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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08786
Pioneer Variable Contracts Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: December 31
Date of reporting period: January 1, 2004 through June 30, 2004
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1.REPORTS TO SHAREOWNERS.
[Pioneer Investments Logo]
PIONEER
VARIABLE
CONTRACTS
TRUST
Pioneer Variable Contracts Trust -- Class I Shares
Pioneer Emerging Markets VCT Portfolio
Pioneer Europe VCT Portfolio
Pioneer International Value VCT Portfolio
Pioneer Small Cap Value VCT Portfolio
Pioneer Small Company VCT Portfolio
Pioneer Mid Cap Value VCT Portfolio
Pioneer Growth Shares VCT Portfolio
Pioneer Real Estate Shares VCT Portfolio
Pioneer Fund VCT Portfolio
Pioneer Equity Income VCT Portfolio SEMIANNUAL REPORT
Pioneer Balanced VCT Portfolio June 30, 2004
Pioneer High Yield VCT Portfolio
Pioneer Strategic Income VCT Portfolio
Pioneer America Income VCT Portfolio
Pioneer Money Market VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
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Table of Contents
Letter to Shareowners 1
Pioneer Emerging Markets VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Pioneer Europe VCT Portfolio
Portfolio and Performance Update 4
Portfolio Management Discussion 5
Pioneer International Value VCT Portfolio
Portfolio and Performance Update 6
Portfolio Management Discussion 7
Pioneer Small Cap Value VCT Portfolio
Portfolio and Performance Update 8
Portfolio Management Discussion 9
Pioneer Small Company VCT Portfolio
Portfolio and Performance Update 10
Portfolio Management Discussion 11
Pioneer Mid Cap Value VCT Portfolio
Portfolio and Performance Update 12
Portfolio Management Discussion 13
Pioneer Growth Shares VCT Portfolio
Portfolio and Performance Update 14
Portfolio Management Discussion 15
Pioneer Real Estate Shares VCT Portfolio
Portfolio and Performance Update 16
Portfolio Management Discussion 17
Pioneer Fund VCT Portfolio
Portfolio and Performance Update 18
Portfolio Management Discussion 19
Pioneer Equity Income VCT Portfolio
Portfolio and Performance Update 20
Portfolio Management Discussion 21
Pioneer Balanced VCT Portfolio
Portfolio and Performance Update 22
Portfolio Management Discussion 23
Pioneer High Yield VCT Portfolio
Portfolio and Performance Update 24
Portfolio Management Discussion 25
Pioneer Strategic Income VCT Portfolio
Portfolio and Performance Update 26
Portfolio Management Discussion 27
Pioneer America Income VCT Portfolio
Portfolio and Performance Update 28
Portfolio Management Discussion 29
Pioneer Money Market VCT Portfolio
Portfolio and Performance Update 30
Schedules of Investments
Pioneer Emerging Markets VCT Portfolio 31
Pioneer Europe VCT Portfolio 37
Pioneer International Value VCT Portfolio 40
Pioneer Small Cap Value VCT Portfolio 43
Pioneer Small Company VCT Portfolio 47
Pioneer Mid Cap Value VCT Portfolio 51
Pioneer Growth Shares VCT Portfolio 54
Pioneer Real Estate Shares VCT Portfolio 57
Pioneer Fund VCT Portfolio 58
Pioneer Equity Income VCT Portfolio 62
Pioneer Balanced VCT Portfolio 65
Pioneer High Yield VCT Portfolio 72
Pioneer Strategic Income VCT Portfolio 78
Pioneer America Income VCT Portfolio 88
Pioneer Money Market VCT Portfolio 90
Financial Statements 92
Notes to Financial Statements 116
PIONEER VARIABLE CONTRACTS TRUST
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LETTER TO SHAREOWNERS 6/30/04
- --------------------------------------------------------------------------------
Dear Shareowner,
U.S. equity markets traced a jagged course through the first half of the year,
ending on June 30 only slightly ahead of where they started. Mid-sized and
small-cap indices scored modest gains, while indicators that track large-cap
stocks showed even smaller changes. For bond investors, Treasury issues wound
up the period with higher yields and lower prices than at year-end. The same
was true of corporate issues, whose prices gave ground in the face of rising
interest rates, while high-yield bonds, outstanding performers over recent
quarters, also cooled off.
Although the economic expansion continued to move ahead, investors were
preoccupied with factors that might have undesirable impacts on the economy and
the markets. For one thing, the threat of terrorism is never far from our
minds. For another, the jump in oil prices, attributed to turmoil in the
Mideast and vast demand from China and other developing nations, was a major
factor. The cost of gas or oil for heating our homes, and gasoline for our cars
is a critical component in household budgets. Industry, too, requires energy,
and in many cases petroleum is an essential raw material.
The "jobless" recovery became a job-generating machine for a few months,
followed by a brief slump and a partial rebound. But strong boosts in
employment quickly triggered fears of economic overheating; too much demand for
goods and services, the reasons for aggressive corporate hiring, might trigger
inflation. That would lead to higher interest rates that could choke off the
recovery by causing consumers and businesses to hold back on outlays. In fact,
on June 30, the Federal Reserve Board raised short-term interest rates by
one-quarter percentage point, the first hike in four years.
While there may be further increases, they probably will be gradual; the
Federal Reserve Board would like to keep the expansion intact while keeping
inflation at bay. And even after the Fed's June move, short-term rates remain
near the lowest levels many of us have seen. U.S. businesses, which have done
massive amounts of cost-cutting in recent years, can readily accommodate
somewhat higher borrowing costs. In addition, the federal income tax cuts that
have helped bolster growth over the past several quarters remain in place.
The possibility of higher interest rates and the economy's direction could have
important implications for the way your portfolio is balanced, so an
appointment with your professional financial advisor may well be in order.
As always, we appreciate your continued confidence in Pioneer.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood
President
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the 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.
1
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO UPDATE 6/30/04
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Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
International Common Stocks 62.1%
Depositary Receipts for International Stocks 25.7%
U.S. Common Stocks 5.5%
Temporary Cash Investment 4.1%
International Preferred Stocks 2.6%
Geographical Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF PIE CHART]
South Korea 22.6%
Taiwan 9.7%
Brazil 9.4%
South Africa 7.1%
Mexico 6.8%
India 6.3%
Russia 4.6%
Thailand 4.1%
Malaysia 4.0%
Turkey 3.7%
Chile 3.2%
Indonesia 2.2%
Hungary 2.0%
Israel 1.9%
Singapore 1.9%
Poland 1.9%
Peru 1.5%
People's Republic of China 1.4%
Philippines 1.4%
United Kingdom 1.0%
Egypt 1.0%
Other (individually less than 1%) 2.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. Samsung Electronics Co. 4.09%
2. Telefonos de Mexico SA 3.11
3. Petrobras Brasileiro SA
(A.D.R.) 2.53
4. Anglo American Plc 2.25
5. Alumax, Inc. 2.09
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
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PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $16.37 $17.37
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.1496 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Emerging Markets VCT Portfolio at net asset value, compared to that of the
Morgan Stanley Capital International (MSCI) Emerging Markets Free Index.
Portfolio returns are based on net asset value and do not reflect any applicable
insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer MSCI
Emerging Emerging
Markets Markets
VCT Portfolio Free Index
10/98 10000 10000
10490 10675
18750 17766
12/00 12337 12330
11450 12037
12/02 11312 11315
17903 17682
6/04 17019 17540
The MSCI Emerging Markets Free Index is an unmanaged, capitalization-weighted
measure of 679 securities trading in 26 emerging markets; it reflects only
those securities available to foreign investors. Index returns are calculated
monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in the
Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 9.83%
(10/30/98)
5 Years 3.81%
1 Year 30.30%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- -------------------------------------------------------------------------------
For the six months ended June 30, 2004, Pioneer Emerging Markets VCT Portfolio's
Class I shares delivered a total return at net asset value of -4.94%. Over the
same time period, the MSCI Emerging Markets Free Index had a total return of
- -0.78%.
In the following discussion, Mark Madden, portfolio manager of the Pioneer
Emerging Markets VCT Portfolio, addresses the factors affecting the Portfolio's
performance and the outlook for the emerging markets.
Q: What factors influenced the performance of emerging markets in the six
months ended June 30, 2004?
A: A combination of accelerating economic growth, attractive stock valuations,
positive economic reforms, strong commodity prices and low interest rates
led to strong returns in emerging markets from March 2003 to early April
2004. However, beginning in mid-April 2004, emerging markets experienced
declines due to a number of factors. First, interest rates started to climb
higher as investors anticipated a U.S. Federal Reserve change in monetary
policy. Investors sought safe-haven investments while withdrawing funds
from emerging markets and other higher-risk asset classes. Second, the
Chinese government's efforts to slow its overheating economy led to
declines in Chinese stocks and stocks throughout Asia. Third, rising oil
and energy prices were perceived to pose a threat to global growth while
increasing the risk of inflation.
Over the last six months, the total return for the Portfolio was below that
of the benchmark MSCI Emerging Markets Free Index. One area that contributed
to the Portfolio's underperformance was a sell-off of Brazil's stock market
due to the country's reliance on external debt and concerns for higher rates.
We remain positive on Brazil's outlook, however, and we believe investors do
not adequately recognize the improvements that have been made in the economy
in recent years. Brazil now has both a large fiscal surplus and a current
account surplus; domestic real interest rates are the lowest in more than a
decade; and there is substantial pent-up domestic demand that should drive an
acceleration of economic growth.
Q: What is your investment strategy?
A: Our investment process is driven by rigorous research that focuses on
companies with strong long-term growth prospects and proven management
ability that sell at a discount to our estimation of fair value. We look
for companies that are well positioned in countries and industries with
favorable long-term trends and growth potential. We manage risk through
diversification among various countries, sectors and companies while
emphasizing stocks that are attractively valued.
Q: Where are you finding attractive opportunities in emerging markets?
A: As for countries, we currently favor Brazil, Thailand and Turkey. In all
three markets we see very attractive stock valuations and improved economic
prospects. Recent volatility has provided an opportunity, in our opinion,
to add to positions at attractive prices. The Portfolio long maintained an
overweight in India, but we recently reduced that position to slightly
above the index weight following the recent elections. In a surprising
outcome, Sonia Gandhi and the Congress party coalition soundly defeated the
incumbent National Democratic Alliance (NDA) party, which had been credited
with the progress seen in the Indian economy over the last few years.
Investors became concerned that the new administration may not have the
same emphasis on economic reforms necessary for future growth. We are more
cautious on our outlook for India until we see the policies of the new
administration.
As for sectors, we like the energy and consumer staples sectors. Energy
stocks are enjoying increasing profitability due to tight supply and strong
demand, and we expect this to continue in the medium term. Consumer spending
is picking up in many countries, and we expect the attractively valued stocks
in the consumer staples sector to benefit from this trend. We are less
optimistic on the technology sector, where we do not believe stronger demand
can be sustained. Technology profit margins continue to be under pressure,
and a weaker dollar may further erode profit margins of emerging markets
firms that export most of their production to the United States.
Q: What is your outlook?
A: In our last annual report, we wrote that we were optimistic on the prospects
for emerging markets over the next several years although we did expect
some correction in the coming year. Emerging markets have been correcting
over the last two months, and we expect this volatility may continue in the
near term. However, the basis for our longer term optimism remains in
place. Stock valuations in emerging markets are less expensive than in
developed markets, while economic growth rates of developing countries are
higher than those of developed markets. In addition, many companies in
emerging markets are gaining global market share by delivering quality
products and services at very competitive prices. The main risk to these
investments relates to the potential for global growth to falter. On the
other hand, if growth is too strong, inflation may accelerate, leading to
higher interest rates and lower stock valuations. We believe that the
markets are already beginning to price in these risks, and an opportunity
is developing to acquire stocks with strong long-term prospects at
attractive prices.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Investing in emerging markets carries its own set of risks, including but not
limited to, currency fluctuations, and social and economic instability.
However, we feel confident that the long-term prospects invite serious
consideration.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO UPDATE 6/30/04
- -------------------------------------------------------------------------------
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF PIE CHART]
Financials 29.3%
Health Care 11.0%
Energy 10.7%
Telecommunication Services 10.1%
Consumer Staples 8.5%
Industrials 8.4%
Materials 7.4%
Consumer Discretionary 6.7%
Information Technology 4.9%
Utilities 3.0%
Geographical Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF PIE CHART]
United Kingdom 29.6%
France 23.6%
Switzerland 13.6%
Germany 9.4%
Italy 6.1%
Netherlands 5.8%
Spain 4.2%
Ireland 2.8%
Belgium 2.0%
Sweden 1.9%
Finland 1.0%
Five Largest Holdings
(As a percentage of equity holdings)
1. BP Amoco Plc 4.53%
2. Vodafone Group Plc 4.08
3. Total SA 3.28
4. Nestle SA (Registered
Shares) 3.09
5. Eni S.p.A. 2.84
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
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PERFORMANCE UPDATE 6/30/04
- -------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $9.10 $9.05
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.0709 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Europe VCT Portfolio at net asset value, compared to that of the Morgan Stanley
Capital International (MSCI) Europe Index. Portfolio returns are based on net
asset value and do not reflect any applicable insurance fees or surrender
charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer MSCI
Europe Europe
VCT Portfolio Index
10/98 10000 10000
10600 10992
13618 12741
12/00 11104 11671
8587 9349
12/02 6955 7629
9269 10570
6/04 9393 10891
The MSCI Europe Index is an unmanaged, capitalization-weighted index of the 15
European country indices included in the MSCI EAFE (Europe, Australasia, Far
East) Index. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Portfolio returns, do not reflect any fees, expenses or
sales charges. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- -------------------------------------------------------------
Net Asset Value
- -------------------------------------------------------------
Life-of-Class -1.10%
(10/30/98)
5 Years -2.07%
1 Year 23.76%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
4
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
European stocks posted modest gains during the six months ended June 30, 2004.
During this time, we saw signs of renewed interest in and a rotation back
toward higher-quality investments. However, the pace of economic recovery is
being tempered by higher oil prices and expectations of rising interest rates.
In the following interview, Stan Pearson, a member of the Portfolio's
management team, discusses the over-arching factors facing investors during the
reporting period and his efforts to position the Portfolio for positive growth.
Q: Was the economic environment favorable for the Portfolio's investment
strategy?
A: The economic environment was generally favorable for European stocks. Stock
price valuations are fair and supported by strong dividend yields. Growth
across Europe is more moderate than outside the region, and this fact is
discounted in stock prices. The strength of the euro eased a bit during the
six months, but it continues to be a risk for European exporters.
For the six months ended June 30, 2004, the Portfolio's Class I shares rose
1.33% at net asset value. In comparison, the Morgan Stanley Capital
International (MSCI) Europe Index posted a return of 3.04% for the same
period.
Q: What investments hurt performance during the six months?
A: Several factors contributed to the Portfolio's underperformance. First,
mobile phone and network manufacturer Nokia (Finland) surprised the market
with two profit warnings and disappointing results. Secondly, unlike the
benchmark, the Portfolio didn't own pharmaceutical Aventis, which rose
sharply after a takeover bid from Sanofi. The Portfolio did hold Sanofi
(France), but investors penalized the company for its decision to bid for
Aventis. We think this situation is temporary and will hold on to Sanofi,
because we believe the merger will create appreciation potential.
Elsewhere in the pharmaceutical sector, investments in GlaxoSmithKline
(United Kingdom) underperformed when the company released disappointing
first quarter results. The company was recovering in the final months of the
reporting period. Finally, while our decision to overweight investments in
the capital goods sector proved successful, our stock selection was a bit
disappointing. Swedish engineering companies Sandvik, Atlas Copco and SKF
had absolute positive performance but underperformed other companies in the
capital goods sector that rallied more strongly on optimism about
restructuring programs.
Q: What investments helped performance during the six months?
A: One of the more positive contributors to performance was Zurich Financial
(Switzerland), which we purchased during the reporting period. This
company, which is benefiting from an improving outlook for the insurance
sector, had an attractive valuation at the time of purchase and
outperformed both the sector and the broader equity market. In the energy
sector, we sold investments in Royal Dutch Petroleum (Holland) and Shell
Transport & Trading (United Kingdom) and reinvested the proceeds in BP
Amoco (United Kingdom) -- a decision that proved successful. BP is
benefiting from its substantial production growth thanks to past
investments. Furthermore, the company is carrying a lot of cash, which it
may use to increase returns to its shareholders through dividends or share
buy-back programs.
Food giant Nestle (Switzerland) appreciated strongly as a result of market
share growth and rising profit margins. European small-sized companies
outperformed during the six months. An overweight position in the capital
goods sector made a positive contribution. EADS (France), the maker of the
Airbus, was particularly strong in the second quarter. The company is
benefiting from signs of recovery in the commercial aerospace sector earlier
than expected. In the utilities sector, E.ON (Germany) benefited from higher
electricity prices and strong cash flow. We are optimistic that the company
may return some of its extra cash to investors through a special dividend or
share buy backs. In the pharmaceuticals sector, Schering (Germany) did well
in the second quarter, thanks to investors' positive reaction to its plans
to increase its profit margins and for a new cancer product it is developing
with Novartis (Switzerland).
Q: Given current market conditions in European markets, how are you positioning
the Portfolio?
A: We continue to emphasize investments in the capital goods sector, because we
think it will benefit from increasing levels of capital expenditure, as
global demand increases and companies become more confident. We're limiting
positions in the technology hardware and software sector, because we
believe stock prices of many of these companies are inflated and already
reflecting future growth. In the telecommunications sector, we've uncovered
interesting companies but prefer operators with a high level of exposure to
the European mobile market, which continues to generate attractive growth.
Q: What is your outlook?
A: We think European equities are poised to continue to perform well versus
other asset classes. The global economic recovery is well underway, led by
the strong U.S. economy. The European economy continues to demonstrate a
less robust pace of economic growth, but stock price valuations in Europe's
equity markets remain attractive and fully reflect the moderate pace of
growth in the region.
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.
International investing may involve special risks, including differences in
accounting and currency, as well as economic and political instability.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
5
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- -------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- -------------------------------------------------------------------------------
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF A PIE CHART]
Financials 25.0%
Consumer Discretionary 13.8%
Industrials 12.0%
Telecommunication Services 9.6%
Consumer Staples 9.4%
Materials 7.9%
Energy 6.8%
Health Care 6.6%
Information Technology 6.4%
Utilities 2.5%
Geographical Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF A PIE CHART]
Japan 26.4%
United Kingdom 21.4%
France 14.6%
Switzerland 8.5%
Germany 5.7%
Netherlands 4.6%
Italy 4.2%
Spain 3.0%
South Korea 2.1%
Brazil 1.1%
Turkey 1.1%
Finland 1.0%
Belgium 1.0%
Russia 1.0%
Other (individually less than 1%) 4.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. BP Amoco Plc 3.17%
2. Vodafone Group Plc 2.76
3. Total SA 2.33
4. Mitsubishi Tokyo Financial
Group, Inc. 2.26
5. Toyota Motor Co. 2.23
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $10.36 $10.06
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.0542 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
International Value VCT Portfolio at net asset value, compared to that of the
Morgan Stanley Capital International (MSCI) All Country World Free (ACWF) ex.
U.S. Index. Portfolio returns are based on net asset value and do not reflect
any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer MSCI
International AC
Value Wld
VCT Portfolio Fr USA+
3/95 10000 10000
11053 10960
12/96 11998 11691
12581 11929
12/98 12163 13655
17561 17877
12/00 13609 15177
10378 12218
12/02 8996 10425
11701 14740
6/04 12113 15346
+ Index comparison begins on 2/28/95. The MSCI ACWF ex. U.S. Index is composed
of 46 markets - 21 developed countries and 25 emerging countries. Index
returns are calculated monthly, assume reinvestment of dividends and,
unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in the Index.
- -------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- -----------------------------------------------------------
Net Asset Value
- -----------------------------------------------------------
Life-of-Class 2.06%
(3/1/95)
5 Years -1.38%
1 Year 26.70%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
6
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- -------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- -------------------------------------------------------------------------------
With the global recovery well under way, the six months ended June 30, 2004,
proved to be a positive environment for international stocks. As Stefano
Pregnolato, a member of the Portfolio's management team, highlights in this
report, different industries and companies within those sectors are benefiting
to a greater degree than others as the recovery solidifies.
Q: How did the Portfolio perform during the first half of fiscal 2004?
A: The market environment was generally favorable for international stocks. Low
interest rates, improving corporate fundamentals and consumer demand helped
drive stock prices higher. For the six months ended June 30, 2004, the
Portfolio's Class I shares rose 3.52% at net asset value. In comparison,
the Morgan Stanley Capital International (MSCI) All Country World Free
Index excluding the United States grew 4.10% for the same period. A handful
of stocks contributed to the Portfolio's underperformance relative to the
benchmark -- most notably Nokia (Finland), which is encountering strong
competition in the communications equipment sector.
Q: What strategies or investments hurt performance most during the six months
under review?
A: Information technology was the biggest disappointment for the reporting
period. Even though the Portfolio's exposure to this sector was just below
that of the benchmark, our decision to maintain a large exposure to Nokia
(Finland) hurt performance. Nokia announced that profits later this year
might not be as robust as originally thought.
While the Portfolio's exposure to telecommunication services was in line
with that of the benchmark, it largely consisted of Vodafone Group (United
Kingdom) -- one of the Portfolio's largest holdings on June 30. Vodafone
delivered positive performance for the six months, but underperformed the
sector overall. The stock came under pressure in late May, when Vodafone
announced that forecasted earnings might be less than previously
anticipated.
The Portfolio's greater-than-benchmark exposure to health care investments
did well but not as well as those constituting the benchmark. Finally,
investments in consumer staples did well, but the Portfolio's underweighted
position, relative to its benchmark, limited its participation in the rally
of those stocks.
Q: What strategies or investments helped performance most during the six months
under review?
A: The momentum for global economic growth shifted to Asia during the first
quarter of 2004, particularly to Japan, where its resurging economy and
reform efforts are being well received by investors. During the spring, we
increased investments there. By June 30, the Portfolio's exposure to Japan
was higher than that of the benchmark at 25.98% of total equity assets. The
increase was very positive for the Portfolio. In addition, the Japanese
market is less correlated to the U.S. economy than that of Europe or the
rest of Asia -- creating a valuable diversifying effect for the Portfolio.
The sector allocation strategy also played a significant part in
performance. We'd chosen to keep the Portfolio's exposure to energy stocks
just below that of the benchmark, but our selection of companies, most
specifically ENI (Italy), significantly outperformed those constituting the
benchmark. Similarly, investments in utility holdings were below that of the
benchmark, but they outperformed those in the benchmark and represented some
of the strongest performers for the six-month period.
With the increased global economic activity, consumer-related companies also
outperformed during the six months ended June 30. Consumer discretionary
companies led this group. Effective stock selection and our decision to
overweight investments in this sector helped the Portfolio tremendously.
Finally, we deemphasized the materials sector relative to the benchmark on
account of our view that near-term fundamentals were weak. This strategy
proved to be the right decision.
Q: Europe still represents the majority of the Portfolio's holdings. How are
these investments faring?
A: European stocks generally moved in line with the benchmark. Stock price
valuations are fair and supported by strong dividend yields. Growth across
Europe is more moderate than outside the region, and that fact is
discounted in stock prices. The strength of the euro eased a bit during the
six months, but it continues to be a risk for European exporters.
Q: What is your outlook for the balance of the fiscal year?
A: We are cautious about the equity markets in an environment of rising
interest rates. However, we see some opportunity in Japan as the signs of
growth begin to build after essentially two decades of recession. We also
see opportunities in key emerging markets where stronger balance sheets,
domestic growth and political reform should provide the basis for good
returns -- notably Brazil, Russia and Turkey.
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.
International investing may involve special risks, including differences in
accounting and currency, as well as economic and political instability.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
7
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- -------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- -------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF A PIE CHART]
U.S. Common Stocks 87.0%
Temporary Cash Investment 6.3%
Depositary Receipts for International Stocks 4.0%
Closed End Mutual Funds 1.3%
Exchange Traded Fund 0.8%
International Common Stocks 0.6%
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF A PIE CHART]
Financials 23.7%
Industrials 21.3%
Consumer Discretionary 13.1%
Materials 8.8%
Information Technology 8.5%
Health Care 7.9%
Energy 7.0%
Utilities 5.2%
Consumer Staples 3.4%
Telecommunication Services 1.1%
Five Largest Holdings
(As a percentage of equity holdings)
1. Nu Skin Enterprises, Inc. 2.17%
2. Massey Energy Co. 1.79
3. Pediatrix Medical
Group, Inc. 1.74
4. Insight Enterprises, Inc. 1.70
5. Wabtec Corp. 1.63
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- -------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- -------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $13.50 $12.50
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- -------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Small Cap Value VCT Portfolio at net asset value, compared to that of the
Russell 2000 Value Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
Pioneer Russell
Small Cap 2000
Value Value
VCT Portfolio Index
11/01 10000 10000
12/01 10574 10612
12/02 8979 9400
12/03 12160 13727
12/04 13133 14802
Index comparison begins 11/30/01. The Russell 2000 Value Index is a measure of
the performance of the value-oriented stocks in the Russell 2000 Index. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in the Index.
- -------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ------------------------------------------------------------
Net Asset Value
- ------------------------------------------------------------
Life-of-Class 12.04%
(11/9/01)
1 Year 30.31%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
8
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- -------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
In the following discussion, portfolio manager David Adams and assistant
portfolio manager Jack McPherson review their investment strategies and the
performance of Pioneer Small Cap Value VCT Portfolio.
Q: How did the Portfolio perform over this period?
A. For the six months ended June 30, 2004, Pioneer Small Cap Value VCT
Portfolio returned 8.00% at net asset value. These results were in line
with the 7.83% return on the Russell 2000 Value Index, the Portfolio's
benchmark, for the same period.
Q: What were conditions like over the first half of the year, and how did you
respond?
A. The U.S. economic recovery continued to take hold over the early months of
the year. But as global demand drove up prices for key commodities,
inflationary pressures led the Federal Reserve Board to raise short-term
interest rates at its June meeting. Anticipation of higher rates had been a
damper on the markets for several weeks prior to the Fed's move.
The Portfolio's positive results over the period reflected our commitment to
our established discipline. In contrast to last year when speculative issues
were market leaders, the kind of companies we invest in -- better-quality
issues with strong financial characteristics and good earnings prospects --
have been in favor for much of 2004.
Q: Which sectors or stocks helped performance the most?
A. Our overweight position in energy-related companies compared to our
benchmark was the biggest positive over this period. Massey Energy
benefited as global demand pushed up the price of Appalachian coal. The
weak U.S. dollar also made domestic coal more competitive in foreign
markets. In energy services, Maverick Tube saw orders for its oil well
casings increase as drilling activity grew in response to higher energy
prices. Unit Corporation benefited from higher prices at its own wells, as
well as from increased activity in its equipment leasing business. Stelmar
Shipping is experiencing firm pricing for its fleet of double-hulled
tankers as existing tanker capacity is unable to meet the demands of an
expanding world economy.
Q: Which of your other decisions had a positive impact?
A. In the financial sector, we found good value among commercial banks whose
business customers tend to increase borrowings as business conditions
improve. Shares of Texas Capital Bancshares and Cardinal Financial both
rose; those regional banks are well positioned to capture market share if
customers seek local alternatives in the wake of the J.P. Morgan-BankOne
merger. Advanta, which supplies credit cards for small businesses, was a
strong contributor, and Selective Insurance gained, thanks to favorable
claims experience and higher premiums.
Among industrial firms, we bought Wabtac, a maker of parts for rail cars, at
a low point in its business cycle. Shares have moved higher as the expanding
economy absorbs excess freight capacity and new cars are being built.
In health care, Pediatrix Medical Group saw continued good results from its
hospital-based neonatology services. Shares of Cross Country Healthcare
gained as investors anticipated renewed demand for temporary nursing staff
at hospitals seeking to fill vacancies following a period of cutbacks.
Software makers Borland and SPSS were sluggish performers. Investors also
grew cautious toward Rewards Network as it worked to implement a new
business plan. Lower gold prices hurt results at Iamgold, which is also
attempting to acquire another firm while being targeted as a merger partner.
Q: What is your outlook for the upcoming months?
A. Most businesses sectors are doing well in the economic recovery, but an
apparent slowdown in job creation and a wave of cautious earnings forecasts
may hint at a slower pace of expansion. Inflation, higher interest rates
and world tensions may also give investors reasons to defer commitments, at
least until the presidential election is decided. Against that background,
good, attractively valued companies continue to emerge, creating
opportunities for our value-oriented investment style.
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.
Small-capitalization stocks may be subject to greater short-term price
fluctuations than securities of larger companies.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
9
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- -------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- -------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF A PIE CHART]
U.S. Common Stocks 88.7%
Temporary Cash Investment 7.2%
Depositary Receipts for International Stocks 3.0%
International Common Stocks 1.1%
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF A PIE CHART]
Financials 22.9%
Industrials 16.5%
Information Technology 13.6%
Consumer Discretionary 12.2%
Health Care 12.1%
Energy 7.4%
Materials 6.5%
Consumer Staples 5.1%
Telecommunication Services 2.8%
Utilities 0.9%
Five Largest Holdings
(As a percentage of equity holdings)
1. Advanta Corp. (Class B) 2.37%
2. Alliance Atlantis
Communications, Inc. 1.80
3. Forest Oil Corp. 1.76
4. Corn Products
International, Inc. 1.75
5. Nu Skin Enterprises Inc. 1.74
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- -------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- -------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $12.15 $11.44
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- -------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Small Company VCT Portfolio at net asset value, compared to that of the Russell
2000 Index. Portfolio returns are based on net asset value and do not reflect
any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer
Small Russell
Company 2000
VCT Portfolio Index
1/01 10000 10000
12/01 10498 9741
12/02 8739 7747
12/03 10951 11407
6/04 11630 12177
Index comparison begins 1/31/01. The Russell 2000 Index is an unmanaged measure
of the 2,000 smallest stocks, based on capitalization, in the Russell 3000
Index. Index returns are calculated monthly, assume reinvestment of dividends
and, unlike Portfolio returns do not reflect any fees, expenses or sales
charges. You cannot invest directly in the Index.
- -------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ------------------------------------------------------------
Net Asset Value
- ------------------------------------------------------------
Life-of-Class 5.82%
(1/19/01)
1 Year 24.23%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
10
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- -------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- -------------------------------------------------------------------------------
In the following discussion, portfolio manager David Adams and assistant
portfolio manager Jack McPherson review their investment strategies and the
performance of Pioneer Small Company VCT Portfolio.
Q: How did Pioneer Small Company VCT Portfolio perform over this period?
A. For the six months ended June 30, 2004, the Portfolio returned 6.21% at net
asset value. This result slightly trailed the Portfolio's benchmark, the
Russell 2000 Index, which returned 6.76% over the same period.
Q: Please describe the background for small-company stocks over this period.
A. Stocks, led by small-cap issues, moved higher early in the year on the basis
of solid earnings gains and encouraging job creation in many sectors of the
economy. But investors began to retrench in the spring as demand for goods
and services pushed prices higher. The expectation that the Federal Reserve
Board would raise short-term rates in order to forestall inflationary
trends became a reality near the end of the period. Troubling developments
overseas and high energy prices also kept investors on the sidelines.
Q: Which stocks or sectors influenced performance favorably?
A. Good stock selection in consumer staples and financial services bolstered
returns. NuSkin Enterprises continues to record impressive sales gains in
Asia; Chinese consumers especially have embraced NuSkin's line of diet,
health and beauty products. Shares of Chattem, which markets Gold Bond and
Icy Hot among other brands, moved higher following resolution of pending
legal issues.
Alliance Atlantis, a Canadian cable operator and producer of the CSI
television programs, rose as investors took a favorable view of management's
restructuring efforts. Alliance also holds movie distribution rights for the
Lord of the Rings series and the political documentary Fahrenheit 911.
Wabtac, which fabricates components for rail cars, saw new orders increase
in response to rising freight volumes. A pickup in air freight and security
services aided the Brinks Company; the company also made progress in dealing
with liabilities left over from its coal-mining days, when it was known as
Pittston.
Anticipating possible interest-rate hikes, we avoided thrifts and other
rate-sensitive financial issues. Instead, we favored commercial banks whose
business customers seemed likely to increase their borrowings as economic
conditions improve. California-based City National and Texas Capital
Bankshares both contributed positively to results. The acquisition of Staten
Island Bank by Independence Community Bank also added to returns.
For Advanta, the improving economy meant stepped up demand from its small
business clients for credit cards and other business services, while
Selective Insurance Group, a property and casualty insurer, benefited from
increased premiums and a favorable claims experience. In technology, the
buyout of American Management Systems by CGI made an important contribution.
Q: Which holdings had a negative impact over the period?
A. Disappointing earnings pressured shares of Power Integrations, which makes
semiconductors for electronic devices, including chargers for cell phones
and DC/AC converters. We believe the trend to miniaturization will
eventually boost demand for the company's products. Elsewhere, First
Healthgroup, a managed care company, fell victim to aggressive pricing on
the part of competitors. Unifi, which makes synthetic yarns for textiles,
fell sharply when it was unable to finalize a proposed manufacturing
venture in China. Difficult times for the airlines have hurt AAR, which
manufactures parts and components for aircraft, and its shares fell.
Princeton Review, a provider of preparatory courses for college entrance
and other exams, also declined, following a weak earnings report.
Q: What is your current outlook?
A. The Federal Reserve Board raised interest rates in June, but if the economy
idles for a time an aggressive series of increases seems unlikely. In the
meantime, equity valuations may already reflect the impact of higher rates.
That circumstance has led to a number of attractive investment
opportunities among small-company stocks that we are analyzing as
candidates for investment.
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.
Small-capitalization stocks may be subject to greater short-term price
fluctuations than securities of larger companies.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
11
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- -------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- -------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF A PIE CHART]
U.S. Common Stocks 93.0%
Temporary Cash Investment 6.0%
Depositary Receipts for International Stocks 1.0%
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF A PIE CHART]
Financials 21.7%
Consumer Discretionary 15.6%
Industrials 12.6%
Information Technology 12.6%
Health Care 9.6%
Materials 8.5%
Energy 6.6%
Utilities 6.5%
Consumer Staples 6.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. Foot Locker, Inc. 2.58%
2. Mattel, Inc. 2.29
3. W.W. Grainger, Inc. 2.26
4. Safeway, Inc. 2.14
5. CIGNA Corp. 2.13
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- -------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- -------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $21.99 $20.47
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.080 $ - $ 0.2095
- -------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Mid Cap Value VCT Portfolio at net asset value, compared to that of the Russell
Midcap Value Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
Russell Pioneer
Midcap Mid Cap
Value Value
Index VCT Portfolio
3/95 10000 10000
12263 11819
12/96 14748 13596
19812 16952
12/98 20820 16271
20799 18407
12/00 24789 21721
25369 23130
12/02 22920 20537
31643 28234
6/04 33910 30733
Index comparison begins 2/28/95. The Russell Midcap Value Index measures the
performance of the value-oriented stocks in the Russell Midcap Index. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in any Index.
- -------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ------------------------------------------------------------
Net Asset Value
- ------------------------------------------------------------
Life-of-Class 12.66%
(3/1/95)
5 Years 10.11%
1 Year 32.23%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
12
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- -------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- -------------------------------------------------------------------------------
Despite interim volatility, stocks tended to gain over the first six months of
2004, riding on the tide of a strengthening economy and generally rising
corporate profitability. In the following interview, Rod Wright discusses the
market environment and portfolio strategies during the six months ended June
30, 2004. Mr. Wright is responsible for day-to-day portfolio supervision of
Pioneer Mid Cap Value VCT Portfolio.
Q: How did the Portfolio perform?
A: The Portfolio performed well. For six months ended June 30, 2004, the
Portfolio had a total return of 8.85% at net asset value, while the Russell
Midcap Value Index returned 7.17%.
Q: What were the principal factors that affected performance?
A: Despite a succession of fears that caused short-term market reversals,
stocks generally rose during the six months as evidence accumulated that
the economy was strengthening and that corporate earnings were increasing.
The rally that had driven the market for most of 2003 continued in early
2004 until March, when market interest rates spiked up on fears about the
effects of rising oil prices, the possibility of increasing inflationary
pressure and the likelihood that the Federal Reserve would tighten monetary
policy. Adding to the uncertainty was the anxiety over the continuing
violence in Iraq. In the final weeks of the period, however, the market
rebounded again in anticipation of good news about corporate earnings and
the widening expectation that the Federal Reserve would act gradually in
raising short-term rates, helping to sustain the economic recovery.
Q: What types of investments helped Portfolio performance?
A: Security selection was the primary factor, as stocks across the industry
spectrum contributed to performance. Stocks in the health care, financial
services, telecommunications and industrial sectors did well, while stocks
in basic materials, consumer staples and consumer discretionary sectors did
less well.
The top individual contributor was Charter One Financial, which was taken
over by Royal Bank of Scotland, at a substantial premium to its valuation.
Several other performance leaders were formerly out-of-favor companies whose
stock prices began appreciating as their earnings and business prospects
began to improve. They included: NCR, the technology conglomerate that began
turning around its business in time to benefit from an increase in corporate
capital spending; and Reliant Energy, an independent power producer and
energy merchant whose stock gained as a result of a corporate restructuring
and the sale of undervalued assets. The Portfolio also had success with
stocks such as Becton Dickinson, the medical supplies company, which
benefited from rising earnings and the introduction of new products, and
Providian, a credit-card issuer whose prospects began to improve under a
restructuring plan implemented by new management.
Q: Were there any disappointments?
A: We had a few. Investment Technology Group, a company specializing in
electronic trading operations, declined as it faced increased competition
in the financial markets. However, we continued to hold the stock because
of the value of its assets. We have sold our stake in another
disappointment, Seagate Technology, a manufacturer of disc drives, which
became the victim of industry overcapacity. Similarly, we also eliminated
positions in two disappointing mining stocks, Freeport-McMoRan and Newmont
Mining, both of which declined as the price of gold weakened.
Q: What is your investment outlook?
A: We think that the market trends will continue to be choppy, as a variety of
factors will weigh on investors' minds. However, the outlook for corporate
earnings is generally positive and companies are generating a great deal of
free cash flow. We intend to remain focused on our core discipline,
concentrating on investments in quality companies with reasonable stock
valuations.
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.
Mid-capitalization stocks may be subject to greater short-term price
fluctuations than securities of larger companies.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
13
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- -------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- -------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Common Stocks 91.8%
Depositary Receipts for International Stocks 8.2%
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF PIE CHART]
Information Technology 30.2%
Health Care 22.9%
Consumer Discretionary 14.5%
Industrials 10.1%
Financials 8.6%
Consumer Staples 7.6%
Materials 3.5%
Telecommunication Services 1.6%
Energy 1.0%
Five Largest Holdings
(As a percentage of equity holdings)
1. Microsoft Corp. 5.50%
2. Intel Corp. 4.41
3. Sandisk Corp. 3.05
4. Bristol-Myers Squibb Co. 3.02
5. Samsung Electronics
Co., Ltd. 2.84
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $12.10 $12.22
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Growth Shares VCT Portfolio at net asset value, compared to that of the Russell
1000 Growth Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer
Growth Russell
Shares 1000
VCT Portfolio Index
10/97 10000 10000
10227 10646
12/98 13561 13522
14637 16351
12/00 13484 15079
10962 13202
12/02 7157 10343
8971 13436
6/04 8883 13883
The Russell 1000 Growth Index contains those Russell 1000 securities with
greater-than-average growth orientation. Companies in this index tend to
exhibit higher price-to-book and price-to-earnings ratios, lower dividend
yields and higher forecasted growth values than the Value universe. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ----------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------
Life-of-Class -1.76%
(10/31/97)
5 Years -9.91%
1 Year 9.90%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
14
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
The U.S. economy continued to grow during the first half of 2004, but the
general investment environment for equities began turning slightly negative as
rising corporate profit trends began to weaken, consumer spending was not as
strong as expected, and markets began anticipating a tighter monetary policy
from the Federal Reserve. In the following interview, Christopher Galizio
discusses the factors that affected the performance of Pioneer Growth VCT
Shares Portfolio during the six-month period ended June 30, 2004. Mr. Galizio
is a member of the Portfolio's management team.
Q: How did the Portfolio perform during the first half of 2004?
A: For the six-month period ended June 30, 2004, the Growth Shares Portfolio
Class I had a total return of -0.98% at net asset value. For the same
period, the Russell 1000 Growth Index returned 2.74%. We believe the
Portfolio's underperformance was due to the overweight position in
technology, particularly semi-conductor companies, early in the period.
Q: What was the general investment environment like during the period?
A: The overall market sentiment appeared to be turning negative late in the
six-month period.
The stock market surge that that had begun in March 2003 appeared to lose
some energy. Several major corporations, including the retail and
semi-conductor industries, began to report earnings disappointments, and we
saw some weakening in profit trends, notably in the consumer and technology
sectors. Consumer spending trends, in particular, appeared weak as
over-extended consumers finally began to retrench from their high-spending
patterns. As stock market investors anticipated the June 30 announcement by
the Federal Reserve Board that it would begin to tighten monetary policy by
raising short-term interest rates, the share prices of some
consumer-oriented financial institutions began to fade. Industrial stocks,
however, tended to outperform the overall market.
Q: What were your principal strategies during the period?
A: We restructured the Portfolio during the period, focusing on large-cap
companies that we believed offered long-term value, above-average revenue
growth, strong returns on capital and reasonable valuations in relation to
their earnings potential. This strategy led to a reduced emphasis on the
semi-conductor industry and increased weightings in the software, consumer
discretionary and financial services areas.
We reduced our semi-conductor holdings, eliminating positions in Applied
Materials, Cypress Semiconductor, Texas Instruments and Maxim Technology. We
did add Taiwan Semiconductor, a major manufacturer with an attractive stock
valuation. Overall, however, semiconductor stocks went from an overweight to
an underweight position relative to the benchmark S&P 500. The reduced
weightings in technology tended to support performance.
Conversely, we increased the Portfolio's emphasis on software companies,
adding companies such as Macrovision, which has developed a technology to
protect DVDs, CDs and other disc-based products from piracy, as well as
Take-Two Interactive, the developer of video games, including Grand Theft
Auto --the most successful game in history, with a new version soon to be
introduced. We also added Fair Isaac, which has developed software to help
credit card companies analyze the credit-worthiness of applicants. Fair
Isaac tended to detract from performance late in the six-month period as it
reported disappointing earnings, but we continued to hold it because of its
attractive valuation.
We moved from an underweight to an overweight in the consumer discretionary
sector, taking advantage of attractive valuations of Disney, whose media and
theme park properties have improved earnings outlooks, and Viacom, the owner
of the CBS and MTV television networks among other properties. Among
retailers, we sold our Wal-Mart position before the stock fell hard,
investing in Target, Kohl's and Ross Stores.
In addition, we increased the emphasis on financial services stocks,
focusing on insurance companies with excellent valuations that were not as
vulnerable to interest-rate increases as banks and other lenders.
We continued to de-emphasize consumer staples, although we added Altria (the
former Philip Morris), which offered a high dividend yield and an attractive
stock price that we believed was the result of overly pessimistic market
evaluations of the company's tobacco liability.
In addition, we invested in First Data, the leader in processing of credit
card transactions and owner of the Western Union system, and Accenture, an
information technology services consulting firm.
Q: What were some of the investments that influenced performance?
A: Among newer holdings, Macrovision rose significantly during the period as
its revenue grew faster than had been expected. Sepracor, a pharmaceutical
company and a new holding, also advanced on positive news of a drug under
development. Zimmer Holdings, a world leader in orthopedic products,
including hip and knee replacements, was another health care position that
did very well. The timely sale of Wal-Mart also supported performance.
The overweight position in the semiconductor industry early during the
six-month period held back performance, as valuations in that group fell
hard. Corinthian Colleges, operator of adult vocational educational colleges
and programs, was another detractor, as the SEC began an investigation of
its financial records. However, we took advantage of the price decline to
add to the position in Corinthian because of its goods long-term
fundamentals.
Lexar and Sandisk, two manufacturers of flash memories for cameras and cell
phones, also fell on disappointing sales.
Freeport-McMoRan, a leader in the copper mining industry and a strong
support for performance in 2003, also declined both because of problems at
one of its mines and because of fears of an economic slowdown in China, an
important importer of copper. We increased our investment in the company
because of its attractive price. We also believed it experienced some
short-term production problems that would be resolved.
Q: What is your investment outlook?
A: We are cautions about the near-term opportunities in the domestic stock
market, as stock valuations appear relatively expensive and the Federal
Reserve Board has moved to a less accommodating monetary policy. The home
refinancing boom of the past two years may hurt the future earnings of
banks, while the technology industry faces a number of challenges, from
pricing pressure on its products to calls to change the way many companies
have treated stock options in their accounting. Health care stocks, however,
appear to be more reasonably valued.
Given this outlook, we are paying very strict attention to our analysis and
selection of individual companies. We also have somewhat reduced our
exposure to the domestic stock market with investments in Europe and the
emerging markets. We have, for example, increased our position in Vodafone,
the world's largest wireless communications service company, and we have
added small holdings from Korea, Taiwan and Israel.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
15
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Common Stocks 100.0%
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF PIE CHART]
Office 17.4%
Apartment 16.8%
Regional Mall 15.0%
Industrial 12.7%
Shopping Center 10.4%
Hotel 8.7%
Diversified 8.5%
Self Storage 4.1%
Cash 3.0%
Factory Outlet 2.1%
Manufactured Homes 1.0%
Health Care 0.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. Simon DeBartolo
Group, Inc. 6.00%
2. Boston Properties, Inc. 5.02
3. Equity Residential
Property Trust 4.36
4. ProLogis Trust 3.97
5. Catellus Development
Corp. 3.91
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $19.55 $18.57
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.400 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Real Estate Shares VCT Portfolio at net asset value, compared to that of the
Wilshire Real Estate Securities Index. Portfolio returns are based on net asset
value and do not reflect applicable insurance fees and surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer Wilshire
Real Estate Real Estate
Shares Securities
VCT Portfolio Index+
3/95 10000 10000
11696 11322
12/96 15875 15497
19235 18565
12/98 15629 15330
14977 14841
12/00 19397 19403
20911 21431
12/02 21440 21983
28890 30133
6/04 31028 32226
+ Index comparison begins on 2/28/95. The Wilshire Real Estate Securities Index
is a market-capitalization weighted measure of the performance of real estate
investment trusts (equity and hybrid) and real estate operating companies.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Portfolio returns, do not reflect any fees, expenses or sales charges.
You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ------------------------------------------------------
Net Asset Value
- ------------------------------------------------------
Life-of-Class 12.89%
(3/1/95)
5 Years 13.58%
1 Year 28.90%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
16
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
Fear of higher interest rates, rising oil prices and the ongoing turmoil in
Iraq contributed to volatile markets for the six months ended June 30, which
made up the first half or your Portfolio's fiscal year. In this report, Mathew
Troxell, a member of the Portfolio's investment management team, discusses the
sector's positive returns amidst the shifting economic landscape and his
expectations for 2004.
Q: Was the market and economic environment favorable for the Portfolio's
investment strategy?
A: Real estate stocks, like most asset classes, experienced great volatility
during the reporting period.
With evidence suggesting that the U.S. economy was on its way to recovery,
the real estate market rose strongly during the first quarter of 2004.
However, in early April, the jobs report for March was surprisingly strong
and sparked a sell-off in the bond market. Bond investors feared that the
economy might be growing too fast and would ignite inflation. Interest rates
began to rise, pushing bond prices down. Prices of real estate stocks also
fell sharply even though historically they have exhibited a low correlation
to bond prices. Rising oil prices and political uncertainty in Iraq further
heightened investor concerns. During May and June, real estate investment
trusts began to recover and picked up enough positive momentum to regain much
of the ground lost in April -- ending the six months with relatively strong
performance gains.
For the six months ended June 30, 2004, the Portfolio's Class I shares rose
7.4% at net asset value. In comparison, the Wilshire Real Estate Securities
Index increased 6.96% for the same period.
Q: What investments helped performance during the six months?
A: Several holdings contributed positively to the Portfolio's returns. AvalonBay
Communities, one of the Portfolio's largest holdings, is an
apartment/multi-family real estate investment trust (REIT) that has benefited
from the expectation of improving fundamentals for apartments. Job growth has
been very positive for household formations, especially for young adults who
are leaving home for the first time. This demographic group has the highest
propensity to rent rather than buy. This stronger renter demand is giving
apartment REIT managers, such as AvalonBay, greater pricing flexibility. In
addition, rising interest rates should contribute to higher renter demand,
because buying a home becomes a more expensive option.
In the lodging sector, Starwood Hotels and Resorts performed well,
particularly in the final two months of the reporting period. Starwood, as
well as the sector in general, are benefiting from a recovery in lodging
demand, which is directly correlated to the improving economy. Catellus
Development, a real estate management and development company, holds a
portfolio of high-quality predominately industrial properties generating
strong cash flow. This REIT's positive performance was driven, in part, by
management's decision to convert to REIT status early in 2004. The heightened
investor interest helped it to outperform the benchmark during the six
months.
Q: What investments hurt performance during the six months?
A: We believe that Simon Property Group is a solid company, but after
consistently outperforming the real estate market during the multi-year rally
through the first quarter of 2004, it, along with other retail names, lagged
in the final months of the reporting period. Following the market correction
this spring, it began to recover. However, when management announced in late
June that it was acquiring Chelsea Property Group (also held by the
Portfolio), investors reacted negatively. We view the proposed merger very
positively, because we think Chelsea Property Group, which owns factory
outlet shopping centers in Japan as well as in the United States, would add
international diversity and a new retail focus to Simon's current portfolio.
Following disappointing performance last year, Apartment Investment and
Management continued to lag the benchmark. This REIT, which owns a diverse
portfolio of multi-family apartment complexes, suffered more than its peers
as apartment fundamentals proved challenging last year and experienced
lower-than-expected fee income and higher-than-expected
apartment-turnover-related expenses last year -- resulting in a reduced
dividend. Even with the greater promise for improving fundamentals, we
reduced the position this spring, because we tempered our view of its total
return potential.
Q: What is your outlook for the balance of 2004?
A: We think that the various property types making up the real estate market
are generally experiencing improving fundamentals. While real estate
earnings typically lag an improvement in fundamentals, hotel and apartment
landlords can respond fairly quickly. Should economic growth continue,
however, we believe retail landlords will begin to lose the relative
advantage they have previously enjoyed. We believe that it will fall to
astute stock selection to separate the wheat from the chafe.
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.
Real estate investments may be subject to special risks, including risks
related to general and local economic conditions and risks related to an
individual property.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
17
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Common Stocks 94.7%
Depositary Receipts for International Stocks 3.5%
International Common Stocks 1.8%
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF PIE CHART]
Financials 17.1%
Information Technology 13.9%
Consumer Discretionary 13.0%
Health Care 12.5%
Industrials 12.3%
Consumer Staples 11.9%
Energy 8.2%
Materials 5.7%
Telecommunication Services 3.3%
Utilities 2.1%
Five Largest Holdings
(As a percentage of equity holdings)
1. ChevronTexaco Corp. 2.17%
2. Exxon Mobil Corp. 2.11
3. McGraw-Hill Co., Inc. 1.93
4. Target Corp. 1.85
5. SBC Communications, Inc. 1.71
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $18.98 $18.70
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.100 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Fund VCT Portfolio at net asset value, compared to that of the Standard &
Poor's (S&P) 500 Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer S&P
Fund 500
VCT Portfolio Index
10/97 10000 10000
10543 10643
12/98 13296 13686
15411 16565
12/00 15600 15060
13908 13275
12/02 11261 10342
13936 13306
6/04 14220 13764
The S&P 500 Index is an unmanaged measure of 500 widely held common stocks
listed on the New York Stock Exchange, American Stock Exchange and the
over-the-counter market. Index returns assume reinvestment of dividends and,
unlike Portfolio returns, do not reflect any fees, expenses or sales charges.
Portfolio returns are based on net asset value and do not reflect any
annuity-related costs. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ----------------------------------------------------
Net Asset Value
- ----------------------------------------------------
Life-of-Class 5.42%
(10/31/97)
5 Years -0.70%
1 Year 17.84%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
18
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In the following discussion, portfolio manager John Carey, reviews the
investment environment and the performance of Pioneer Fund VCT Portfolio over
the six months ended June 30, 2004.
Q: How did the Portfolio perform over the first six months of 2004?
A: Pioneer Fund VCT Portfolio recorded a positive total return of 2.04% at net
asset value in the six months ended June 30, 2004. The Standard & Poor's 500
Index showed a total return of 3.44% over the same period. Investors appeared
to be "rotating" out of more highly priced stocks and into shares more
moderately priced, with dividends and steadier earnings outlooks.
Q: Please discuss the Portfolio's performance versus the S&P 500 Index.
A: Our underperformance versus the S&P was attributable mainly to our stock
holdings in four sectors: information technology, materials, industrials and
telecommunications services. Our strongest positive contributors were our
investments in consumer discretionary, consumer staples and health care.
Taking first the negative contributors, our technology holdings showed an
overall decline of 1.59% versus the S&P sector gain of 0.44%. The main
culprits were our positions in Texas Instruments, Novellus Systems, Synopsys
and Nokia. After analyzing the different situations, we retained shares in
Texas Instruments and Nokia, but liquidated our positions in Novellus and
Synopsys. With regard to materials, where again we showed a negative return
(3.80%) versus a slight positive return (0.71%) for the S&P sector, the
largest factor was our position in Rio Tinto. In the case of the materials,
we believe that the fundamentals are strong for the group looking out at
least over the next couple of years and that it was mainly "profit taking"
behind the weak share prices. Perhaps, too, there was some concern about a
potential slow-down in the Chinese economy, which has been a prime user of
many raw materials as that country rapidly industrializes. Following our
evaluation of the "pros and cons," we retained Rio Tinto, a prominent
worldwide mining company, as well as our shares of other companies in the
sector.
Industrials presented a mixed picture, with our investments rising 5.13%
versus an increase for the sector of 7.42%. We had very good performance from
our railroad holding Norfolk Southern, but our capital-goods stocks were more
sluggish. Finally, in telecomm services, we did not own AT&T Wireless, which
received a premium take-over bid, but instead owned BellSouth and SBC
Communications, the companies in the joint venture, Cingular, that made the
bid. BellSouth and SBC both declined as investors worried that they
"overpaid."
On the bright side, we had some nice gains from stocks in consumer
discretionary, consumer staples and health care. They were, respectively,
John Wiley & Sons, publisher of scientific and technical books and journals
and also owner of the "For Dummies" imprint; Colgate-Palmolive, major brand
in toothpaste; and Becton Dickinson, provider of medical supplies including
disposable syringes.
Q: What changes have you have made to the Portfolio so far this year?
A: We were fairly active during the six months, adding 18 positions and
eliminating 18. The combined effect of securities transactions and market
fluctuations produced overall increases for our weightings in the energy,
consumer discretionary, consumer staples, health care and financials sectors;
overall decreases for our weightings in industrials and information
technology; and no meaningful change for our weightings in materials,
telecommunications services and utilities. In energy, we initiated positions
in Apache, British Petroleum, Pioneer Natural Resources and Occidental
Petroleum and sold positions in Transocean, Royal Dutch Petroleum, and Shell
Transport & Trading. We believed that Transocean was fairly valued, and in
the cases of Royal Dutch and the allied Shell Transport we had developed
reservations about management in the wake of significant downward revisions
in oil and gas reserves estimates. On the other hand, we thought that
prospects were positive for the companies we added and that the larger number
of holdings would provide the portfolio with more diversification.
In consumer discretionary we invested in three companies we thought were
poised to do better with the stronger economy, Ford Motor, Liz Claiborne, and
Walt Disney, and sold two stocks that had been longer-term disappointments,
Dow Jones and Eastman Kodak. We also added Clorox, formulator of bleaches and
other household cleansers, and Estee Lauder, cosmetics manufacturer, in
consumer staples. Our health care additions were among our most significant
and included equipment makers Guidant and St. Jude Medical, distributor
Cardinal Health, and generic-drug companies Barr Pharmaceuticals and Mylan
Laboratories.
One of our purchases in financials proved to be particularly well timed, as
SouthTrust, a regional bank headquartered in Birmingham, Alabama, received a
generous acquisition offer from another bank, Wachovia, not long after we had
bought it. Another entry we made to the portfolio was U.S. Bancorp, based in
Minneapolis, Minnesota. In other sectors, we bought, in materials, Ecolab,
supplier of industrial and institutional cleaning chemicals, and, in
information technology, Apple Computer, survivor, against all odds, in the
personal-computer business as well as innovative producer of the very hot
iPod digital-music player.
Along with the seven names already mentioned in energy and consumer
discretionary and (above) in information technology, we deleted the
following: Boeing, Lockheed Martin, Robert Half, Union Pacific, Medco Health
Solutions, Bank of America, Electronics Data Systems, BMC Software, Cisco
Systems, QUALCOMM and Altera.
Q: What is your outlook on the stock market and economy for the remainder of
2004?
A: At the midpoint of 2004, the market appears in disarray. Truth be told,
interest rates have not really moved very much at all, but there appears
great anxiety about greater moves to come. Inflation is not a current
problem, yet the high oil and raw-materials prices, as well as the prospect
of rising wages with growth in employment, provide the worriers a reason to
focus on the risk of inflation. Corporate earnings are generally very strong
and also strongly up from last year, but the expressed concern is with
respect to slowing of the impressive comparisons.
The market to us remains attractive, even if more moderately attractive than
it was in early 2003 when prices were much lower and the economy was still
just poised for its rebound rather than underway with the rebound as it is
currently. We see especially good values, however, among the good companies
with good long-term records in which we like to invest on your behalf and
which were relatively neglected by investors up until recently.
Betting which way the market might go on a short-term basis has never seemed
to us like a particularly fruitful endeavor. So our intention is, as always,
to stay invested over the coming months, and years, and to stay invested in
the solid kinds of companies we always aim to own in your Portfolio. Thank
you for your support.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
19
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Common Stocks 94.2%
Temporary Cash Investment 4.4%
Convertible Preferred Stocks 1.3%
Convertible Corporate Bonds 0.1%
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF PIE CHART]
Financials 22.4%
Utilities 16.1%
Energy 12.0%
Consumer Discretionary 10.9%
Industrials 9.3%
Health Care 7.5%
Consumer Staples 7.1%
Telecommunication Services 6.9%
Materials 5.3%
Information Technology 2.5%
Five Largest Holdings
(As a percentage of equity holdings)
1. ChevronTexaco Corp. 4.15%
2. ConocoPhillips 3.93
3. PACCAR, Inc. 3.78
4. Exxon Mobil Corp. 3.21
5. Charter One Financial, Inc. 3.07
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $18.62 $18.09
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.180 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Equity Income VCT Portfolio at net asset value, compared to that of the Russell
1000 Value Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer Russell
Equity 1000
Income Value
VCT Portfolio Index
3/95 10000 10000
12025 12632
12/96 13852 15366
18732 20773
12/98 22816 24021
23092 25787
12/00 26522 27597
24673 26054
12/02 20770 22010
25466 28620
6/04 26470 29745
Index comparison begins 2/28/95. The Russell 1000 Value Index measures the
performance of those Russell 1000 companies with lower price-to-book ratios and
lower forecasted growth values. Index returns assume reinvestment of dividends
and, unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. Portfolio returns are based on net asset value and do not reflect any
annuity-related costs. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ----------------------------------------------------
Net Asset Value
- ----------------------------------------------------
Life-of-Class 11.31%
(3/1/95)
5 Years 1.54%
1 Year 17.83%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
20
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In the following discussion, portfolio manager John Carey reviews the
performance of Pioneer Equity Income VCT Portfolio over the six months ended
June 30, 2004.
Q: How did the portfolio fare over the past six months?
A: Stock prices generally showed gains during the period. The Russell 1000
Value Index rose by 3.94%, and Pioneer Equity Income VCT Portfolio rose by
exactly the same amount, 3.94% at net asset value. After the market of
2003, when the prices of many highly cyclical stocks moved dramatically,
the first six months of 2004 saw investors return to steadier companies.
Information technology, which had been the strongest performing sector in
2003 with the sharp recovery of many deeply depressed stocks, was one of
the weakest areas of the market through June of this year. On the other
hand, consumer staples, energy, and industrials all performed above the
benchmark average as investors looked more favorably on companies with
substantial earnings and also dividends.
While financials actually underperformed the benchmark Russell 1000 Value
Index, our Portfolio experienced the largest contribution to total return
from our investments there. Two of our holdings, Charter One Financial and
South Trust, received take-over bids from other banks at substantial premiums
to their current share prices (and also to our average cost on the shares),
producing sharp gains in the market value of those positions. We also did not
own any shares of the lackluster performer Citigroup, a major component of
the Russell index.
Offsetting results came from our weightings and stock selection in
telecommunications services and utilities. In telecomm, our AT&T stock
declined as investors worried about mounting price competition amid slower
growth. Further affecting our relative performance in that sector was our
lack of ownership of AT&T Wireless, the cellular provider operating
independently of its former parent since late 2001. That company received an
acquisition offer from Cingular, a joint venture between two companies that
we did own, BellSouth and SBC Communications. The stocks of those companies
fell on concerns about the acquisition price, while stock in AT&T Wireless
rose in recognition of the premium price to be paid.
With regard to our holdings in the utilities sector, we have continued to
favor the strong utilities with well-supported and consistent dividend-paying
records. It so happened that some of the best-performing utility stocks
during the period were the so-called turnaround stories, some of which had
even sharply reduced or eliminated their dividends. We shall stick with our
long-term strategy and emphasis on financial strength and business stability.
Q: What changes did you make to the Portfolio in the first half of the period?
A: Overall we added seven positions and liquidated nine. With the high oil
prices and positive outlook for energy, we thought it reasonable to enlarge
our exposure somewhat in that sector and added Occidental Petroleum. A
specialist in coatings and other chemical products, Valspar shows good
earnings potential as the economy improves. J. C. Penney has re-focused on
its department stores after negotiating the sale of its sagging drugstore
operation, and the results show it. Clorox, is benefiting from better
management. Ameren and Equitable Resources were two additions in utilities,
and U. S. Bancorp is a strong regional bank headquartered in Minneapolis.
Little bespeaks quality and reliability better than a long dividend-paying
record, and here is how our new holdings compare in that regard: Occidental
Petroleum, payments every year since 1975; Valspar, each year since 1964;
J. C. Penney, continuous payments starting in 1922; Clorox, without
interruption since 1968; Ameren and Equitable Resources, since 1906 and
1950, respectively; and U. S. Bancorp, through its predecessor companies,
an unbroken record going back all the way to the year of the Battle of
Gettysburg, 1863.
The list of names leaving the Portfolio in the period included Deere,
Illinois Tool Works, Norfolk Southern, Tribune, Biomet, Bank of America,
Merrill Lynch, Equity Office Properties, and Electronic Data Systems.
Q: What is your outlook on the stock market and the economy for the remainder
of 2004?
A: At the midpoint of 2004, the market appears in disarray. Truth be told,
interest rates have not really moved very much at all, but there appears
great anxiety about greater moves to come. Inflation is not a current
problem, yet the high oil prices provide the worriers a reason to focus on
the risk of inflation. Corporate earnings are generally very strong and
also strongly up from last year, but the expressed concern is with respect
to slowing of the wonderful comparisons. And so it goes as well when it
comes to discussion of international events and corporate-governance issues
and much else: the glass is half empty, not half full, as the common
expression goes. From our point of view, the market remains quite
attractive, and especially the good companies with good records. Betting
which way the market might go on a short-term basis has never seemed to us
like a particularly fruitful endeavor. So our intention is to stay invested
over the coming months, and to stay invested in the solid kinds of
companies we always aim to own. Thank you for your support.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
21
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Common Stocks 65.0%
U.S. Government Securities 21.6%
U.S. Corporate Bonds 13.0%
Asset Backed Securities 0.4%
Sector Distribution
(As a percentage of long-term holdings)
[TABULAR REPRESENTATION OF PIE CHART]
Government 20.9%
Consumer Staples 17.1%
Financials 12.2%
Information Technology 11.8%
Consumer Discretionary 10.3%
Health Care 9.3%
Industrials 7.3%
Energy 6.0%
Materials 3.5%
Telecommunication Services 1.1%
Utilities 0.5%
Five Largest Holdings
(As a percentage of equity holdings)
1. Berkshire Hathaway, Inc.
(Class B) 3.50%
2. First Data Corp. 3.35
3. Microsoft Corp. 3.29
4. Pfizer, Inc. 3.21
5. Northrop Grumman Corp. 3.21
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $14.18 $14.04
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.130 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Balanced VCT Portfolio at net asset value, compared to that of the Standard &
Poor's (S&P) 500 Index and the Lehman Brothers Aggregate Bond Index. Portfolio
returns are based on net asset value and do not reflect any applicable
insurance fees or surrender charges.
Lehman
Pioneer S&P Aggregate
Balanced 500 Bond
VCT Portfolio Index Index+
3/95 10000 10000 10000
11847 12533 11279
12/96 13536 15406 11686
15920 20543 12817
12/98 16341 26417 13929
16754 31974 13812
12/00 17668 29068 15418
17268 25623 16720
12/02 15496 19961 18435
18085 25684 19192
6/04 18434 26567 19221
+ Index comparison begins 2/28/95. The S&P 500 Index is an unmanaged measure of
500 widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and the over-the-counter market. The Lehman Brothers Aggregate
Bond Index is a widely recognized market value-weighted measure of government
and corporate securities, agency mortgage pass-through securities,
asset-backed securities and commercial mortgage-based securities. Index
returns assume reinvestment of dividends and, unlike Portfolio returns, do
not reflect any fees, expenses or sales charges. Portfolio returns are based
on net asset value and do not reflect any annuity-related costs. You cannot
invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- -------------------------------------------------------
Net Asset Value
- -------------------------------------------------------
Life-of-Class 6.99%
(3/1/95)
5 Years 1.87%
1 Year 9.04%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
22
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
In the following interview, Timothy Mulrenan, who is responsible for the equity
portfolio of Pioneer Balanced VCT Portfolio, and Richard Schlanger, who is
responsible for the Portfolio's fixed income investments, discuss the markets
and their investment strategies during the six months ended June 30, 2004.
Q: How did the Portfolio perform during the first six months of 2004?
A: Pioneer Balanced VCT Portfolio had a total return of 1.93% at net asset value
during the six months ended June 30, 2004. The Portfolio's benchmarks, the
S&P 500 and the Lehman Brothers Aggregate Bond Index returned 3.44% and
0.15%, respectively.
Q: What were the factors that affected performance?
A: The domestic equity market produced generally positive returns for the six
months, but those returns masked the underlying volatility and tensions
between conflicting influences. Supporting equity valuations were an
expanding economy and robust corporate profits. The competing negative
factors included the spike in market interest rates midway through the six
months, as well as uncertainty brought on by concerns over issues such as
energy prices, stability in Iraq and presidential election-year politics.
In the fixed income markets, interest rates rose, with shorter-maturity rates
rising more than longer-term rates. The price losses brought on by higher
rates as well as the flattening of the yield curve -- or difference between
short-term and long-term yields -- resulted in volatility in the bond market.
The key factor was the widely anticipated announcement by the Federal Reserve
Board on the final day of the period to begin tightening monetary policy by
starting to raise the influential overnight lending rate -- the Fed Funds
rate. The initial hike was from 1.00% to 1.25%, but the expectation was that
the Fed would raise rates further in the months to come in an effort to guard
against inflationary pressures.
Q: What were your principal strategies during the period?
A: On June 30, about 64% of assets were invested in stocks -- about the same
percentage as at the start of the period. The remaining assets were invested
in fixed income assets, including corporate bonds, government securities, and
mortgage-backed securities, with a small allocation in foreign bonds and less
than 2% in cash.
We trimmed our energy position to take profits and to reduce our
vulnerability to the area during a time when we expected increased price
volatility. We remained overweighted in energy stocks, however, and are
positive about the sector's longer-term fundamentals. We modestly increased
the Fund's health care holdings, adding medical device company Guidant and
pharmaceutical company Eli Lilly. We thought Guidant's stock price had become
compellingly attractive after it fell because of an announcement about a
delay in a new product introduction. We like Eli Lilly because it has
well-developed research and development activities that should produce a flow
of new products. In addition, we initiated a position in Liz Claiborne, the
apparel company. We think it is attractive because of its strong distribution
during a time when the industry is beginning to gain greater control over
pricing.
We substantially reduced our holdings in two stocks that had performed very
well -- software company Symantec and auto insurance company Progressive. We
also eliminated our position in Devon Energy, an exploration and production
company, because of our concerns about its internal cost structure. In the
fixed income allocation, we raised overall quality, with average credit
quality moving from A+ to AA-. Interest-rate sensitivity -- as measured by
duration -- was about even with that of the benchmark Lehman Brothers
Aggregate Bond Index, although it declined slightly during the six months to
about 4.3 years.
We increased our exposure to mortgage-backed securities from 40.3% of fixed
income assets to 48.0%. Mortgages tend to be less vulnerable to declining
prices than Treasuries and other government securities in a rising
interest-rate environment. We reduced our exposure to corporates, taking
profits when their yield advantage over Treasuries began to narrow. At the
end of the period, 26.3% of the fixed income portfolio was invested in
industrial and utility bonds, compared to 31.4% at the start of the period.
At the same time, we also reduced our banking and financial services bond
holdings from over Treasuries than existing issues available on the secondary
market. When we invested in Treasury bonds, we tended to hold TIPS, or
inflation-protected Treasuries, although we sold them near the end of the
period when the Federal Reserve made it clear it intended to control
inflationary pressures.
Q: What types of investments had the greatest influence on performance?
A: Among our equity investments, our emphasis on consumer staples companies
helped considerably as stock investors began to recognize the value of
higher-quality, stable growth companies that had been overlooked in the rally
of 2003. Holdings such as Gillette, PepsiCo and Wrigley performed very well.
Our technology positions also contributed to performance, led by Symantec,
whose share price went up 27% during the six months. Detracting from
performance, however, was security selection in the consumer discretionary
sector. Family Dollar Stores had disappointing earnings, which may have been
related to higher gasoline prices and the adverse effect on their largely
lower-income customers, but we still favored the company and continued to
hold it at the end of the period. Newmont Mining, which had been a strong
contributor to Fund performance prior to the period, fell 20% during the
period in response to slumping gold prices. However, we still believe the
company is attractive and continue to hold a position in it.
In the fixed income portfolio, our overweight position in mortgages helped
substantially, as did our exposure to corporate bonds -- both high yield and
investment-grade. Performance was held back, however, by our concentration in
intermediate-term securities, as short- and intermediate-term interest rates
rose more than the rates on long-term bonds during the six months
Q: What is your investment outlook?
A: We believe the June 30 announcement by the U.S. Federal Reserve that it was
starting to raise short-term rates is the start of a long process of
interest-rate hikes that is likely to continue at least through the end of
2005. We anticipate moving to a barbell strategy over time with respect to
maturity allocations, concentrating on both short-term securities and
long-term bonds while de-emphasizing intermediate-term bonds that we think
are most vulnerable in the present environment.
We believe the equity market will continue to be choppy, with no major trends
either up or down in stock price averages. The outlooks for gross domestic
product (GDP) and for corporate earnings both are favorable, although the
rate of corporate profit growth may slow somewhat. The big question that will
be on investors' minds will be what happens to interest rates. In addition,
uncertainty about geopolitical events and the outcome of the presidential
election will influence investor psychology. We think the most likely
scenario is that the major stock averages will show moderate growth over the
next several months.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
23
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment in securities)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Corporate Bonds 57.7%
Convertible Corporate Bonds 35.4%
Temporary Cash Investment 4.1%
Convertible Preferred Stocks 2.8%
Maturity Distribution
(As a percentage of total investment in securities)
[TABULAR REPRESENTATION OF PIE CHART]
0-1 years 2.5%
1-3 years 16.6%
3-4 years 18.6%
4-6 years 44.9%
6-8 years 10.4%
8+ years 7.0%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Bowater, Inc., 6.5%, 6/15/13 3.71%
2. CMS Energy Corp., 7.75%,
8/1/10 2.97
3. Freeport-Mc Corp., 5.5%
(144A) 2.87
4. Forest City Enterprises,
7.625%, 6/1/15 2.83
5. Meristar Hospitality Corp.,
9.125%, 1/15/11 2.69
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $11.12 $11.45
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.3137 $ - $ 0.047
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch
(ML) High Yield Master II Index and of the ML Index of Convertible Bonds
(Speculative Quality). Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
ML
Pioneer ML Convertible
High High Bonds
Yield Yield Speculative
VCT Portfolio Master II+ Quality
5/00 10000 10000 10000
12/00 10623 9770 8424
12387 10207 7882
12/02 12211 10013 7744
16215 12830 10529
6/04 16254 13006 11090
+ Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a
broad-based measure of the performance of the non-investment grade U.S.
domestic bond market. The ML Index of Convertible Bonds (Speculative Quality)
is a market-capitalization weighted index including mandatory and
non-mandatory domestic corporate convertible securities. Index returns assume
reinvestment of dividends and, unlike Portfolio returns, do not reflect any
fees, expenses or sales charges. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- -------------------------------------------------------------
Net Asset Value
- -------------------------------------------------------------
Life-of-Class 11.82%
(5/1/00)
1 Year 9.80%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
24
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
High-yield bonds offered slightly positive returns during the first half of
2004. In the following report, portfolio manager Margaret Patel describes the
market backdrop and why the Portfolio slightly underperformed its benchmark
index.
Q: How did the Portfolio perform?
A: During the six months ended June 30, 2004, the Portfolio's Class I shares
had a total return based on net asset value of 0.25%. By comparison, the
Merrill Lynch High Yield Master II Index returned 1.36%. The 30-day SEC
yield on June 30, 2004, was 3.88%.
Q: What was the environment like for the high-yield market during the first six
months of 2004?
A: Rising interest rates significantly dampened returns for all segments of the
fixed-income market. Signs of a strengthening economy and the increased
possibility of sustained inflationary pressures caused market yields to
rise in anticipation of an increase in short-term interest rates by the
Federal Reserve Board. That hike came to pass on the last day of the
period. Bond prices move in the opposite direction of interest rates and
within such an environment Treasury bonds suffered the worst relative price
declines. Steady economic growth helped high-yield bonds perform better
than Treasuries, but high-yield bonds still suffered price declines due to
rising market yields. Lower-quality securities outperformed higher-quality
issues during the period, as investors became more comfortable taking on
riskier investments within a strengthening economy.
Q: Why did the Portfolio's performance slightly lag that of the Merrill Lynch
High Yield Master II Index?
A. The Portfolio had a higher overall credit quality than the index during a
period when lower-rated bonds led the market. We favored higher-quality
securities because we felt that they offered better value and risk
profiles. We also increased the Portfolio's economic sensitivity during the
period, including adding investments in the basic materials sector.
Companies in this sector had performed well due to torrid demand from
China. However, during the period the Chinese government took steps to slow
economic growth to reduce inflationary pressures from building. Investors,
in turn, became concerned that the moves would soften demand for basic
materials, and so these investments suffered. Finally, the Portfolio's
allocation to convertible securities -- about 40% at the end of the period
-- also dampened performance somewhat. Convertibles underperformed generic
high-yield bonds because of declines in the underlying stock prices,
particularly in two of our areas of focus -- basic materials and
technology.
Q: Which investments proved to be some of the top performers during the fiscal
year? Which disappointed?
A: Two energy holdings, Tom Brown and Nuevo Energy, offered significant price
appreciation when they were each acquired by investment-grade companies.
Convertible bonds issued by Kaydon -- which manufactures ball bearings,
hydraulic gear and filters for the aerospace, electronics and heavy
construction industries -- rose in concert with the underlying stock price
due to an improving business outlook. Real estate firm LNR Properties
continued to perform well despite the risk that higher interest rates might
hurt its business. On the down side, three commodity-based companies --
Freeport Mac MoRan, Coeur d'Alene Mining and Graftech, underperformed
because of fears that slower growth in the U.S. and China would reduce
demand for basic materials.
Q: What is your outlook?
A: The Fed's rate hike at the end of the period was widely expected, and the
Board indicated its willingness to implement any further rate increases in
a slow, measured manner. The U.S. economy remains relatively healthy, so we
believe that the overall outlook for corporate earnings should be positive.
It is possible that Treasury yields could continue to rise during the rest
of 2004, but we feel that the extent of any such increases should be
relatively muted. Within such an environment, high-yield bonds could
continue to attract investors who are more comfortable taking on more risk
within a healthy economy and who are looking for more attractive yields
than either those offered in the Treasury or other lower-yielding segments
of the fixed-income markets.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Portfolio invests in below investment-grade securities, which may be more
volatile and subject to greater price fluctuations than investment-grade
securities.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
25
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Corporate Bonds 55.6%
U.S. Government Securities 21.4%
Foreign Government Bonds 12.8%
Convertible Corporate Bonds 3.1%
Asset Backed Securities 2.7%
Temporary Cash Investment 1.9%
Municipal Bonds 1.2%
Sovereign Issue 0.8%
Supranational Bonds 0.5%
Maturity Distribution
(As a percentage of total investment portfolio)
TABULAR REPRESENTATION OF PIE CHART]
0-1 years 4.7%
1-3 years 23.2%
3-4 years 20.9%
4-6 years 31.0%
6-8 years 14.6%
8+ years 5.6%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Norwegian Government,
6.75%, 1/15/07 1.78%
2. Government of France,
3.0%, 7/25/09 1.62
3. Government National
Mortgage Association II,
6.0%, 11/20/33 1.53
4. Federal Home Loan Mortgage
Corp., 6.0%, 6/1/17 1.45
5. Swedish Government,
5.5%, 10/8/12 1.40
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $10.56 $11.01
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.3241 $ - $ 0.1616
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Strategic Income VCT Portfolio at net asset value, compared to that of the
Lehman Brothers U.S. Universal Index. Portfolio returns are based on net asset
value and do not reflect any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer Lehman
Strategic U.S.
Income Universal
VCT Portfolio Index+
7/99 10000 10000
10070 10136
12/00 10525 11234
11251 12144
12/02 12458 13338
15104 14117
6/04 15152 14140
+ Index comparison begins July 31, 1999. The Lehman Brothers U.S. Universal
Index is the union of the U.S. Aggregate Index, the U.S. High Yield Corporate
Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, the
non-ERISA portion of the CMBS Index and the CMBS High Yield Index. Municipal
debt, private placements and non-dollar-denominated issues are excluded from
the Index. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Portfolio returns, do not reflect any fees, expenses or
sales charges. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- -----------------------------------------------------
Net Asset Value
- -----------------------------------------------------
Life-of-Class 8.79%
(7/29/99)
1 Year 6.51%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
26
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
Domestic high-yield corporate bonds and mortgage-backed securities provided the
best relative returns during the first six months of 2004, a period marked by
rapid rises in interest rates as evidence of a strengthening economy became
more pervasive. Higher-rated bonds tended to lose value as market interest
rates rose. In international trading, the U.S. dollar strengthened, limiting
the returns from foreign investment-grade bonds while the prices of emerging
market debt declined after strong gains earlier. The following is an interview
with Kenneth J. Taubes, who discusses the factors that influenced the
Portfolio's performance during the six-month period. Mr. Taubes, head of
Pioneer's Fixed Income Group, oversees the team responsible for daily
management of the Portfolio.
Q: How did the Portfolio perform during the six months ended June 30, 2004?
A: The Portfolio performed reasonably well in a challenging environment. During
the six-month period, the Portfolio's Class I shares had a total return of
0.32%, while the Lehman U.S. Universal Bond Index returned 0.17%. The 30-day
Standardized SEC Yield for the Portfolio's Class I Shares on June 30, 2004,
was 6.13%.
Q: What were the factors that affected performance?
A: The Portfolio's ability to diversify across several different fixed-income
classes worked to its advantage during a period in which rising interest
rates tended to undermine the values of higher-quality domestic bonds and a
strengthening dollar tended to hurt the values of investments in
foreign-denominated securities. The Portfolio's positive performance and
slight edge over the U.S. Universal Bond Index came despite exposure to two
poorly performing areas that are not significantly represented in the index:
foreign investment-grade securities and emerging markets.
Throughout the six months, our emphasis on the domestic high-yield corporate
bonds helped performance substantially, as this was the best-performing part
of the bond market. High-yield bonds, as represented by the Merrill Lynch
High Yield Master II Index, returned 1.36% during the period, while most
higher quality domestic fixed-income classes had negative returns. In our
domestic investment-grade positions, we also focused on the best-performing
area, mortgage-backed securities, which benefited from the lessening of fears
of prepayments and diminishing interest-rate volatility. We de-emphasized
Treasuries, the area most vulnerable to rising interest rates, and the
Treasury securities we did own tended to be inflation-protected securities
that outperformed standard Treasuries. While emerging markets were down more
than 6% during the six months, we focused our holdings on corporate issuers
whose longer-term prospects remained good.
Although we reduced its position, the Portfolio remained overweighted in
non-dollar currencies during the period, and this held back performance as
the U.S. dollar strengthened. In particular, our investments in the
currencies of growth-oriented economies such as Australia and Canada did
poorly, as these currencies weakened even more than the euro and other
currencies tied to economies with less growth.
At the end of the six months, 37% of assets were invested in high-yield
corporates, the largest emphasis of any asset class. Mortgage-backed
securities accounted for 21% of assets, while emerging market debt
represented about 16% of Portfolio assets and international investment-grade
bonds accounted for another 16%. Investment-grade corporate bonds represented
just 9% of Portfolio assets, and the Treasury position at the end of the six
months was less than 1%.
Average credit quality on June 30 was BBB-.
Q: What changes did you make in the Portfolio during the six months?
A: We continued our emphasis on domestic high-yield corporate bonds. We expect
the economy to continue to expand, helping strengthen the financial health of
high-yield issuers, many of which are starting to enjoy greater pricing power
over their products. Also, high-yield bonds can remain less sensitive to the
negative price impacts of rising interest rates because of their yield
advantage over higher quality securities.
In spite of the strength of the U.S. dollar during the period, we thought the
long-term trend of the dollar continued to be one of weakening versus other
currencies. As a result, we maintained investments in growth-oriented
countries such as Australia, Canada, Sweden and Norway.
Q: What types of individual investments had the greatest influence on
performance?
A: Several high-yield holdings helped substantially. The bonds of Metro PCS, a
wireless telecommunications provider in several metropolitan areas, including
in Georgia and California, rose substantially in price on the news that the
company intended to proceed with an initial public stock offering. Bonds
issued by Corning, which restructured its business to focus on the production
of the material used for flat-screen television, did very well, as did
securities of several hotel companies, whose earnings increased as the
economy improved and business travel improved. Among the better-performers in
the Portfolio were bonds issued by the Hilton, Starwood and John Q. Hammond
hotel chains.
While emerging market debt tended to detract from performance, the bonds of
Brazilian brewer AMBEV gained after the announcement of plans for its
acquisition by the European firm Interbrew.
Disappointments included the bonds of Primus Telecommunications, a
multi-national telecommunications service provider based in the United
States. While its earnings were positive, the bonds fell because of investor
skepticism about the sector. The bonds of Brazilian steel company CSN also
detracted from performance in the general decline in emerging markets,
despite strong company fundamentals.
Q: What is your outlook for the bond market?
A: With an outlook for continuing economic expansion, we expect that short-term
interest rates are likely to rise further in the coming months. The Federal
Reserve began to raise the Fed Funds Rate, the most influential short-term
rate, on June 30. The Fed has signaled it plans to raise rates gradually, but
to continue to be accommodative and encourage growth, a policy likely to keep
interest rates low by historical standards. Market rates on longer-term
bonds, which rose in the months leading up to the June 30 announcement,
probably are priced appropriately for current conditions, but pressure should
continue for the rates of shorter-term and intermediate-term bonds to rise.
The financial health of domestic corporations should continue to improve.
More companies report they have gained additional pricing power, which should
help them strengthen their balance sheets. At the same time, the weaker
dollar has improved the competitiveness of many industries in world markets.
In our domestic portfolio, we expect to continue to focus on high-yield
corporate bonds and mortgage-backed securities and position the Portfolio to
mute the impact of rising interest rates of short- and intermediate-term
securities with a relatively short duration.
While foreign currencies fell during the most recent six months, we believe
the U.S. dollar may weaken in the coming months, particularly if the Federal
Reserve maintains its commitment to an accommodative monetary policy. We have
emphasized the Australian and Canadian currencies and also hold investments
in growth-oriented European economies, such as Sweden and Norway. After
several years of avoiding the yen, we also have initiated a small position in
the Japanese currency to benefit from expanding global growth.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
International investing may involve special risks, including differences in
accounting and currency as well as economic and political instability.
27
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Government & Agency Obligations 90.7%
Temporary Cash Investment 6.9%
Collateralized Mortgage Obligations 1.8%
U.S. Corporate Bonds 0.6%
Maturity Distribution
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
0-1 years 3.8%
1-3 years 42.4%
3-4 years 26.4%
4-6 years 18.3%
6-8 years 0.5%
8+ years 8.6%
Five Largest Holdings
(As a percentage of equity holdings)
1. U.S. Treasury Notes, 6.5%,
2/15/10 13.05%
2. U.S. Treasury Notes,
6.25%, 8/15/23 5.05
3. Federal Home Loan Mortgage
Corp., 6.0%, 3/1/33 3.47
4. U.S. Treasury Notes,
6.375%, 8/15/27 2.57
5. Federal Home Loan Mortgage
Corp., 6.0%, 5/1/34 2.52
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $10.03 $10.35
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.3374 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
America Income VCT Portfolio at net asset value, compared to that of the Lehman
Brothers Fixed-Rate Mortgage-Backed Securities Index and of Lehman Brothers
Government Bond Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer Lehman Lehman
America Government Fixed Rate
Income Bond Mortgage
VCT Portfolio Index+ Index+
3/95 10000 10000 10000
10574 11302 11098
12/96 10712 11615 11693
11616 12727 12802
12/98 12563 13981 13694
12246 13667 13947
12/00 13686 15477 15505
14573 16598 16779
12/02 16076 18506 18246
16368 18943 18802
6/04 16393 18920 18948
+ Index comparisons begin 2/28/95. The Lehman Brothers Fixed-Rate
Mortgage-Backed Securities Index is an unmanaged index including 15- and
30-year fixed rate securities backed by pools of the Government National
Mortgage Association, Federal Home Loan Mortgage Corporation and Federal
National Mortgage Association. The Lehman Brothers Government Bond Index is
an unmanaged performance measure of U.S. Treasury debt, all publicly issued
debt of U.S. government agencies and quasi-federal corporations of corporate
debt guaranteed by the U.S. government. Index returns are calculated monthly,
assume reinvestment of dividends and, unlike Portfolio returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in
any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ----------------------------------------------------
Net Asset Value
- ----------------------------------------------------
Life-of-Class 5.43%
(3/1/95)
5 Years 6.02%
1 Year 0.07%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
28
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In an improving economy, uncertainty about rising interest rates dominated
market sentiment. As a result, the yields on fixed-income securities declined
and then rose, as investors tried to determine when the Federal Reserve would
raise interest rates and by how much. In this volatile environment, Pioneer
America Income VCT Portfolio delivered a relatively high level of income to
shareholders. In the following interview, Richard Schlanger, a member of the
Pioneer fixed-income team, discusses the factors that affected the fixed-income
market and the Portfolio over the past six months.
Q: How did the Portfolio perform during the six-month period ended June 30,
2004?
A: For the six-month period ended June 30, 2004, Class I shares of Pioneer
America Income VCT Portfolio produced a total return of 0.15% at net asset
value. The Portfolio outperformed the Lehman Brothers Government Bond Index
which returned -0.13% for the same period. It underperformed the Lehman
Brothers Fixed-Rate Mortgage-Backed Index, which returned 0.77%. At the end
of the period, the 30-day SEC yield for Class A shares was 3.20%.
Q: What was the investment environment like during the period?
A: For the first three months of 2004, concerns about geopolitical issues and
the "jobless" economic recovery kept interest rates at 45-year lows. When we
moved into the second calendar quarter of 2004, however, the employment
picture changed dramatically. Several hundred thousand jobs were added to the
economy in April and May, leading to concerns about the pace of Federal
Reserve tightening, accelerating inflation and higher interest rates. In this
environment, market rates rose, causing the yield curve to flatten. (The
yield curve shows the relationship between bond yields and maturity lengths.)
Normally, the yield curve is positively sloped with yields on long-term bonds
exceeding those on short-term bonds. The yield curve flattens when yields on
short-term bonds rise more than those on long-term bonds. This was the case
during the period. As interest rates rose, bond yields went up and prices
declined.
Q: What investment strategies contributed to performance?
A: About 65% of net assets were diversified in mortgage-backed securities
issued by Government Sponsored Enterprises, such as the Government National
Mortgage Association (Ginnie Mae), the Federal Home Loan Mortgage
Corporation (Freddie Mac) and the Federal National Mortgage Association
(Fannie Mae). (Ginnie Mae securities are backed by the full faith and
credit of the government. A full faith and credit backing applies to
underlying Portfolio securities not to Portfolio shares.) Because mortgages
outperformed Treasury securities, the Portfolio's overweight in the sector
relative to the benchmark was the biggest aid to total return. In the
volatile interest-rate environment, we were concerned about the prepayment
risk that is associated with mortgage-backed securities. When interest
rates decline, homeowners often "prepay" their existing mortgages and
refinance their homes at a lower rate. Significant prepayment activity can
result in declining yields and share prices in portfolios with investments
in mortgages. To mitigate this risk, we selected mortgages with lower
weighted average coupon rates that we believe are less likely to be
prepaid.
Q: What investment strategies detracted from performance?
A: A little more than 31% of the Portfolio was invested in Treasury and agency
securities with predominently short- and intermediate-term maturities. As
yields on securities in these maturity ranges moved higher, their prices
declined. As a result, the Portfolio's exposure to bonds in the middle of
the yield curve held back results.
Q: What is your outlook over the next several months?
A: We believe the economy is on a sustained path for improvement and are
concerned that the seeds for higher inflation are being planted. The
Federal Reserve raised interest rates by 0.25% on June 30 and is likely to
continue doing so at a measured pace over the next two years. As interest
rates move higher, we will consider using a barbell strategy in managing
the Treasury portion of the Portfolio. This means we may sell some of our
intermediate-term holdings and add securities in the one-to-two-year range
and in the 20 plus-year range. With this approach, the Portfolio should
benefit from the higher yields that long-term bonds provide and from the
relative price stability of short-term securities. We will also seek
mortgage-backed securities that are selling at a discount and that can
provide the Portfolio with relatively high yields as well as the potential
for price appreciation.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
29
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO AND PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Short-term interest rates remained at 46-year lows during the first half of
2004, although the U.S. Federal Reserve Board finally signaled a shift in its
accommodative monetary policy on June 30 when it raised the key Fed Funds Rate
from 1.00% to 1.25%. Throughout the six months, Pioneer Money Market VCT
Portfolio maintained a $1 share price and provided modest current income
consistent with the low yields available in the money market. The Portfolio
invests exclusively in high-quality money market instruments issued by the U.S.
government and domestic corporations and banks. All issues have the highest
ratings from the two leading nationally recognized ratings organizations: A1 by
Standard & Poor's Investors Services and P1 by Moody's Investor Services.
(Ratings apply to underlying securities, not Fund shares.)
In the following discussion, Andrew D. Feltus reviews the investment
environment and the strategies that affected the Portfolio over the six months
ended June 30, 2004. Mr. Feltus is a member of Pioneer's Fixed Income Group,
which is responsible for the daily management of the Portfolio.
Q: How did the Portfolio perform during the first half of 2004?
A: For the six months ended June 30, 2004, Pioneer Money Market VCT Portfolio
had a total return of 0.25% at net asset value. On June 30, 2004, the
Portfolio's seven-day effective yield was 0.91%.
Q: What factors affected Portfolio performance?
A: Short-term interest rates remained at historically low levels over the past
six months. It was a period, however, in which evidence steadily
accumulated that the U.S. economy was recovering briskly. Growth Domestic
Product (GDP), for example, grew by an annual rate of 3.9% for the first
three months. The nation's industrial production increased by 5.6% since
June 30, 2004, and the economy added 1.4 million new jobs during the same
12 months.
Evidence of the economy's vibrancy became more persuasive during the six
months, especially after the Department of Labor released an unexpectedly
strong new-jobs report for March. Market interest rates began rising and
expectations grew that the Federal Reserve Board would finally shift from its
accommodative monetary policy and begin raising short-term interest rates.
The Fed confirmed those expectations on the final day of the six-month period
when it raised the influential Fed Funds Rate by one-quarter of one percent
and signaled that it was likely to raise the rate further in subsequent
months to head-off inflationary threats.
Q: Given this environment, what strategies did you pursue?
A: We held to our quality orientation in managing the Portfolio. While the
effective duration was 71 days on June 30, 2004, we expected to shorten
duration aggressively as the Federal Reserve began to raise rates. A
shorter-duration should give the Portfolio greater ability to invest in
new, higher-yielding securities as rates start to rise.
Q: What is your investment outlook?
A: We anticipate that while the Federal Reserve will continue to stimulate
continued economic growth, it is likely to raise short-term rates further
for the remainder of 2004 and at least the beginning of 2005. Given this
outlook, we expect to maintain a shorter duration to give us the
flexibility to capture additional yield as rates rise. However, we also
expect to take a more barbelled approach, with concentrations both in very
short, one-to-two month securities and in one-year maturities, where higher
yields are available. We also intend to consider opportunities to invest in
floating-rate notes, where we believe we can take advantage of higher
yields without assuming more risk.
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $1.00 $1.00
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.0025 $ - $ -
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- -------------------------------------------------------
Net Asset Value
- -------------------------------------------------------
Life-of-Class 3.59%
(3/1/95)
5 Years 2.68%
1 Year 0.46%
All total returns shown assume reinvestment of distributions at net asset
value.
* Portfolio performance does not reflect any variable contract fees, expenses
or sales charges. If they had been included, performance would have been
lower. See the pages that comprise the inside cover of this report for
performance net of any contract fees, expenses or sales charges.
Past performance does not guarantee future results. Returns and principal
values fluctuate so that your investment, when redeemed, may be worth more or
less than its original cost. The performance table does not reflect the
deduction of taxes that a shareowner would pay on distributions or the
redemption of shares.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
30
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCKS - 2.6%
Materials - 0.3%
Diversified Metals & Mining - 0.3%
259,000 Caemi Mineracao E Metalurgia SA* $ 99,034
-----------
Total Materials $ 99,034
-----------
Capital Goods - 0.1%
Industrial Conglomerates - 0.1%
1,855 GS Holdings Corp.* $ 16,639
3,445 LG Corp. 30,901
-----------
$ 47,540
-----------
Total Capital Goods $ 47,540
-----------
Banks - 0.7%
Diversified Banks - 0.7%
2,541,700 Banco Itau Holding Financeira $ 235,144
-----------
Total Banks $ 235,144
-----------
Telecommunication Services - 1.5%
Integrated Telecommunication Services - 0.7%
14,401 Tele Norte Leste Participacoes (A.D.R.) $ 183,325
-----------
Wireless Telecommunication Services - 0.8%
10,900 Telesp Celular Participacoes (A.D.R.)* $ 85,894
5,800 Telemig Celular Participacoes (A.D.R.) 171,100
-----------
$ 256,994
-----------
Total Telecommunication Services $ 440,319
-----------
TOTAL PREFERRED STOCKS
(Cost $663,334) $ 822,037
-----------
COMMON STOCKS - 92.5%
Energy - 10.3%
Integrated Oil & Gas - 6.2%
225,000 CNOOC, Ltd. $ 95,517
5,480 Lukoil Holding (A.D.R.) 574,030
30,900 Petrobras Brasileiro SA (A.D.R.) 778,680
13,500 Surgutneftegaz (A.D.R.) (b)* 442,125
15,644,450 Tupras-Turkiye Petrol Rafinerileri AS 102,718
-----------
$ 1,993,070
-----------
Oil & Gas Equipment And Services - 0.4%
3,000 Samchully Co., Ltd. $ 143,240
-----------
Oil & Gas Exploration & Production - 2.0%
183,600 China Petroleum & Chemical $ 67,671
6,100 Mol Magyar Olaj 243,471
179,000 Panva Gas Holdings, Ltd.* 77,535
67,000 PTT Public Co., Ltd. 252,428
-----------
$ 641,105
-----------
Shares Value
Oil & Gas Refining Marketing &
Transportation - 1.7%
983,500 Petron Corp. $ 53,590
7,400 Polski Koncern Nafto (G.D.R.) 116,980
7,500 S-OIL Corp.* 313,146
2,120 TelecomAsia Corp. Public Co., Ltd. 69,430
-----------
$ 553,146
-----------
Total Energy $ 3,330,561
-----------
Materials - 14.7%
Aluminum - 0.1%
12,000 Catcher Technology Co., Ltd. $ 38,556
-----------
Commodity Chemicals - 1.5%
3,869 Daelim Industrial Co. $ 121,643
11,300 Reliance Industries, Ltd. (144A)* 226,848
12,010,000 Ultrapar Participacoes SA 128,312
-----------
$ 476,803
-----------
Construction Materials - 1.1%
5,150 Asia Cement Co., Ltd. $ 115,063
29,013,250 Akcansa Cimento AS 58,636
40,422 Lafarge Malayan Cement* 8,679
14,400 Siam City Cement Co., Ltd. 74,686
12,000 Siam Cement Co., Ltd. 71,872
2,932 Suez Cement Co. (G.D.R.)* 24,042
-----------
$ 352,978
-----------
Diversified Chemicals - 0.7%
200 Israel Chemicals, Ltd. $ 386
2,600 LG Chemicals, Ltd. 88,515
258,360 Sinopac Holdings Co. 135,772
-----------
$ 224,673
-----------
Diversified Metals & Mining - 3.0%
11,400 Anglo American Plc $ 238,032
4,900 Antofagasta Plc 83,845
3,800 Companhia Vale do Rio Doce (A.D.R.) 148,580
3,900 Industrias Penoles SA 13,936
17,200 KGHM Polska Miedz SA* 131,684
4,100 Norilsk Nickel 226,013
127,000 Yanzhou Coal Mining (Class H) 139,864
-----------
$ 981,954
-----------
Gold - 0.4%
25,500 IAMGOLD Corp. (b) $ 142,290
-----------
Paper Products - 0.2%
2,370 Aracruz Cellulose SA (A.D.R.)* $ 77,404
-----------
The accompanying notes are an integral part of these financial statements. 31
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Precious Metals & Minerals - 4.5%
33,200 Anglo American Plc $ 694,786
1,750 Anglogold, Ltd. 55,955
8,600 Anglogold, Ltd. (A.D.R.)(b) 276,576
20,400 Compania de Minas Buenaventura SA 450,840
-----------
$ 1,478,157
-----------
Specialty Chemicals - 0.9%
85,501 Formosa Plastic Corp.* $ 121,327
135,055 Nan Ya Plastics Corp. 178,645
-----------
$ 299,972
-----------
Steel - 2.1%
231,106 China Steel Corp., Ltd. $ 219,413
7,700 Pohang Iron & Steel Co., Ltd. (A.D.R.)* 258,027
16,800 Remgro, Ltd. 205,595
-----------
$ 683,035
-----------
Total Materials $ 4,755,822
-----------
Capital Goods - 4.1%
Building Products - 0.8%
12,500 Daewoo Heavy Industries & Machinery, Ltd. $ 151,670
2,530 Hanil Cement Co., Ltd. 97,062
-----------
$ 248,732
-----------
Construction, Farm Machinery &
Heavy Trucks - 0.2%
17,700 Punjab Tractors, Ltd.* $ 78,632
-----------
Construction & Engineering - 1.2%
240,000 CTCI Corp. $ 119,451
2,386,626 Enka Insaat VE Sanayi AS 49,004
7,900 Kyeryong Construction Industrial Co., Ltd. 72,767
9,600 LG Construction, Ltd. 158,825
-----------
$ 400,047
-----------
Electrical Components & Equipment - 0.6%
14,900 Bharat Heavy Electricals (Demat Shares) $ 162,829
7,512 Crompton Greaves, Ltd.* 21,267
-----------
$ 184,096
-----------
Industrial Conglomerates - 0.4%
3,675 GS Holdings Corp.* $ 54,673
6,825 LG Corp. 101,535
-----------
$ 156,208
-----------
Metal Fabricators - 0.3%
5,470 Korea Zinc Co. $ 90,913
-----------
Industrial Machinery - 0.6%
187,000 Yungtay Engineering Co., Ltd. $ 99,949
12,200 Daewoo Heavy Industries &
Machinery, Ltd.* 82,391
-----------
$ 182,340
-----------
Total Capital Goods $ 1,340,968
-----------
Shares Value
Commercial Services & Supplies - 0.5%
Diversified Commercial Services - 0.5%
17,656 Bidvest Group, Ltd. $ 150,339
-----------
Total Commercial Services &
Supplies $ 150,339
-----------
Transportation - 1.3%
Air Freight & Couriers - 0.2%
153,400 Singapore Post, Ltd. $ 78,675
-----------
Airlines - 0.3%
6,600 Korean Air* $ 86,183
-----------
Marine - 0.6%
11,880 Hyundai Merchant Marine Co.* $ 89,610
19,800 Samsung Heavy Industries Co., Ltd. 89,244
-----------
$ 178,854
-----------
Railroads - 0.2%
23,000 Malaysia International Shipping $ 72,759
-----------
Total Transportation $ 416,471
-----------
Automobiles & Components - 4.0%
Auto Parts & Equipment - 1.0%
27,900 Dongyang Mechatronics Corp. $ 75,207
3,000 Hyundai Mobis 133,766
28,600 Jardine Cycle & Carriage, Ltd. 106,742
-----------
$ 315,715
-----------
Automobile Manufacturers - 3.0%
12,800 Edaran Otomobile Nasional $ 31,865
5,230 Hyundai Heavy Industries 125,045
5,900 Hyundai Motor Co., Ltd. 228,102
7,100 Kia Motors 60,968
42,818,482 Koc Holdings AS* 193,285
143,653 PT Astra International 84,365
106,100 Sime Darby 155,008
13,999 Tata Motors 115,901
-----------
$ 994,539
-----------
Total Automobiles & Components $ 1,310,254
-----------
Consumer Durables & Apparel - 1.0%
Footwear - 0.2%
346,700 Symphony Holdings, Ltd. $ 59,888
-----------
Homebuilding - 0.5%
563,500 Ayala Land, Inc. $ 58,368
67,000 Corporacion GEO, SA de CV* 88,361
-----------
$ 146,729
-----------
Leisure Products - 0.3%
104,200 Berjaya Sports Toto $ 104,254
-----------
Total Consumer Durables & Apparel $ 310,871
-----------
32 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Hotels, Restaurants & Leisure - 0.3%
Hotels, Resorts & Cruise Lines - 0.2%
9,200 Indian Hotels Co., Ltd. $ 70,251
-----------
Restaurants - 0.1%
63,700 Jollibee Foods Corp. $ 27,425
-----------
Total Hotels, Restaurants & Leisure $ 97,676
-----------
Media - 2.3%
Broadcasting & Cable TV - 1.1%
33,500 ABS-CBN Broadcasting Corp.* $ 13,499
107,000 BEC World Public Co., Ltd. 47,119
370,903 Media Prima* 152,240
289,300 United Broadcasting Corp., Plc* 140,138
-----------
$ 352,996
-----------
Movies & Entertainment - 0.9%
322,800 Grammy Entertainment Plc $ 120,828
57,700 Zee Telefilms, Ltd. 158,449
-----------
$ 279,277
-----------
Publishing - 0.3%
41,650 Singapore Press Holdings $ 100,952
-----------
Total Media $ 733,225
-----------
Retailing - 0.3%
Department Stores - 0.0%
7,300 Robinson Department Store Plc.* $ 704
-----------
General Merchandise Stores - 0.3%
20,400 Jaya Jusco Stores $ 59,148
1,300 LG Home Shopping 53,083
-----------
$ 112,231
-----------
Total Retailing $ 112,935
-----------
Food & Drug Retailing - 2.9%
Food Distributors - 0.7%
10,500 Compania Cervecerias Unidas SA $ 224,490
-----------
Food Retail - 2.2%
12,000 Brasil Distributor Pao Acu (A.D.R.) $ 207,600
3,780 CJ Corp. 205,247
5,700 Distribucion y Servicio D&A SA 86,640
256,700 Metro Cash & Carry, Ltd.* 100,037
8,827,000 Migros Turk T.A.S. 42,837
199,800 PT Indofood Sukses Makmur Tbk 14,936
5,000 Tiger Brands, Ltd. 73,882
-----------
$ 731,179
-----------
Total Food & Drug Retailing $ 955,669
-----------
Food, Beverage & Tobacco - 5.1%
Agricultural Products - 0.4%
25,000 Makhteshim-Agan Industries, Ltd. $ 116,485
-----------
Shares Value
Distillers & Vintners - 1.4%
3,575,700 Andalou efes Biracilik VE $ 41,675
12,500 Companhia de Bebidas PR (A.D.R.) 250,875
62,600 Grupo Modelo SA de CV 157,488
-----------
$ 450,038
-----------
Packaged Foods & Meats - 0.2%
71,017 Rainbow Chicken, Ltd. $ 61,981
-----------
Soft Drinks - 1.4%
2,100 Coca-Cola, S.A. de C.V. (A.D.R.)* $ 46,599
14,200 Embotelladora Andina SA (A.D.R.) 171,962
3,700 Fomento Economico Mexicano SA de CV 169,608
140,600 Sermsuk Public Co., Ltd. 83,313
-----------
$ 471,482
-----------
Tobacco - 1.7%
13,700 British American Tobacco (Malaysia) Bhd $ 182,161
6,200 Korea Tobacco* 143,187
100 Philip Morris CR AS* 61,114
52,100 PT Gudang Garam Public Co., Ltd. 76,116
186,500 PT Hanjaya Mandala Sampoerna Tbk 101,487
-----------
$ 564,065
-----------
Total Food, Beverage & Tobacco $ 1,664,051
-----------
Household & Personal Products - 0.8%
Household Products - 0.7%
23,183,610 Arcelik A.S.* $ 114,832
3,600 LG Household & Health Care, Ltd. 102,977
-----------
$ 217,809
-----------
Personal Products - 0.1%
2,350 Natura Cosmeticos SA* $ 37,915
-----------
Total Household & Personal
Products $ 255,724
-----------
Health Care Equipment & Services - 1.5%
Health Care Distributors - 1.5%
7,130 Teva Pharmaceutical Industries, Ltd. $ 479,778
-----------
Total Health Care Equipment &
Services $ 479,778
-----------
Pharmaceuticals & Biotechnology - 1.4%
Pharmaceuticals - 1.4%
17,200 Aurobindo Pharma, Ltd. $ 122,108
3,300 Biocon, Ltd.* 36,004
1,275 Gideon Richter (G.D.R.) 129,576
6,000 Lupin, Ltd.* 82,931
110,200 PT Tempo Scan Pacific 82,073
-----------
$ 452,692
-----------
Total Pharmaceuticals &
Biotechnology $ 452,692
-----------
The accompanying notes are an integral part of these financial statements. 33
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Banks - 8.2%
Diversified Banks - 8.2%
24,612,250 Akbank T.A.S. $ 90,447
2,222 Banco Bradesco SA 102,101
3,303 Banco Santiago 88,190
29,835 Canara Bank, Ltd. 78,518
217,960 Chinatrust Financial Holding Co., Ltd. 243,915
107,600 Commerce Asset Holdings 137,786
25,400 Commercial International Bank 95,566
7,100 Hana Bank 150,917
23,775 Hong Leong Bank* 30,273
54,700 Kasikornbank* 69,767
1,900 Kookmin Bank* 59,383
900 Kookmin Bank (A.D.R.) (b)* 28,242
58,700 Malayan Banking Bhd 156,218
162,700 Metropolitan Bank & Trust Co. 78,354
9,500 MISR International 30,400
342,300 National Finance Public Co., Ltd. 123,354
4,300 OTP Bank Rt* 88,099
407,500 PT Bank Central Asia Tbk 81,393
2,136,076 PT Lippo Bank* 113,095
37,656 Public Bank Bhd (Foreign) 65,541
59,100 Siam Commercial Bank Plc (Foreign) 67,026
24,400 Standard Bank Group, Ltd. 171,042
13,600 State Bank of India 127,540
40,130,800 Turkiye Garanti Bankasi AS* 119,578
39,834,952 Turkiye Is Bankasi (Isbank) 144,998
5,700 Uniao de Bancos
Brasileiros SA (G.D.R.) (144A) 112,689
-----------
$ 2,654,432
-----------
Total Banks $ 2,654,432
-----------
Diversified Financials - 4.3%
Investment Banking & Brokerage - 0.2%
203,600 O.S.K. Holdings $ 83,715
-----------
Diversified Financial Services - 4.1%
3,955,000 Alarko Holding AS* $ 77,279
457,700 Bank Mandiri 57,371
408,344 China Development Financial 209,894
42,000 Citic Pacific, Ltd. 103,317
78,300 FirstRand, Ltd. 130,264
137,000 Fubon Group 119,826
37,217,239 Haci Omer Sabanci Holding AS* 110,331
118,200 Kiatnakin Finance Plc 104,826
109,000 MCL Ladn, Ltd. 87,633
32,066 RMB Holdings, Ltd. 85,768
76,900 Sanlam, Ltd. 110,688
632,700 SM Prime Holdings 68,868
78,300 TISCO Finance Public Co., Ltd. 52,200
-----------
$ 1,318,265
-----------
Total Diversified Financials $ 1,401,980
-----------
Shares Value
Insurance - 1.0%
Multi-Line Insurance - 0.6%
2,800 Samsung Fire & Marine Insurance $ 179,648
-----------
Property & Casualty Insurance - 0.4%
7,900 Cathay Financial Holding Co., Ltd.
(G.D.R.) (144A)* $ 141,489
-----------
Total Insurance $ 321,137
-----------
Real Estate - 0.4%
Real Estate Management & Development - 0.4%
98,200 Marco Polo Developments, Ltd. $ 116,009
-----------
Total Real Estate $ 116,009
-----------
Software & Services - 0.9%
Application Software - 0.9%
1,583 Infosys Technologies, Ltd. $ 190,400
14,200 Satyam Computer Services* 94,455
-----------
$ 284,855
-----------
Total Software & Services $ 284,855
-----------
Technology Hardware & Equipment - 6.9%
Semiconductors - 1.7%
43,800 Hon Hai Precision Industry $ 163,461
268,605 Taiwan Semiconductor Manufacturing Co. 388,889
-----------
$ 552,350
-----------
Communications Equipment - 1.0%
1,500 China Unicom (A.D.R.)* $ 11,850
12,140 Empresa Nacional De Telecom 68,663
8,000 Matav Rt (A.D.R.)* 162,480
3,100 Samsung Electro Mechanics Co., Ltd.* 88,337
-----------
$ 331,330
-----------
Computer Hardware - 0.4%
109,160 Compal Electronics $ 118,972
-----------
Computer Storage & Peripherals - 0.5%
107,000 Asia Vital Components $ 123,329
16,400 Quanta Computer, Inc. 34,960
-----------
$ 158,289
-----------
Electronic Equipment & Instruments - 3.2%
28,000 Anpec Electronics Corp. $ 34,886
53,375 Asustek Computer, Inc. 121,959
32,150 Elec & Eltek International Co., Ltd. 90,105
4,050 LG Electronics, Inc. 193,745
6,400 Mtekvision Co., Ltd.* 201,726
12,000 Novatek Microelectronics, Ltd. 39,802
10,000 Richtek Technology Corp.* 29,120
8,000 Samsung Corp.* 98,270
770 Samsung Display Devices* 81,495
154,900 Varitronix International, Ltd. 153,116
-----------
$ 1,044,224
-----------
34 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Office Electronics - 0.1%
5,700 Baiksan OPC Co. $ 49,660
-----------
Total Technology Hardware &
Equipment $ 2,254,825
-----------
Semiconductors - 4.4%
3,030 Samsung Electronics $ 1,261,174
240,621 United Microelectronics Corp., Ltd.* 180,003
-----------
$ 1,441,177
-----------
Total Semiconductors $ 1,441,177
-----------
Telecommunication Services - 12.7%
Integrated Telecommunication Services - 7.3%
6,400 Brasil Telecom Participacoes SA $ 196,480
4,900 Compania de Telephonos de
Chile SA ADR 59,731
16,800 KT Corp.(b)* 303,072
29,587 Mahanagar Telephone Nigam, Ltd. 214,506
29,900 Mahanagar Telephone 85,917
11,900 SPT Telecom AS* 145,977
3,440 Telekomunik Indonesia SP (A.D.R.)* 53,492
28,800 Telefonos de Mexico SA 958,176
79,500 Telekomunikacja Polska SA 330,002
-----------
$ 2,347,353
-----------
Wireless Telecommunication Services - 5.4%
27,200 Advanced Service Co., Ltd. (Foreign) $ 59,224
17,700 Alumax, Inc. 643,749
18,800 Bharti Televentures* 55,843
6,600 Korea Telecom Freetel Co. 114,992
13,300 Mobinil-Egyptian Mobile Services 160,177
24,337 SK Telecom Co., Ltd. (b)* 510,834
146,000 Taiwan Cellular Corp. 139,305
22,400 Venfin, Ltd. 72,617
-----------
$ 1,756,741
-----------
Total Telecommunication Services $ 4,104,094
-----------
Utilities - 3.2%
Electric Utilities - 2.3%
156,700 Empresa Nacional de Electricid SA $ 64,502
1,992,335 Enersis SA* 235,543
14,600 Korea Electric Power Corp.* 235,684
216,400 Manila Electric Co.* 116,189
4,360 Unified Energy System (G.D.R.) 115,494
-----------
$ 767,412
-----------
Shares Value
Gas Utilities - 0.6%
2,300 Gazprom (A.D.R.) (b) $ 67,017
4,200 Korea Gas Corp.* 121,811
-----------
$ 188,828
-----------
Water Utilities - 0.3%
8,500 Cia Saneamento Basic de
Estado de Sao Paulo (b)* $ 92,905
-----------
Total Utilities $ 1,049,145
-----------
TOTAL COMMON STOCKS
(Cost $24,410,123) $29,994,690
-----------
RIGHTS/WARRANTS - 0.0%
Commercial Services & Supplies - 0.0%
Diversified Commercial Services - 0.0%
1,580 Bidbee Group, Ltd., 12/8/06* $ 1,494
-----------
Total Commercial Services &
Supplies $ 1,494
-----------
Telecommunication Services - 0.0%
Integrated Telecommunication Services - 0.0%
32,210 True Corp., Plc* $ --
-----------
Total Telecommunication Services $ --
-----------
TOTAL RIGHTS/WARRANTS
(Cost $9,539) $ 1,494
-----------
TEMPORARY CASH INVESTMENT - 4.1%
Security Lending Collateral - 4.1%
1,335,560 Securities Lending
Investment Fund, 1.29% $ 1,335,560
-----------
TOTAL TEMPORARY
CASH INVESTMENT
(Cost $1,335,560) $ 1,335,560
-----------
TOTAL INVESTMENT IN
SECURITIES - 99.2%
(Cost $26,418,556)(a)(b) $32,153,781
-----------
OTHER ASSETS AND
LIABILITIES - 0.8% $ 271,080
-----------
TOTAL NET ASSETS - 100.0% $32,424,861
===========
The accompanying notes are an integral part of these financial statements. 35
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
(A.D.R) American Depositary Receipt
(G.D.R.) Global Depositary Receipt
* Non-income producing security.
144A Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $481,026 or 1.5% of
net assets.
(a) Distributions of investments by country of issue, as a percentage of
total equity holdings (excluding temporary cash investments) is as
follows:
South Korea 22.6%
Taiwan 9.7%
Brazil 9.4%
South Africa 7.1%
Mexico 6.8%
India 6.3%
Russia 4.6%
Thailand 4.1%
Malaysia 4.0%
Turkey 3.7%
Chile 3.2%
Indonesia 2.2%
Hungary 2.0%
Israel 1.9%
Singapore 1.9%
Poland 1.9%
Peru 1.5%
People's Republic of China 1.4%
Philippines 1.4%
United Kingdom 1.0%
Egypt 1.0%
Other (individually less than 1%) 2.3%
------
100.0%
======
(b) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
7,125 Anglogold, Ltd. (A.D.R.) $ 226,718
8,060 Cia Saneamento Basic de
Estado de Sao Paulo* 84,952
155 Gazprom (A.D.R.) 4,301
24,225 IAMGOLD Corp. 129,846
500 Kookmin Bank (A.D.R.)* 15,690
15,905 KT Corp.* 285,495
5,635 SK Telecom Co., Ltd.* 118,504
12,705 Surgutneftegaz (A.D.R.)* 398,937
----------
Total $1,264,443
==========
36 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCK - 1.2%
Automobiles & Components - 1.2%
Automobile Manufacturers - 1.2%
250 Porsche AG $ 168,171
-----------
Total Automobiles & Components $ 168,171
-----------
TOTAL PREFERRED STOCK
(Cost $83,104) $ 168,171
-----------
COMMON STOCKS - 96.7%
Energy - 10.4%
Integrated Oil & Gas - 7.2%
72,851 BP Amoco Plc $ 646,674
20,351 Eni S.p.A. 405,664
-----------
$ 1,052,338
-----------
Oil & Gas Refining Marketing &
Transportation - 3.2%
2,446 Total SA $ 468,764
-----------
Total Energy $ 1,521,102
-----------
Materials - 7.1%
Commodity Chemicals - 1.2%
3,611 BASF India, Ltd. $ 194,454
-----------
Construction Materials - 4.4%
9,648 CRH Plc $ 204,756
1,610 Italcementi S.p.A.* 21,639
3,384 Lafarge SA 303,469
1,070 Vinci SA 108,236
-----------
$ 638,100
-----------
Diversified Metals & Mining - 1.5%
5,596 Rio Tinto Plc $ 135,150
2,544 Sandvik AB 87,158
-----------
$ 222,308
-----------
Total Materials $ 1,054,862
-----------
Capital Goods - 6.9%
Aerospace & Defense - 1.7%
37,685 Bae Systems $ 150,674
3,195 European Aeronautic Defence 89,543
-----------
$ 240,217
-----------
Construction & Engineering - 2.6%
11,469 ACS, Actividades de Construccion y
Servicios, SA $ 193,903
3,804 Compagnie de Saint Gobain 190,868
-----------
$ 384,771
-----------
Electrical Components & Equipment - 1.4%
3,012 Schneider Electric SA $ 206,592
-----------
Shares Value
Industrial Machinery - 1.2%
1,976 Atlas Copco AB $ 73,630
2,843 AB SKF 104,848
-----------
$ 178,478
-----------
Total Capital Goods $ 1,010,058
-----------
Commercial Services & Supplies - 1.3%
Diversified Commercial Services - 1.3%
8,308 TNT Post Group NV $ 190,718
-----------
Total Commercial Services &
Supplies $ 190,718
-----------
Automobiles & Components - 1.0%
Auto Parts & Equipment - 1.0%
2,594 Compagnie Generale des
Etablissements Michelin $ 144,247
-----------
Total Automobiles & Components $ 144,247
-----------
Hotels, Restaurants & Leisure - 1.6%
Restaurants - 1.6%
17,111 Compass Group Plc $ 104,877
8,438 Gus Plc 130,372
-----------
$ 235,249
-----------
Total Hotels, Restaurants & Leisure $ 235,249
-----------
Media - 2.8%
Advertising - 0.6%
2,942 Publicis SA $ 87,652
-----------
Publishing - 2.2%
7,545 Elsevier NV $ 106,401
7,505 Vivendi Universal* 209,672
-----------
$ 316,073
-----------
Total Media $ 403,725
-----------
Food & Drug Retailing - 5.9%
Drug Retail - 0.6%
6,888 Boots Co., Plc* $ 86,141
-----------
Food Retail - 5.3%
13,588 Koninklijke Ahold NV* $ 107,363
1,649 Nestle SA (Registered Shares) 441,222
45,427 Tesco Plc 220,619
-----------
$ 769,204
-----------
Total Food & Drug Retailing $ 855,345
-----------
Food, Beverage & Tobacco - 2.5%
Tobacco - 2.5%
2,313 Altadis SA* $ 71,759
18,370 British American Tobacco Plc 285,962
-----------
$ 357,721
-----------
Total Food, Beverage & Tobacco $ 357,721
-----------
The accompanying notes are an integral part of these financial statements. 37
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Health Care Equipment & Services - 0.9%
Health Care Distributors - 0.9%
2,279 Celesio AG $ 136,601
-----------
Total Health Care Equipment &
Services $ 136,601
-----------
Pharmaceuticals & Biotechnology - 9.9%
Pharmaceuticals - 9.9%
7,494 AstraZeneca Plc $ 337,721
13,196 GlaxoSmithKline Plc 269,229
3,103 Novartis 137,485
3,123 Roche Holdings AG 310,402
4,338 Sanofi-Synthelabo SA 275,980
1,796 Schering AG 106,369
-----------
$ 1,437,186
-----------
Total Pharmaceuticals &
Biotechnology $ 1,437,186
-----------
Banks - 14.6%
Diversified Banks - 14.6%
8,696 Allied Irish Banks Plc $ 134,767
10,567 Banco Bilbao Vizcaya Argentaria, SA 141,941
32,459 Barclays Plc 278,005
5,468 BNP Paribas SA 338,177
6,739 Credit Agricole SA 164,819
7,061 CS Group* 252,092
4,600 Depfa Bank Plc 67,090
4,223 Dexia 70,228
23,715 HSBC Holding Plc 355,583
11,268 Royal Bank of Scotland Group Plc 326,779
-----------
$ 2,129,481
-----------
Total Banks $ 2,129,481
-----------
Diversified Financials - 8.6%
Asset Management & Custody Banks - 0.5%
2,630 Man Group Plc* $ 68,365
-----------
Diversified Financial Services - 8.1%
3,406 Deutsche Boerse AG $ 173,841
6,390 ING Groep NV 152,033
1,735 Lagardere S.C.A. 109,014
3,616 Societe Generale 309,152
1,489 Swiss Re 97,134
4,893 UBS AG 346,529
-----------
$ 1,187,703
-----------
Total Diversified Financials $ 1,256,068
-----------
Shares Value
Insurance - 5.5%
Life & Health Insurance - 0.8%
4,009 Assicurazioni Generali $ 108,714
-----------
Multi-Line Insurance - 4.0%
10,463 AXA SA $ 232,122
2,217 Zurich Financial Services* 351,799
-----------
$ 583,921
-----------
Reinsurance - 0.7%
3,097 Hannover Rueckversicheru $ 104,114
-----------
Total Insurance $ 796,749
-----------
Software & Services - 0.6%
IT Consulting & Other Services - 0.6%
1,364 Atos Origin* $ 88,246
-----------
Total Software & Services $ 88,246
-----------
Technology Hardware & Equipment - 4.2%
Semiconductors - 1.3%
6,783 Philips Electronics NV $ 184,096
-----------
Communications Equipment - 1.0%
10,079 Nokia Oyj $ 146,254
-----------
Computer Hardware - 0.8%
38,933 Dixons Group Plc $ 116,952
-----------
Electronic Equipment & Instruments - 1.1%
2,201 Siemens AG $ 159,583
-----------
Total Technology Hardware &
Equipment $ 606,885
-----------
Telecommunication Services - 9.9%
Alternate Carriers - 0.9%
4,989 France Telecom SA $ 130,883
-----------
Integrated Telecommunication Services - 5.0%
7,122 Belgacom SA* $ 217,656
25,747 Telecom Italia Mobile S.p.A. 146,594
59,202 Telecom Italia S.p.A. 184,922
12,569 Telefonica SA 186,877
-----------
$ 736,049
-----------
Wireless Telecommunication Services - 4.0%
263,946 Vodafone Group Plc $ 582,271
-----------
Total Telecommunication Services $ 1,449,203
-----------
38 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Utilities - 3.0%
Electric Utilities - 3.0%
4,077 E.On AG $ 295,674
17,458 National Grid Transco Plc 136,027
-----------
$ 431,701
-----------
Total Utilities $ 431,701
-----------
TOTAL COMMON STOCKS
(Cost $11,851,998) $14,105,147
-----------
TOTAL INVESTMENT IN
SECURITIES - 97.9%
(Cost $11,935,102)(a) $14,273,318
-----------
OTHER ASSETS AND
LIABILITIES - 2.1% $ 311,386
-----------
TOTAL NET ASSETS - 100.0% $14,584,704
===========
* Non-income producing security.
(a) Distributions of investments by country of issue, as a percentage of
total equity holdings (excluding temporary cash investments) is as
follows:
United Kingdom 29.6%
France 23.6
Switzerland 13.6
Germany 9.4
Italy 6.1
Netherlands 5.8
Spain 4.2
Ireland 2.8
Belgium 2.0
Sweden 1.9
Finland 1.0
------
100.0%
======
The accompanying notes are an integral part of these financial statements. 39
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCKS - 0.5%
Telecommunication Services - 0.5%
Integrated Telecommunication Services - 0.5%
10,100 Tele Norte Leste Participacoes (A.D.R) $ 128,573
-----------
Total Telecommunication Services $ 128,573
-----------
TOTAL PREFERRED STOCKS
(Cost $121,829) $ 128,573
-----------
COMMON STOCKS - 98.1%
Energy - 6.8%
Integrated Oil & Gas - 4.5%
84,110 BP Amoco Plc $ 746,617
16,000 Eni S.p.A. 318,934
-----------
$ 1,065,551
-----------
Oil & Gas Refining Marketing &
Transportation - 2.3%
2,870 Total SA $ 550,021
-----------
Total Energy $ 1,615,572
-----------
Materials - 7.8%
Commodity Chemicals - 1.0%
4,200 BASF India, Ltd. $ 226,172
-----------
Construction Materials - 2.2%
3,800 CRH Plc $ 80,693
6,200 Italcementi S.p.A.* 83,330
1,600 Lafarge BR 143,501
2,180 Vinci SA 220,516
-----------
$ 528,040
-----------
Diversified Metals & Mining - 2.2%
3,850 Freeport-McMoRan Copper & Gold, Inc.
(Class B) $ 127,628
2,100 Norilsk Nickel 115,763
6,090 Rio Tinto Plc 147,081
4,000 Sandvik AB 137,040
-----------
$ 527,512
-----------
Specialty Chemicals - 1.6%
23,400 Hitachi Chemical Company, Ltd. $ 388,026
-----------
Steel - 0.8%
23,102 Broken Hill Proprietary Co., Ltd. $ 202,242
-----------
Total Materials $ 1,871,992
-----------
Capital Goods - 9.2%
Aerospace & Defense - 0.7%
5,700 European Aeronautic Defence $ 159,747
-----------
Construction & Engineering - 3.2%
13,449 Actividades de Construccion y Servicios, SA $ 227,379
4,000 Compagnie de Saint Gobain (a) 200,702
93,000 Kajima Corp. 347,050
-----------
$ 775,131
-----------
Shares Value
Electrical Components & Equipment - 4.5%
86,000 Mitsubishi Electric Corp.* $ 427,269
7,900 NEC Electronics Corp (a)* 492,426
2,400 Schneider Electric SA 164,615
-----------
$ 1,084,310
-----------
Industrial Machinery - 0.8%
25,100 Scottish Power Plc $ 182,184
-----------
Total Capital Goods $ 2,201,372
-----------
Commercial Services & Supplies - 0.8%
Diversified Commercial Services - 0.8%
8,100 TNT Post Group N.V. $ 185,943
-----------
Total Commercial Services &
Supplies $ 185,943
-----------
Transportation - 1.8%
Railroads - 1.8%
78 East Japan Railway Co. $ 440,064
-----------
Total Transportation $ 440,064
-----------
Automobiles & Components - 4.1%
Auto Parts & Equipment - 0.3%
1,500 Compagnie Generale des
Etablissements Michelin $ 83,412
-----------
Automobile Manufacturers - 3.8%
3,000 Bayerische Motoren Werke AG $ 133,429
6,360 Hyundai Motor Co, Ltd. 124,680
27,216,000 Koc Holding AS* 122,855
12,900 Toyota Motor Co. 526,110
-----------
$ 907,074
-----------
Total Automobiles & Components $ 990,486
-----------
Consumer Durables & Apparel - 2.1%
Homebuilding - 2.1%
59,000 Sekisui Chemical Co., Ltd. $ 501,648
-----------
Total Consumer Durables & Apparel $ 501,648
-----------
Hotels, Restaurants & Leisure - 2.4%
Casinos & Gaming - 1.6%
8,200 Sammy Corp. $ 393,532
-----------
Restaurants - 0.8%
12,000 GUS Plc $ 185,407
-----------
Total Hotels, Restaurants & Leisure $ 578,939
-----------
Media - 2.1%
Advertising - 0.4%
3,000 Publics SA $ 89,380
-----------
Publishing - 1.7%
9,600 Vivendi Universal* $ 268,201
13,700 Reed Elsevier Plc 133,638
-----------
$ 401,839
-----------
Total Media $ 491,219
-----------
40 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Retailing - 2.9%
Distributors - 1.4%
34,000 Mitsubishi Corp. $ 332,179
-----------
General Merchandise Stores - 1.5%
6,900 Ryohin Keikaku Co., Ltd. $ 359,149
-----------
Total Retailing $ 691,328
-----------
Food & Drug Retailing - 5.0%
Drug Retail - 0.6%
12,200 Boots Co., Plc* $ 152,573
-----------
Food Retail - 4.4%
16,700 Koninklijke Ahold NV* $ 131,951
7,266 Koninklijke Ahold NV (144A)* 57,148
1,890 Nestle SA (Registered Shares) 505,706
74,200 Tesco Plc 360,356
-----------
$ 1,055,161
-----------
Total Food & Drug Retailing $ 1,207,734
-----------
Food, Beverage & Tobacco - 3.1%
Tobacco - 3.1%
19,820 British American Tobacco Plc $ 308,534
55 Japan Tobacco, Inc.* 429,378
-----------
$ 737,912
-----------
Total Food, Beverage & Tobacco $ 737,912
-----------
Household & Personal Products - 1.2%
Household Products - 1.1%
5,200 Uni-Charm Corp.* $ 260,449
-----------
Personal Products - 0.1%
480 Kose Corp. $ 18,533
-----------
Total Household & Personal
Products $ 278,982
-----------
Health Care Equipment & Services - 0.8%
Health Care Distributors - 0.4%
1,600 Celesio AG $ 95,902
-----------
Health Care Supplies - 0.4%
560 Nobel Biocare Holding AG $ 87,988
-----------
Total Health Care Equipment &
Services $ 183,890
-----------
Pharmaceuticals & Biotechnology - 5.8%
Pharmaceuticals - 5.8%
10,432 Astrazeneca Plc $ 470,123
9,590 GlaxoSmithKline Plc 195,658
3,788 Roche Holdings AG 376,498
3,800 Sanofi-Synthelabo SA 241,753
1,670 Schering AG 98,907
-----------
$ 1,382,939
-----------
Total Pharmaceuticals &
Biotechnology $ 1,382,939
-----------
Shares Value
Banks - 13.2%
Diversified Banks - 13.2%
7,400 Allied Irish Banks Plc $ 114,682
44,300 Banca Intesa S.p.A. 173,896
18,600 Banco Bilbao Vizcaya Argentaria SA 249,844
18,325 Barclays Plc 156,950
5,520 BNP Paribas SA (a) 341,393
10,345 Credit Agricole SA 253,013
6,830 CS Group* 243,845
18,000 Development Bank of Singapore, Ltd. 151,460
22,900 HSBC Holding Plc 343,363
2,300 Kookmin Bank (A.D.R.) (a)* 72,174
57 Mitsubishi Tokyo Financial Group, Inc.* 533,456
14,020 Royal Bank of Scotland Group Plc 406,589
6,100 Uniao de Bancos
Brasileiros SA (G.D.R.) (144A) 120,597
-----------
$ 3,161,262
-----------
Total Banks $ 3,161,262
-----------
Diversified Financials - 7.0%
Consumer Finance - 1.4%
3,100 Aiful Corp. $ 327,006
-----------
Diversified Financial Services - 4.8%
12,400 ING Groep NV $ 295,025
2,000 Lagardere SA 125,665
2,519 Societe Generale 215,363
7,150 UBS AG 506,374
-----------
$ 1,142,427
-----------
Specialized Finance - 0.8%
3,800 Deutsche Boerse AG $ 193,950
-----------
Total Diversified Financials $ 1,663,383
-----------
Insurance - 3.1%
Life & Health Insurance - 0.7%
6,100 Assicurazioni Generali $ 165,417
-----------
Multi-Line Insurance - 2.4%
12,500 AXA SA $ 277,313
1,860 Zurich Financial Services* 295,149
-----------
$ 572,462
-----------
Total Insurance $ 737,879
-----------
Real Estate - 1.4%
Real Estate Management & Development - 1.4%
27,000 Mitsui Fudosan Co. $ 326,878
-----------
Total Real Estate $ 326,878
-----------
Software & Services - 1.2%
IT Consulting & Other Services - 0.9%
1,700 Atos Origin* $ 109,984
27,900 LogicaCMG Plc 93,699
-----------
$ 203,683
-----------
The accompanying notes are an integral part of these financial statements. 41
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Software & Services - 0.3%
6,500 T-Online International AG* $ 74,140
-----------
Total Software & Services $ 277,823
-----------
Technology Hardware & Equipment - 4.0%
Semiconductors - 1.1%
9,500 Philips Electronics NV $ 257,838
-----------
Communications Equipment - 1.0%
17,031 Nokia Oyj $ 247,134
-----------
Computer Hardware - 0.5%
42,100 Dixons Group Plc $ 126,465
-----------
Electronic Equipment & Instruments - 1.4%
1,200 Nidec Corp. $ 123,877
2,790 Siemens 202,289
-----------
$ 326,166
-----------
Total Technology Hardware &
Equipment $ 957,603
-----------
Semiconductors - 1.2%
450 Samsung Electronics $ 187,303
21,400 United Microelectronics (A.D.R.) (a)* 92,234
-----------
$ 279,537
-----------
Total Semiconductors $ 279,537
-----------
Telecommunication Services - 8.9%
Alternate Carriers - 0.7%
6,200 France Telecom $ 162,653
-----------
Integrated Telecommunication Services - 4.0%
7,900 Belgacom SA* $ 241,431
9,500 British Sky Broadcasting Plc 108,058
17,100 Mahanagar Telephone Nigam, Ltd. 123,977
15,630 Telefonica SA 232,388
17,340 Telecom Italia Mobile S.p.A. 98,728
46,486 Telecom Italia S.p.A. 145,203
-----------
$ 949,785
-----------
Wireless Telecommunication Services - 4.2%
1,000 Mobile Telesystems* $ 122,000
5,700 SK Telecom Co., Ltd.* 119,643
4,100 Turkcell Iletism Hizmet (A.D.R.)* 125,870
295,011 Vodafone Group Plc 650,801
-----------
$ 1,018,314
-----------
Total Telecommunication Services $ 2,130,752
-----------
Shares Value
Utilities - 2.4%
Electric Utilities - 2.4%
4,433 E.On AG $ 321,491
31,100 National Grid Transco Plc 242,321
-----------
$ 563,812
-----------
Total Utilities $ 563,812
-----------
TOTAL COMMON STOCKS
(Cost $20,267,040) $23,458,949
-----------
TEMPORARY CASH INVESTMENT - 4.4%
Security Lending Collateral - 4.4%
1,038,146 Securities Lending
Investment Fund, 1.29% $ 1,038,146
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,038,146) $ 1,038,146
-----------
TOTAL INVESTMENT
IN SECURITIES - 103.0%
(Cost $21,427,015)(a)(b) $24,625,668
-----------
OTHER ASSETS
AND LIABILITIES - (3.0)% $ (709,954)
-----------
TOTAL NET ASSETS - 100.0% $23,915,714
===========
(A.D.R.) American Depositary Receipt
(G.D.R.) Global Depositary Receipt
* Non-income producing security.
144A Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $177,745 or 0.7% of
net assets.
(a) Distributions of investments by country of issue (excluding temporary
cash investments), as a percentage of total investment in equity
securities, is as follows:
Japan 26.4%
United Kingdom 21.4
France 14.6
Switzerland 8.5
Germany 5.7
Netherlands 4.6
Italy 4.2
Spain 3.0
South Korea 2.1
Brazil 1.1
Turkey 1.1
Finland 1.0
Belgium 1.0
Russia 1.0
Other (individually less than 1%) 4.3
------
100.0%
======
(b) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
4,985 BNP Paribas SA $309,856
3,800 Compagnie de Saint Gobain 190,433
1,825 Kookmin Bank (A.D.R.)* 57,269
5,400 NEC Electronics Corp.* 333,872
20,320 United Microelectronics (A.D.R.)* 86,157
--------
Total $977,587
========
42 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 86.1%
Energy - 6.1%
Oil & Gas Drilling - 1.6%
1,100 Atwood Oceanics, Inc.* $ 45,925
19,511 Key Energy Services, Inc.* 184,184
6,550 Todco* 101,329
-----------
$ 331,438
-----------
Oil & Gas Equipment & Services - 1.8%
10,125 Gulfmark Offshore, Inc.* $ 159,770
7,890 Maverick Tube Corp.* 207,191
-----------
$ 366,961
-----------
Oil & Gas Exploration & Production - 2.7%
4,550 Penn Virginia Corp. $ 164,301
9,370 Swift Energy Co.* 206,702
5,994 Unit Corp.* 188,511
-----------
$ 559,514
-----------
Total Energy $ 1,257,913
-----------
Materials - 7.6%
Diversified Metals & Mining - 1.6%
11,314 Massey Energy Co. $ 319,168
-----------
Gold - 1.5%
9,150 Glamis Gold, Ltd.* $ 160,400
27,875 IAMGOLD Corp. (a) 155,543
-----------
$ 315,943
-----------
Metal & Glass Containers - 0.7%
3,962 Jarden Corp.* $ 142,592
-----------
Paper Products - 1.9%
12,093 Domtar, Inc. (a) $ 156,483
7,550 Flowserve Corp.* 188,297
3,425 Longview Fibre Co. 50,450
-----------
$ 395,230
-----------
Specialty Chemicals - 0.4%
2,900 Great Lakes Chemical Corp. $ 78,474
-----------
Steel - 1.5%
2,675 Carpenter Technology $ 91,084
21,693 Graftech International, Ltd.* 226,909
-----------
$ 317,993
-----------
Total Materials $ 1,569,400
-----------
Capital Goods - 7.7%
Aerospace & Defense - 0.3%
3,450 Intrado, Inc.* $ 55,511
-----------
Construction, Farm Machinery &
Heavy Trucks - 1.4%
16,150 Wabtec Corp. $ 291,346
-----------
Shares Value
Construction & Engineering - 0.8%
3,795 Granite Construction, Inc. $ 69,183
5,800 Insituform Technologies, Inc.* 94,366
-----------
$ 163,549
-----------
Electrical Components & Equipment - 0.9%
16,004 Power-One, Inc.* $ 175,724
-----------
Industrial Conglomerates - 1.3%
14,760 Cornell Companies, Inc.* $ 200,736
6,021 NN, Inc. 76,527
-----------
$ 277,263
-----------
Industrial Machinery - 2.2%
8,062 Joy Global, Inc. $ 241,376
2,350 Kaydon Corp. 72,686
1,469 Nacco Industries, Inc. 139,555
-----------
$ 453,617
-----------
Trading Companies & Distributors - 0.8%
5,803 Applied Industrial Technologies, Inc. $ 174,786
-----------
Total Capital Goods $ 1,591,796
-----------
Commercial Services & Supplies - 7.1%
Data Processing Services - 0.5%
7,725 Gartner Group, Inc.* $ 102,125
-----------
Commercial Printing - 0.8%
3,793 John H. Harland Co. $ 111,325
1,600 Valassis Communications, Inc.* 48,752
-----------
$ 160,077
-----------
Diversified Commercial Services - 4.9%
2,600 Arbitron, Inc.* $ 94,952
13,700 Central Parking Corp. 256,053
4,378 Chemed Corp. 212,333
2,570 FTI Consulting, Inc.* 42,405
10,685 Profit Recovery Group International* 58,447
20,105 Rent-Way, Inc.* 180,945
6,025 Watson Wyatt & Co. Holdings 160,566
-----------
$ 1,005,701
-----------
Employment Services - 0.9%
6,095 Korn/Ferry International* $ 118,060
11,575 On Assignment, Inc.* 68,293
-----------
$ 186,353
-----------
Total Commercial Services &
Supplies $ 1,454,256
-----------
Transportation - 3.7%
Marine - 0.8%
5,277 Stelmar Shipping Ltd. $ 174,933
-----------
Railroads - 1.2%
9,543 Genesee & Wyoming, Inc.* $ 226,169
-----------
The accompanying notes are an integral part of these financial statements. 43
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Trucking - 1.7%
12,950 Central Freight Lines, Inc.* $ 103,600
2,968 Dollar Thrifty Automotive Group* 81,442
4,375 Forward Air Corp.* 163,620
-----------
$ 348,662
-----------
Total Transportation $ 749,764
-----------
Automobiles & Components - 0.7%
Auto Parts & Equipment - 0.7%
7,995 Federal Signal Corp. $ 148,787
-----------
Total Automobiles & Components $ 148,787
-----------
Consumer Durables & Apparel - 2.0%
Apparel, Accessories & Luxury Goods - 1.3%
14,593 Charming Shoppes, Inc.* $ 130,315
2,950 Kellwood Co. 128,473
-----------
$ 258,788
-----------
Footwear - 0.7%
6,641 Maxwell Shoe Co., Inc.* $ 154,337
-----------
Total Consumer Durables & Apparel $ 413,125
-----------
Hotels, Restaurants & Leisure - 0.6%
Restaurants - 0.6%
7,169 O'Charley's, Inc.* $ 123,235
-----------
Total Hotels, Restaurants & Leisure $ 123,235
-----------
Media - 2.0%
Advertising - 1.6%
4,841 EMAK Worldwide, Inc.* $ 60,270
6,344 R.H. Donnelley Corp. +* 277,487
-----------
$ 337,757
-----------
Publishing - 0.4%
5,465 Advanced Marketing Services, Inc. $ 70,553
-----------
Total Media $ 408,310
-----------
Retailing - 6.1%
Apparel Retail - 0.7%
3,695 Stage Stores, Inc.* $ 139,154
-----------
Catalog Retail - 1.5%
17,075 Insight Enterprises, Inc.* $ 303,252
-----------
General Merchandise Stores - 0.3%
1,615 Blyth Industries, Inc. $ 55,701
-----------
Specialty Stores - 3.6%
5,275 Claire's Stores, Inc. $ 114,468
5,502 Guitar Center, Inc.* 244,674
16,057 Hancock Fabrics, Inc. 204,727
4,923 School Specialty, Inc.* 178,754
-----------
$ 742,623
-----------
Total Retailing $ 1,240,730
-----------
Shares Value
Food & Drug Retailing - 1.1%
Food Retail - 1.1%
6,183 Fresh Del Monte Produce, Inc. (a) $ 156,244
4,875 Wild Oats Markets, Inc.* 68,591
-----------
$ 224,835
-----------
Total Food & Drug Retailing $ 224,835
-----------
Household & Personal Products - 1.9%
Household Products - 1.9%
15,304 Nu Skin Enterprises, Inc. $ 387,497
-----------
Total Household & Personal
Products $ 387,497
-----------
Health Care Equipment & Services - 6.3%
Health Care Distributors - 2.3%
3,235 Amerigroup Corp.* $ 159,162
5,525 Chattem, Inc.* 159,507
8,375 Cross Country Healthcares, Inc.* (a) 152,003
-----------
$ 470,672
-----------
Health Care Equipment - 0.1%
600 Analogic Corp. $ 25,458
-----------
Health Care Facilities - 0.7%
1,675 Sunrise Senior Living, Inc. (a)* $ 65,560
2,133 Triad Hospitals, Inc.* 79,412
-----------
$ 144,972
-----------
Health Care Services - 1.9%
4,452 Pediatrix Medical Group, Inc. +* $ 310,972
4,550 Providence Service Corp.* 85,495
-----------
$ 396,467
-----------
Managed Health Care - 1.3%
6,830 PacifiCare Health Systems* $ 264,048
-----------
Total Health Care Equipment &
Services $ 1,301,617
-----------
Pharmaceuticals & Biotechnology - 0.5%
Biotechnology - 0.5%
14,105 Kendle International, Inc.* $ 109,314
-----------
Total Pharmaceuticals &
Biotechnology $ 109,314
-----------
Banks - 6.6%
Diversified Banks - 3.0%
9,655 BankAtlantic Bancorp, Inc. $ 178,135
3,231 Banner Corp. 93,893
55 International Bancshares Corp.* 2,230
6,600 Provident Financial Services, Inc. 115,830
13,875 Texas Capital Bancshares, Inc.* 230,325
-----------
$ 620,413
-----------
44 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Regional Banks - 3.2%
5,000 Alliance Bankshares Corp.* $ 75,250
19,325 Cardinal Financial Corp.* 174,891
2,400 City National Corp. 157,680
930 Irwin Financial Corp. 24,552
11,275 Sterling Bancshares, Inc. 159,992
1,280 Whitney Holding Corp. 57,178
-----------
$ 649,543
-----------
Thrifts & Mortgage Finance - 0.4%
7,075 First Niagara Financial Group, Inc. $ 84,900
-----------
Total Banks $ 1,354,856
-----------
Diversified Financials - 5.9%
Consumer Finance - 2.8%
6,025 Advanta Corp. $ 132,128
5,778 Advanta Corp. (Class B) 132,432
20,406 Medallion Financial Corp. 162,228
15,100 Rewards Network, Inc. (a)* 135,900
-----------
$ 562,688
-----------
Investment Banking & Brokerage - 2.4%
4,150 A.G. Edwards, Inc. $ 141,225
17,975 Apollo Investment Corp.* 247,516
2,300 Piper Jaffray Co.* 104,029
-----------
$ 492,770
-----------
Specialized Finance - 0.7%
4,068 Financial Federal Corp. (a)* $ 143,438
-----------
Total Diversified Financials $ 1,198,896
-----------
Insurance - 3.5%
Life & Health Insurance - 0.4%
3,231 FBL Financial Group, Inc. $ 91,308
-----------
Property & Casualty Insurance - 2.5%
3,175 American Safety Insurance Group, Ltd.* $ 47,657
5,251 IPC Holdings, Ltd. 193,919
11,400 Quanta Capital Holdings (144A)* 122,436
2,375 RLI Corp. 86,688
1,525 Selective Insurance Group, Inc. (a) 60,817
-----------
$ 511,517
-----------
Reinsurance - 0.6%
4,775 Odyssey Re Holdings Corp. (a) $ 114,600
-----------
Total Insurance $ 717,425
-----------
Real Estate - 3.9%
Real Estate Management & Development - 0.8%
2,875 Corrections Corp. of America* $ 113,534
1,951 Levitt Corp.* 50,258
-----------
$ 163,792
-----------
Shares Value
Real Estate Investment Trusts - 3.1%
3,610 Bedford Property Investors, Inc. $ 105,556
1,528 Entertainment Properties Trust 54,611
3,850 Reckson Associates Realty Corp. 105,721
8,215 Trizec Properties, Inc. 133,576
3,396 Universal Health Realty, Inc. 97,465
6,237 Ventas, Inc. 145,634
-----------
$ 642,563
-----------
Total Real Estate $ 806,355
-----------
Software & Services - 3.6%
Application Software - 0.8%
8,779 SPSS, Inc.* $ 157,759
-----------
Data Processing & Outsourced Services - 0.9%
5,078 Lightbridge, Inc.* $ 28,437
11,967 Pegusus Systems, Inc.* 157,127
-----------
$ 185,564
-----------
Internet Software & Services - 0.8%
5,875 Internet Security Systems, Inc.* $ 90,123
6,800 PEC Solutions, Inc.* 81,124
-----------
$ 171,247
-----------
Systems Software - 1.1%
18,375 Borland Software Corp.* $ 156,004
5,275 Netiq Corp.* 69,630
-----------
$ 225,634
-----------
Total Software & Services $ 740,204
-----------
Technology Hardware & Equipment - 2.8%
Communications Equipment - 1.0%
31,500 Remec, Inc.* $ 199,080
-----------
Computer Storage & Peripherals - 0.8%
2,575 Applied Films Corp.* $ 74,727
3,400 Electronics For Imaging, Inc.* 96,084
-----------
$ 170,811
-----------
Electronic Equipment & Instruments - 0.6%
8,800 Planar Systems, Inc.* $ 117,832
-----------
Technology Distributors - 0.4%
2,300 Tech Data Corp.* $ 89,999
-----------
Total Technology Hardware &
Equipment $ 577,722
-----------
Semiconductors - 1.0%
Semiconductor Equipment - 0.7%
2,768 Advanced Energy Industries, Inc.* $ 43,513
2,187 Brooks Automation, Inc.* 44,068
2,745 Photronics, Inc.* 51,990
-----------
$ 139,571
-----------
The accompanying notes are an integral part of these financial statements. 45
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Semiconductors - 0.3%
5,670 HI/FN, Inc. (a)* $ 67,757
-----------
Total Semiconductors $ 207,328
-----------
Telecommunication Services - 0.9%
Wireless Telecommunication Services - 0.9%
18,803 Boston Communications Group, Inc.* $ 192,731
-----------
Total Telecommunication Services $ 192,731
-----------
Utilities - 4.5%
Gas Utilities - 3.7%
4,175 AGL Resources, Inc. $ 121,284
11,800 NUI Corp. (a) 172,280
4,680 People's Energy Corp. 197,262
9,549 Southwestern Energy Co.* 273,770
-----------
$ 764,596
-----------
Multi-Utilities & Unregulated Power - 0.4%
1,750 Energen Corp. $ 83,983
-----------
Utilities - 0.4%
2,325 UGI Corp. $ 74,633
-----------
Total Utilities $ 923,212
-----------
TOTAL COMMON STOCKS
(Cost $14,675,424) $17,699,308
-----------
EXCHANGE TRADED FUND - 0.7%
875 Russell 2000 Exchange Traded Fund $ 150,763
-----------
TOTAL EXCHANGE TRADED FUND
(Cost $113,541) $ 150,763
-----------
Shares Value
TEMPORARY CASH INVESTMENT - 5.9%
Security Lending Collateral - 5.9%
1,202,726 Securities Lending Investment Fund,
1.29% $ 1,202,726
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,202,726) $ 1,202,726
-----------
TOTAL INVESTMENT IN SECURITIES - 92.7%
(Cost $15,991,691)(a) $19,052,797
-----------
OTHER ASSETS AND
LIABILITIES - 7.3% $ 1,504,180
-----------
TOTAL NET ASSETS - 100.0% $20,556,977
===========
* Non-income producing security.
+ At May 31, 2004, the following securities have pledged to cover margin
requirements for open futures contracts:
Shares Description Market Value
2,385 Pediatrix Medical Group, Inc.* $166,592
400 R.H. Donnelley Corp.* 17,496
144A Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $122,436 or 0.6% of
net assets.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
3,735 Cross Country Healthcares, Inc.* $ 68,238
10,960 Domtar, Inc. 141,713
2,915 Financial Federal Corp.* 102,258
5,565 Fresh Del Monte Produce, Inc. 139,292
4,720 HI/FN, Inc.* 56,262
26,481 IAMGOLD Corp. 141,938
11,540 NUI Corp. 163,176
3,860 Odyssey Re Holdings Corp. 92,640
12,635 Rewards Network, Inc.* 116,874
1,425 Selective Insurance Group, Inc. 55,889
1,496 Sunrise Senior Living, Inc.* 58,254
----------
Total $1,136,534
==========
46 The accompanying notes are an integral part of these financial statements.
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 94.6%
Energy - 7.0%
Oil & Gas Drilling - 2.9%
925 Atwood Oceanics, Inc.* $ 38,619
2,300 Grant Prideco, Inc.* 42,458
8,550 Key Energy Services, Inc.* 80,710
3,363 Patterson Energy, Inc. 112,358
5,075 Todco* 78,510
-----------
$ 352,655
-----------
Oil & Gas Equipment And Services - 1.1%
2,325 Gulfmark Offshore, Inc.* $ 36,689
3,575 Maverick Tube Corp.* 93,880
-----------
$ 130,569
-----------
Oil & Gas Exploration & Production - 2.2%
7,550 Forest Oil Corp.* $ 206,266
1,828 Spinnaker Exploration Co.* 71,981
-----------
$ 278,247
-----------
Oil & Gas Refining Marketing &
Transportation - 0.8%
6,150 Plains Resources, Inc.* $ 104,243
-----------
Total Energy $ 865,714
-----------
Materials - 6.1%
Commodity Chemicals - 1.1%
5,800 Airgas, Inc. $ 138,678
-----------
Gold - 0.5%
10,550 IAMGOLD Corp. (a) $ 58,869
-----------
Materials - 0.5%
600 Mega Blocks, Inc.* $ 9,902
2,950 Mega Blocks, Inc. (144A)* 48,681
-----------
$ 58,583
-----------
Metal & Glass Containers - 0.3%
900 Kennametal, Inc. $ 41,220
-----------
Paper Products - 1.1%
7,575 Wausau-Mosinee Paper Corp. $ 131,048
-----------
Precious Metals & Minerals - 1.2%
11,550 Agnico Eagle Mines, Ltd. (a) $ 152,576
-----------
Specialty Chemicals - 0.6%
8,925 Wellman, Inc. $ 72,560
-----------
Steel - 0.8%
10,000 Graftech International, Ltd.* $ 104,600
-----------
Total Materials $ 758,134
-----------
Shares Value
Capital Goods - 5.4%
Aerospace & Defense - 1.8%
8,450 AAR Corp.* $ 95,908
4,825 MTC Technologies, Inc.* 124,582
-----------
$ 220,490
-----------
Construction, Farm Machinery &
Heavy Trucks - 1.4%
9,950 Wabtec Corp. $ 179,498
-----------
Construction & Engineering - 0.2%
1,500 Insituform Technologies, Inc.* $ 24,405
-----------
Electrical Components & Equipment - 2.0%
2,600 Digital Theater Systems, Inc.* $ 67,912
16,425 Power-One, Inc.* 180,347
-----------
$ 248,259
-----------
Total Capital Goods $ 672,652
-----------
Commercial Services & Supplies - 8.8%
Data Processing Services - 1.2%
8,100 Gartner Group, Inc.* $ 107,082
1,775 TALX Corp. 43,363
-----------
$ 150,445
-----------
Commercial Printing - 0.8%
3,400 John H. Harland Co. $ 99,790
-----------
Diversified Commercial Services - 4.8%
4,951 The Brinks Co. $ 169,572
2,175 Central Parking Corp. 40,651
7,544 FTI Consulting, Inc.* 124,476
3,775 Regis Corp. 168,327
6,000 Tetra Tech, Inc.* 97,920
-----------
$ 600,946
-----------
Employment Services - 1.4%
2,050 Corinthian Colleges, Inc.* $ 50,717
15,600 The Princeton Review, Inc.* 118,092
-----------
$ 168,809
-----------
Environmental Services - 0.6%
11,250 Newpark Resources, Inc.* $ 69,750
-----------
Total Commercial Services &
Supplies $ 1,089,740
-----------
Transportation - 1.3%
Trucking - 1.3%
3,000 Dollar Thrifty Automotive Group* $ 82,320
2,200 Forward Air Corp.* 82,280
-----------
$ 164,600
-----------
Total Transportation $ 164,600
-----------
The accompanying notes are an integral part of these financial statements. 47
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Consumer Durables & Apparel - 4.2%
Apparel, Accessories & Luxury Goods - 1.1%
15,500 Charming Shoppes, Inc.* $ 138,415
-----------
Housewares & Specialties - 2.1%
8,150 Tupperware Corp. $ 158,355
3,450 Yankee Candle Co.* 100,913
-----------
$ 259,268
-----------
Photographic Products - 0.4%
4,800 Creo Products* $ 42,144
-----------
Textiles - 0.6%
25,886 Unifi, Inc.* $ 75,846
-----------
Total Consumer Durables & Apparel $ 515,673
-----------
Hotels, Restaurants & Leisure - 1.3%
Restaurants - 1.3%
2,334 Applebee's International, Inc. $ 53,729
6,325 O'Charley's, Inc.* 108,727
-----------
$ 162,456
-----------
Total Hotels, Restaurants & Leisure $ 162,456
-----------
Media - 2.8%
Movies & Entertainment - 1.7%
11,425 Alliance Atlantis Communications, Inc.* $ 210,231
-----------
Publishing - 1.1%
6,750 Journal Register Co.* $ 135,000
-----------
Total Media $ 345,231
-----------
Retailing - 3.3%
Apparel Retail - 0.4%
2,175 Genesco, Inc.* $ 51,395
-----------
Catalog Retail - 0.5%
3,400 Insight Enterprises, Inc.* $ 60,384
-----------
General Merchandise Stores - 0.9%
3,975 Tuesday Morning Corp.* $ 115,275
-----------
Specialty Stores - 1.5%
900 Guitar Center, Inc.* $ 40,023
3,825 School Specialty, Inc.* 138,886
-----------
$ 178,909
-----------
Total Retailing $ 405,963
-----------
Food & Drug Retailing - 1.6%
Food Distributors - 0.8%
2,214 THe J.M. Smucker Co. $ 101,645
-----------
Food Retail - 0.8%
1,800 Fresh Del Monte Produce, Inc. (a) $ 45,486
3,300 Wild Oats Markets, Inc.* 46,431
-----------
$ 91,917
-----------
Total Food & Drug Retailing $ 193,562
-----------
Shares Value
Food, Beverage & Tobacco - 1.7%
Agricultural Products - 1.7%
4,395 Corn Products International, Inc. $ 204,587
-----------
Total Food, Beverage & Tobacco $ 204,587
-----------
Household & Personal Products - 1.6%
Household Products - 1.6%
8,025 Nu Skin Enterprises, Inc. $ 203,193
-----------
Total Household & Personal
Products $ 203,193
-----------
Health Care Equipment & Services - 10.2%
Health Care Distributors - 2.4%
6,337 AMN Healthcare Services (a)* $ 96,893
2,625 Chattem, Inc.* 75,784
6,600 Cross Country Healthcares, Inc. (a)* 119,790
-----------
$ 292,467
-----------
Health Care Equipment - 1.1%
4,625 Haemonetics Corp.* $ 137,131
-----------
Health Care Facilities - 2.4%
3,300 Lifepoint Hospitals, Inc.* $ 122,826
2,927 Sunrise Senior Living, Inc. (a)* 114,563
1,200 Universal Health Services, Inc. (Class B) 55,068
-----------
$ 292,457
-----------
Health Care Services - 3.7%
20,875 Hooper Holmes, Inc. $ 119,823
4,496 Parexel International Corp.* 89,021
1,500 Pediatrix Medical Group, Inc.* 104,775
7,625 Providence Service Corp.* 143,274
-----------
$ 456,893
-----------
Managed Health Care - 0.6%
5,100 First Health Group Corp.* $ 79,611
-----------
Total Health Care Equipment &
Services $ 1,258,559
-----------
Pharmaceuticals & Biotechnology - 1.3%
Biotechnology - 0.4%
4,525 Cubist Pharmaceuticals, Inc.* $ 50,228
-----------
Pharmaceuticals - 0.9%
4,500 Adolor Corp.* $ 57,060
7,300 Alnylam Pharmaceuticals, Inc. (a)* 55,188
-----------
$ 112,248
-----------
Total Pharmaceuticals &
Biotechnology $ 162,476
-----------
Banks - 6.9%
Diversified Banks - 1.6%
4,400 Provident Financial Services, Inc. $ 77,220
7,200 Texas Capital Bancshares, Inc.* 119,520
-----------
$ 196,740
-----------
48 The accompanying notes are an integral part of these financial statements.
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Regional Banks - 3.2%
400 Alliance Bankshares Corp.* $ 6,020
1,500 City National Corp. 98,550
3,575 Sterling Bancshares, Inc. 50,729
3,000 Virginia Commerce Bancorp, Inc.* 88,530
3,377 Whitney Holding Corp. 150,851
-----------
$ 394,680
-----------
Thrifts & Mortgage Finance - 2.1%
4,500 Commercial Federal Corp. $ 121,950
2,975 Webster Financial Corp. 139,885
-----------
$ 261,835
-----------
Total Banks $ 853,255
-----------
Diversified Financials - 6.9%
Consumer Finance - 3.6%
12,103 Advanta Corp. (Class B) $ 277,401
18,597 Rewards Network, Inc. (a)* 167,373
-----------
$ 444,774
-----------
Investment Banking & Brokerage - 0.9%
8,300 Apollo Investment Corp.* $ 114,291
-----------
Multi-Sector Holding - 1.4%
3,600 Leucadia National Corp. $ 178,920
-----------
Diversified Financial Services - 1.0%
2,800 Gabelli Asset Management, Inc. $ 119,000
-----------
Total Diversified Financials $ 856,985
-----------
Insurance - 2.1%
Property & Casualty Insurance - 2.1%
1,120 First American Corp. $ 28,997
6,800 Quanta Capital Holdings (144A)* 73,032
3,970 Selective Insurance Group, Inc. 158,324
-----------
$ 260,353
-----------
Total Insurance $ 260,353
-----------
Real Estate - 5.6%
Real Estate Investment Trusts - 5.6%
1,800 Camden Property Trust $ 82,440
2,700 Colonial Properties Trust 104,031
3,467 Healthcare Realty Trust, Inc. 129,943
9,107 Innkeepers USA Trust 93,893
4,740 Prentiss Properties Trust 158,885
3,450 Shurgard Storage Centers, Inc. 129,030
-----------
$ 698,222
-----------
Total Real Estate $ 698,222
-----------
Shares Value
Software & Services - 5.8%
Application Software - 3.7%
1,300 Avid Technology, Inc.* $ 70,941
4,112 Fair Isaac & Co., Inc. 137,259
2,850 Manhattan Associates, Inc.* 88,008
6,650 Mercury Computer Systems, Inc.* 164,920
-----------
$ 461,128
-----------
Home Entertainment Software - 0.9%
11,325 Plato Learning, Inc. (a)* $ 112,231
-----------
Internet Software & Services - 0.5%
5,825 Lionbridge Technologies, Inc.* $ 44,561
1,000 PEC Solutions, Inc.* 11,930
-----------
$ 56,491
-----------
IT Consulting & Other Services - 0.2%
1,500 ManTech International Corp.* $ 28,155
-----------
Systems Software - 0.5%
7,500 Borland Software Corp.* $ 63,675
-----------
Total Software & Services $ 721,680
-----------
Technology Hardware & Equipment - 4.0%
Communications Equipment - 0.9%
3,025 Avocent Corp.* $ 111,139
-----------
Computer Storage & Peripherals - 0.6%
2,700 Applied Films Corp.* $ 78,354
-----------
Electronic Equipment & Instruments - 0.6%
5,475 Planar Systems, Inc.* $ 73,310
-----------
Electronic Manufacturing Services - 0.9%
8,450 Plexus Corp.* $ 114,075
-----------
Technology Distributors - 1.0%
3,000 Tech Data Corp.* $ 117,390
-----------
Total Technology Hardware &
Equipment $ 494,268
-----------
Semiconductors - 3.1%
Semiconductor Equipment - 2.2%
898 Cymer, Inc.* $ 33,621
2,701 DuPont Photomasks, Inc. (a)* 54,911
4,796 Photronics, Inc.* 90,836
2,401 Varian Semiconductor Equipment
Associates, Inc.* 92,583
-----------
$ 271,951
-----------
Semiconductors - 0.9%
4,425 Power Integrations, Inc.* $ 110,183
-----------
Total Semiconductors $ 382,134
-----------
The accompanying notes are an integral part of these financial statements. 49
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Telecommunication Services - 2.7%
Integrated Telecommunication Services - 2.0%
8,400 Aeroflex, Inc.* $ 120,372
8,284 CT Communications, Inc. 124,674
-----------
$ 245,046
-----------
Wireless Telecommunication Services - 0.7%
8,600 Boston Communications Group, Inc.* $ 88,150
-----------
Total Telecommunication Services $ 333,196
-----------
Utilities - 0.9%
Gas Utilities - 0.9%
2,525 People's Energy Corp. $ 106,429
-----------
Total Utilities $ 106,429
-----------
TOTAL COMMON STOCKS
(Cost $10,109,655) $11,709,062
-----------
TEMPORARY CASH INVESTMENTS - 7.3%
Security Lending Collateral - 7.3%
906,301 Securities Lending
Investment Fund, 1.29% $ 906,301
-----------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $906,301) $ 906,301
-----------
TOTAL INVESTMENT
IN SECURITIES - 101.9%
(Cost $11,015,956)(a) $12,615,363
-----------
OTHER ASSETS AND
LIABILITIES - (1.9)% $ (231,973)
-----------
TOTAL NET ASSETS - 100.0% $12,383,390
===========
* Non-income producing security.
144A Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $121,713 or 1.0% of
net assets.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
10,160 Agnico Eagle Mines Ltd. $134,823
6,935 Alnylam Pharmaceuticals, Inc.* 49,239
5,664 AMN Healthcare Services* 86,433
4,797 Cross Country Healthcares, Inc.* 87,641
2,305 DuPont Photomasks, Inc.* 46,169
1,685 Fresh Del Monte Produce, Inc. 42,176
10,497 IAMGOLD Corp. 56,264
9,001 Plato Learning, Inc.* 90,460
16,622 Rewards Network, Inc.* 153,754
2,781 Sunrise Senior Living, Inc.* 108,292
--------
Total $855,251
========
50 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.9%
Energy - 6.4%
Integrated Oil & Gas - 0.9%
115,840 Occidental Petroleum Corp. $ 5,607,814
------------
Oil & Gas Drilling - 2.9%
138,315 ENSCO International, Inc. $ 4,024,967
98,730 Nabors Industries, Inc.* 4,464,571
155,930 Transocean Offshore, Inc.* 4,512,612
98,235 Weatherford International, Inc.* 4,418,610
------------
$ 17,420,760
------------
Oil & Gas Exploration & Production - 2.0%
82,861 Devon Energy Corp. $ 5,468,826
180,485 Pioneer Natural Resources Co. 6,331,414
------------
$ 11,800,240
------------
Oil & Gas Refining Marketing &
Transportation - 0.6%
57,785 Sun Company, Inc. $ 3,676,282
------------
Total Energy $ 38,505,096
------------
Materials - 8.3%
Commodity Chemicals - 1.0%
115,445 Air Products & Chemicals, Inc. $ 6,055,090
------------
Diversified Chemical - 1.6%
155,120 PPG Industries, Inc. $ 9,693,449
------------
Diversified Metals & Mining - 2.0%
155,285 Phelps Dodge Corp.* $ 12,036,140
------------
Metal & Glass Containers - 1.6%
130,210 Ball Corp. $ 9,381,631
------------
Paper Products - 2.1%
311,267 Flowserve Corp.* $ 7,762,999
164,600 Meadwestvaco Corp. 4,837,594
------------
$ 12,600,593
------------
Total Materials $ 49,766,903
------------
Capital Goods - 6.0%
Aerospace & Defense - 0.9%
148,300 United Defense Industries, Inc.* $ 5,190,500
------------
Electrical Components & Equipment - 1.8%
178,465 American Power Conversion Corp. $ 3,506,837
486,390 Symbol Technologies, Inc. 7,169,389
------------
$ 10,676,226
------------
Industrial Conglomerates - 3.3%
222,080 American Standard Companies, Inc.* $ 8,952,045
131,520 ITT Industries, Inc. 10,916,160
------------
$ 19,868,205
------------
Total Capital Goods $ 35,734,931
------------
Shares Value
Commercial Services & Supplies - 4.6%
Commercial Printing - 2.0%
90,200 John H. Harland Co. $ 2,647,370
294,540 R.R. Donnelly & Sons Co. (a) 9,725,711
------------
$ 12,373,081
------------
Diversified Commercial Services - 1.0%
131,010 H & R Block, Inc. $ 6,246,557
------------
Environmental Services - 1.6%
319,335 Republic Services, Inc. $ 9,241,555
------------
Total Commercial Services &
Supplies $ 27,861,193
------------
Transportation - 1.7%
Airlines - 0.6%
228,310 Southwest Airlines Co. $ 3,828,759
------------
Railroads - 1.1%
149,120 Canadian National Railway Co. $ 6,500,141
------------
Total Transportation $ 10,328,900
------------
Consumer Durables & Apparel - 4.2%
Apparel, Accessories & Luxury Goods - 0.9%
297,010 The Limited Brands, Inc. $ 5,554,087
------------
Housewares & Specialties - 0.5%
105,600 Yankee Candle Co.* $ 3,088,800
------------
Leisure Products - 2.3%
736,530 Mattel, Inc. $ 13,441,673
------------
Photographic Products - 0.5%
115,500 Eastman Kodak Co. $ 3,116,190
------------
Total Consumer Durables & Apparel $ 25,200,750
------------
Hotels, Restaurants & Leisure - 2.3%
Restaurants - 2.3%
148,700 Brinker International, Inc.* $ 5,073,644
230,605 Tricon Global Restaurants, Inc.* 8,583,116
------------
$ 13,656,760
------------
Total Hotels, Restaurants & Leisure $ 13,656,760
------------
Media - 0.8%
Movies & Entertainment - 0.8%
271,660 Regal Entertainment Group (a) $ 4,917,046
------------
Total Media $ 4,917,046
------------
Retailing - 7.9%
Apparel Retail - 2.1%
132,230 Jones Apparel Group, Inc. $ 5,220,440
196,400 Liz Claiborne, Inc. 7,066,472
------------
$ 12,286,912
------------
Department Stores - 0.8%
130,200 J.C. Penney Co., Inc. $ 4,916,352
------------
The accompanying notes are an integral part of these financial statements. 51
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
General Merchandise Stores - 2.0%
238,200 American Greetings Corp.* $ 5,521,476
172,680 Sears, Roebuck and Co. 6,520,397
------------
$ 12,041,873
------------
Specialty Stores - 3.0%
620,430 Foot Locker, Inc. $ 15,101,266
195,300 Toys "R" Us, Inc.* 3,111,129
------------
$ 18,212,395
------------
Total Retailing $ 47,457,532
------------
Food & Drug Retailing - 6.2%
Drug Retail - 1.5%
211,270 CVS Corp. $ 8,877,565
------------
Food Retail - 3.4%
280,590 ConAgra, Inc. $ 7,598,377
494,200 Safeway, Inc.* 12,523,028
------------
$ 20,121,405
------------
Hypermarkets & Supercenters - 1.3%
313,670 BJ'S Wholesale Club, Inc.* $ 7,841,750
------------
Total Food & Drug Retailing $ 36,840,720
------------
Health Care Equipment & Services - 9.4%
Health Care Distributors - 0.5%
82,400 Par Pharmaceutical Co., Inc.* $ 2,901,304
------------
Health Care Equipment - 2.4%
239,400 Apogent Technologies, Inc.* $ 7,660,800
132,205 Becton, Dickinson & Co. 6,848,219
------------
$ 14,509,019
------------
Health Care Facilities - 3.3%
557,200 Tenet Healthcare Corp.* $ 7,472,052
330,060 Triad Hospitals, Inc.* 12,288,134
------------
$ 19,760,186
------------
Health Care Services - 1.1%
164,630 Laboratory Corp. of America Holdings* $ 6,535,811
------------
Managed Health Care - 2.1%
181,500 CIGNA Corp. $ 12,489,015
------------
Total Health Care Equipment &
Services $ 56,195,335
------------
Banks - 9.1%
Regional Banks - 5.4%
99,000 City National Corp. $ 6,504,300
140,330 KeyCorp 4,194,464
116,165 Marshall & Ilsley Corp. 4,540,890
99,005 North Fork Bancorporation, Inc. 3,767,140
66,240 SouthTrust Corp. 2,570,774
90,775 TCF Financial Corp. 5,269,489
89,400 Zions Bancorporation 5,493,630
------------
$ 32,340,687
------------
Shares Value
Thrifts & Mortgage Finance - 3.7%
115,699 Countrywide Financial Corp. $ 8,127,855
115,375 GreenPoint Financial Corp. 4,580,388
222,760 The PMI Group, Inc. 9,694,515
------------
$ 22,402,758
------------
Total Banks $ 54,743,445
------------
Diversified Financials - 6.0%
Consumer Finance - 3.1%
671,200 Providian Financial Corp.* $ 9,846,504
16,514 White Mountains Insurance Group, Ltd. 8,422,140
------------
$ 18,268,644
------------
Asset Management & Custody Banks - 1.1%
214,590 Federated Investors, Inc. $ 6,510,661
------------
Investment Banking & Brokerage - 1.8%
190,500 A.G. Edwards, Inc. $ 6,482,715
341,950 Investment Technology Group, Inc.* 4,373,541
------------
$ 10,856,256
------------
Total Diversified Financials $ 35,635,561
------------
Insurance - 6.3%
Insurance Brokers - 2.1%
180,710 Platinum Underwriter Holdings, Ltd. (a) $ 5,499,005
187,840 Willis Group Holdings, Ltd. 7,034,608
------------
$ 12,533,613
------------
Life & Health Insurance - 0.9%
99,130 Jefferson - Pilot Corp. $ 5,035,804
------------
Property & Casualty Insurance - 3.3%
104,105 Ambac Financial Group, Inc. $ 7,645,471
278,500 Safeco Corp. 12,254,000
------------
$ 19,899,471
------------
Total Insurance $ 37,468,888
------------
Software & Services - 2.3%
Data Processing & Outsourced Services - 2.3%
555,530 The BISYS Group, Inc.* $ 7,810,752
239,929 SunGard Data Systems, Inc.* 6,238,154
------------
$ 14,048,906
------------
Total Software & Services $ 14,048,906
------------
Technology Hardware & Equipment - 9.4%
Communications Equipment - 3.2%
296,600 Century Telephone Enterprises, Inc. $ 8,909,864
356,121 Tellabs, Inc.* 3,112,498
230,200 Utstarcom, Inc (a)* 6,963,550
------------
$ 18,985,912
------------
Computer Hardware - 1.9%
231,360 NCR Corp.* $ 11,473,142
------------
52 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Computer Storage & Peripherals - 2.1%
284,600 SanDisk Corp. (a)* $ 6,172,974
214,600 Storage Technology Corp.* 6,223,400
------------
$ 12,396,374
------------
Electronic Equipment & Instruments - 2.2%
230,080 W.W. Grainger, Inc. $ 13,229,600
------------
Total Technology Hardware &
Equipment $ 56,085,028
------------
Semiconductors - 0.6%
260,900 Cypress Semiconductor Corp. (a)* $ 3,702,171
------------
Total Semiconductors $ 3,702,171
------------
Utilities - 6.4%
Electric Utilities - 4.6%
148,675 Constellation Energy Group $ 5,634,783
140,350 DTE Energy Co. 5,689,789
115,315 Entergy Corp. 6,458,793
347,300 PG&E Corp.* 9,703,562
------------
$ 27,486,927
------------
Gas Utilities - 0.1%
16,315 KeySpan Energy Corp. $ 598,761
------------
Multi-Utilities & Unregulated Power - 1.7%
920,000 Reliant Energy* $ 9,963,600
------------
Total Utilities $ 38,049,288
------------
TOTAL COMMON STOCKS
(Cost $509,973,009) $586,198,453
------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 6.2%
Repurchase Agreement - 2.0%
$12,100,000 UBS Warburg, Inc. 1.25%,
dated 6/30/04, repurchase price of
$12,100,000 plus accrued interest on
7/1/04 collateralized by $11,094,000
U.S. Treasury Bill, 7.0%, 7/15/06 $ 12,100,000
------------
Shares
Security Lending Collateral - 4.2%
25,038,825 Securities Lending
Investment Fund, 1.29% $ 25,038,825
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $37,138,825) $ 37,138,825
------------
TOTAL INVESTMENT
IN SECURITIES - 104.1%
(Cost $547,111,834)(a) $623,337,278
------------
OTHER ASSETS AND
LIABILITIES - (4.1)% $(24,737,403)
------------
TOTAL NET ASSETS - 100.0% $598,599,875
============
* Non-income producing security.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
105,980 Cypress Semiconductor Corp.* $ 1,462,524
14,695 Platinum Underwriter Holdings Ltd. 445,552
249,900 Regal Entertainment Group 4,510,695
155,000 R.R. Donnelly & Sons Co. 5,128,950
263,720 SanDisk Corp.* 5,909,965
275,023 Utstarcom, Inc* 8,363,449
-----------
Total $25,821,135
===========
The accompanying notes are an integral part of these financial statements. 53
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 99.6%
Energy - 1.0%
Integrated Oil & Gas - 1.0%
2,500 ConocoPhillips $ 190,725
4,200 Occidental Petroleum Corp. 203,322
-----------
$ 394,047
-----------
Total Energy $ 394,047
-----------
Materials - 3.5%
Diversified Metals & Mining - 3.5%
19,700 Freeport-McMoRan Copper & Gold, Inc.
(Class B) $ 653,055
8,900 Phelps Dodge Corp.* 689,839
-----------
$ 1,342,894
-----------
Total Materials $ 1,342,894
-----------
Capital Goods - 6.9%
Aerospace & Defense - 1.1%
6,200 L-3 Communications Holdings, Inc. $ 414,160
-----------
Electrical Component & Equipment - 1.3%
15,200 General Electric Co. $ 492,480
-----------
Industrial Conglom - 4.5%
16,900 American Standard Companies, Inc.* $ 681,239
21,400 Tyco International Ltd. 709,196
4,000 United Technologies Corp. 365,920
-----------
$ 1,756,355
-----------
Total Capital Goods $ 2,662,995
-----------
Commercial Services & Supplies - 2.0%
Employment Services - 2.0%
31,300 Corinthian Colleges, Inc.* $ 774,362
-----------
Total Commercial Services &
Supplies $ 774,362
-----------
Transportation - 1.2%
Trucking - 1.2%
5,900 United Parcel Service $ 443,503
-----------
Total Transportation $ 443,503
-----------
Hotels, Restaurants & Leisure - 3.0%
Casinos & Gaming - 1.3%
13,400 International Game Technology $ 517,240
-----------
Hotels, Resorts & Cruise Lines - 0.8%
6,400 Carnival Corp. $ 300,800
-----------
Restaurants - 0.9%
9,100 Tricon Global Restaurants, Inc.* $ 338,702
-----------
Total Hotels, Restaurants & Leisure $ 1,156,742
-----------
Shares Value
Media - 3.3%
Broadcasting & Cable TV - 0.9%
9,300 Clear Channel Communications, Inc. $ 343,635
-----------
Movies & Entertainment - 2.4%
21,300 The Walt Disney Co. $ 542,937
10,400 Viacom, Inc. (Class B) 371,488
-----------
$ 914,425
-----------
Total Media $ 1,258,060
-----------
Retailing - 8.2%
Apparel Retail - 2.3%
5,400 Liz Claiborne, Inc. $ 194,292
3,900 Nike, Inc. 295,425
15,200 Ross Stores, Inc. 406,752
-----------
$ 896,469
-----------
Department Stores - 2.1%
7,500 J.C. Penney Co., Inc. $ 283,200
12,300 Kohl's Corp.* 520,044
-----------
$ 803,244
-----------
General Merchandise Stores - 2.4%
9,900 Family Dollar Stores, Inc. $ 301,158
14,700 Target Corp. 624,309
-----------
$ 925,467
-----------
Home Improvement Retail - 1.4%
10,000 Lowe's Companies, Inc. $ 525,500
-----------
Total Retailing $ 3,150,680
-----------
Food & Drug Retailing - 2.1%
Drug Retail - 0.6%
5,900 Walgreen Co. $ 213,639
-----------
Food Distributors - 1.5%
8,500 Cardinal Health, Inc. $ 595,425
-----------
Total Food & Drug Retailing $ 809,064
-----------
Food, Beverage & Tobacco - 5.5%
Soft Drinks - 3.6%
17,000 The Coca-Cola Co. $ 858,160
9,800 PepsiCo, Inc. 528,024
-----------
$ 1,386,184
-----------
Tobacco - 1.9%
14,500 Altria Group, Inc. $ 725,725
-----------
Total Food, Beverage & Tobacco $ 2,111,909
-----------
54 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Health Care Equipment & Services - 10.8%
Health Care Distributors - 5.7%
47,400 Bristol-Myers Squibb Co. $ 1,161,300
6,203 Teva Pharmaceutical Industries, Ltd. 417,400
17,100 Wyeth 618,336
-----------
$ 2,197,036
-----------
Health Care Equipment - 4.3%
16,700 Guidant Corp. $ 933,196
5,400 St. Jude Medical, Inc.* 408,510
3,500 Zimmer Holdings, Inc.* 308,700
-----------
$ 1,650,406
-----------
Managed Health Care - 0.8%
2,800 Wellpoint Health Networks, Inc.* $ 313,628
-----------
Total Health Care Equipment &
Services $ 4,161,070
-----------
Pharmaceuticals & Biotechnology - 11.9%
Biotechnology - 2.8%
12,758 Amgen, Inc.* $ 696,204
35,400 Cubist Pharmaceuticals, Inc.* 392,940
-----------
$ 1,089,144
-----------
Pharmaceuticals - 9.1%
16,000 Merck & Co., Inc. $ 760,000
27,851 Pfizer, Inc. 954,732
17,200 Sepracor, Inc.* 909,880
23,400 Schering-Plough Corp. 432,432
14,400 Sanofi-Synthelabo SA (A.D.R.)* 460,656
-----------
$ 3,517,700
-----------
Total Pharmaceuticals &
Biotechnology $ 4,606,844
-----------
Banks - 2.3%
Diversified Banks - 1.1%
4,900 Bank of America Corp. $ 414,638
-----------
Thrifts & Mortgage Finance - 1.2%
7,400 Freddie Mac $ 468,420
-----------
Total Banks $ 883,058
-----------
Diversified Financials - 1.3%
Consumer Finance - 0.6%
15,900 Providian Financial Corp.* $ 233,253
-----------
Investment Banking & Brokerage - 0.7%
2,800 Goldman Sachs Group, Inc. $ 263,648
-----------
Total Diversified Financials $ 496,901
-----------
Shares Value
Insurance - 5.0%
Insurance Brokers - 0.8%
8,200 Willis Group Holdings, Ltd. $ 307,090
-----------
Multi-Line Insurance - 2.4%
13,000 American International Group, Inc. $ 926,640
-----------
Property & Casualty Insurance - 1.8%
9,000 ACE, Ltd. $ 380,520
7,400 Safeco Corp. 325,600
-----------
$ 706,120
-----------
Total Insurance $ 1,939,850
-----------
Software & Services - 11.6%
Application Software - 8.4%
9,200 Fair Isaac & Co., Inc. $ 307,096
74,000 Microsoft Corp. 2,113,440
21,500 Macrovision Corp.* 538,145
9,500 Veritas Software Corp.* 263,150
-----------
$ 3,221,831
-----------
Data Processing & Outsourced Services - 1.5%
12,600 First Data Corp. $ 560,952
-----------
Home Entertainment Software - 0.7%
9,300 Take-Two Interactive Software, Inc.* $ 284,952
-----------
IT Consulting & Other Services - 1.0%
14,100 Accenture, Ltd.* $ 387,468
-----------
Total Software & Services $ 4,455,203
-----------
Technology Hardware & Equipment - 13.0%
Communications Equipment - 1.8%
16,600 Nokia Corp. (A.D.R.) $ 241,364
15,100 Utstarcom, Inc.* 456,775
-----------
$ 698,139
-----------
Computer Hardware - 4.3%
21,800 Dell, Inc.* $ 780,876
41,600 Hewlett-Packard Co. 877,760
-----------
$ 1,658,636
-----------
Computer Storage & Peripherals - 4.1%
61,800 Lexar Media, Inc.* $ 412,824
53,900 Sandisk Corp.* 1,169,091
-----------
$ 1,581,915
-----------
Electronic Equipment &
Instruments - 2.8%
5,300 Samsung Electronics Co., Ltd.* $ 1,091,126
-----------
Total Technology Hardware &
Equipment $ 5,029,816
-----------
The accompanying notes are an integral part of these financial statements. 55
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Semiconductors - 5.5%
61,300 Intel Corp. $ 1,691,880
51,100 Taiwan Semiconductor
Manufacturing Co. (A.D.R.) 424,641
-----------
$ 2,116,521
-----------
Total Semiconductors $ 2,116,521
-----------
Telecommunication Services - 1.6%
Wireless Telecommunication Services - 1.6%
27,100 Vodafone Group Plc (A.D.R.) $ 598,911
-----------
Total Telecommunication Services $ 598,911
-----------
TOTAL COMMON STOCKS
(Cost $38,249,059) $38,392,430
-----------
TOTAL INVESTMENT
IN SECURITIES - 99.6%
(Cost $38,249,059) $38,392,430
-----------
OTHER ASSETS AND
LIABILITIES - 0.4% $ 169,200
-----------
TOTAL NET ASSETS - 100.0% $38,561,630
===========
* Non-income producing security.
(A.D.R.) American Depository Receipt
56 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.4%
Hotels, Restaurants & Leisure - 5.3%
Hotels, Resorts & Cruise Lines - 5.3%
75,000 Hilton Hotels Corp.* $ 1,399,500
58,000 Starwood Hotels & Resorts 2,601,300
-----------
$ 4,000,800
-----------
Total Hotels, Restaurants & Leisure $ 4,000,800
-----------
Diversified Financials - 3.0%
Diversified Financial Services - 3.0%
77,000 Brookfield Properties Corp. $ 2,213,750
-----------
Total Diversified Financials $ 2,213,750
-----------
Real Estate - 89.1%
Real Estate Management & Development - 4.0%
115,500 Catellus Development Corp. $ 2,847,075
8,200 Inland Real Estate Corp.* 106,682
-----------
$ 2,953,757
-----------
Real Estate Investment Trusts - 85.1%
38,500 Apartment Investment & Management Co. $ 1,198,505
46,200 AMB Property Corp. 1,599,906
22,400 Affordable Residential Communities* 371,840
16,500 Alexandria Real Estate Equities, Inc. 936,870
44,000 Arden Realty Group, Inc. 1,294,040
92,500 Archstone Communities Trust 2,713,025
50,000 AvalonBay Communities, Inc.* 2,826,000
73,100 Boston Properties, Inc. 3,660,848
17,500 Chelsea Property Group, Inc. 1,141,350
30,000 Camden Property Trust 1,374,000
10,000 Carramerica Realty Corp. 302,300
61,000 Developers Diversifies Realty Corp. 2,157,570
57,000 Duke Realty Investments, Inc. 1,813,170
79,000 Equity Office Properties Trust 2,148,800
107,000 Equity Residential Property Trust 3,181,110
5,800 First Potomac Realty Trust* 111,186
36,000 Federal Realty Investment Trust 1,497,240
79,500 General Growth Properties, Inc. 2,350,815
25,500 Highwoods Properties, Inc.* 599,250
Shares Value
189,000 Host Marriott Corp.* $ 2,336,040
6,000 Healthcare Realty Trust, Inc. 224,880
2,500 Kilroy Realty Corp. 85,250
53,000 Liberty Property Trust 2,131,130
35,500 The Macerich Co. 1,699,385
11,300 Manufactured Home Communities, Inc. 375,047
9,100 Mills Corp. 424,970
10,500 Corporate Office Properties 260,925
88,000 ProLogis Trust 2,896,960
29,300 Pan Pacific Retail Properties, Inc. 1,480,236
55,000 Prentiss Properties Trust 1,843,600
45,206 Public Storage, Inc. 2,079,928
25,500 PS Business Parks Inc* 1,026,120
48,000 Regency Centers Corp. 2,059,200
35,000 The Rouse Co.* 1,662,500
9,500 iStar Financial, Inc.* 380,000
27,500 Shurgard Storage Centers, Inc. 1,028,500
15,800 Strategic Hotel Capital, Inc.* 232,260
85,000 Simon DeBartolo Group, Inc. 4,370,700
51,000 Taubman Centers, Inc. 1,167,390
37,600 Trizec Properties Inc. 611,376
47,200 United Dominion Realty Trust 933,616
46,000 Vornado Realty Trust 2,627,060
16,500 Western Resources, Inc. 516,120
-----------
$63,731,018
-----------
Total Real Estate $66,684,775
-----------
TOTAL COMMON STOCKS
(Cost $55,838,852) $72,899,325
-----------
TOTAL INVESTMENT
IN SECURITIES - 97.4%
(Cost $55,838,852) $72,899,325
-----------
OTHER ASSETS AND
LIABILITIES - 2.6% $ 1,967,974
-----------
TOTAL NET ASSETS - 100.0% $74,867,299
===========
* Non-income producing security.
The accompanying notes are an integral part of these financial statements. 57
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 96.5%
Energy - 7.9%
Integrated Oil & Gas - 5.9%
16,643 BP Amoco Plc (A.D.R.) $ 891,566
57,921 ChevronTexaco Corp. 5,450,945
24,727 ConocoPhillips 1,886,423
119,280 Exxon Mobil Corp. 5,297,224
36,993 Occidental Petroleum Corp. 1,790,831
------------
$ 15,316,989
------------
Oil & Gas Drilling - 0.9%
42,044 Smith International, Inc.* $ 2,344,373
------------
Oil & Gas Exploration & Production - 1.1%
18,971 Apache Corp. $ 826,187
57,988 Pioneer Natural Resources Co. 2,034,219
------------
$ 2,860,406
------------
Total Energy $ 20,521,768
------------
Materials - 5.5%
Aluminum - 0.6%
46,252 Alcoa, Inc. $ 1,527,704
------------
Commodity Chemicals - 1.1%
23,113 Air Products & Chemicals, Inc. $ 1,212,277
38,676 E.I. du Pont de Nemours and Co. 1,717,988
------------
$ 2,930,265
------------
Diversified Chemical - 0.4%
18,467 PPG Industries, Inc. $ 1,154,003
------------
Diversified Metals & Mining - 2.5%
32,924 Phelps Dodge Corp.* $ 2,551,939
164,111 Rio Tinto Plc 3,949,666
------------
$ 6,501,605
------------
Paper Products - 0.5%
43,199 Meadwestvaco Corp. $ 1,269,619
------------
Specialty Chemicals - 0.4%
32,149 Ecolab, Inc. $ 1,019,123
------------
Total Materials $ 14,402,319
------------
Capital Goods - 7.4%
Aerospace & Defense - 1.5%
38,908 General Dynamics Corp. $ 3,863,564
------------
Electrical Components & Equipment - 0.7%
18,467 Emerson Electric Co. $ 1,173,578
26,633 General Electric Co. 862,909
------------
$ 2,036,487
------------
Shares Value
Industrial Conglomerates - 2.8%
20,674 Illinois Tool Works, Inc. $ 1,982,430
45,528 Johnson Controls, Inc. 2,430,285
31,359 United Technologies Corp. 2,868,721
------------
$ 7,281,436
------------
Industrial Machinery - 2.4%
33,682 Caterpillar, Inc. $ 2,675,698
50,290 Deere & Co. 3,527,341
------------
$ 6,203,039
------------
Total Capital Goods $ 19,384,526
------------
Commercial Services & Supplies - 1.0%
Office Services & Supplies - 1.0%
47,154 Canon, Inc. (A.D.R.) $ 2,518,023
------------
Total Commercial Services &
Supplies $ 2,518,024
------------
Transportation - 3.4%
Airlines - 0.9%
137,864 Southwest Airlines Co. $ 2,311,979
------------
Railroads - 2.0%
40,302 Burlington Northern, Inc. $ 1,413,391
146,340 Norfolk Southern Corp. 3,880,937
------------
$ 5,294,328
------------
Trucking - 0.5%
16,958 United Parcel Service $ 1,274,733
------------
Total Transportation $ 8,881,040
------------
Automobiles & Components - 2.3%
Automobile Manufacturers - 2.3%
208,966 Ford Motor Corp. $ 3,270,318
46,602 PACCAR, Inc. 2,702,450
------------
$ 5,972,768
------------
Total Automobiles & Components $ 5,972,768
------------
Media - 6.2%
Advertising - 1.0%
35,541 Omnicom Group $ 2,697,206
------------
Movies & Entertainment - 0.4%
34,933 The Walt Disney Co. $ 890,442
------------
Publishing - 4.8%
46,390 Elsevier NV $ 652,795
40,418 Gannett Co. 3,429,467
113,495 John Wiley & Sons, Inc. 3,631,840
63,415 McGraw-Hill Co., Inc. 4,855,687
------------
$ 12,569,789
------------
Total Media $ 16,157,437
------------
58 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Retailing - 4.1%
Apparel Retail - 0.3%
19,973 Liz Claiborne, Inc. $ 718,629
------------
Department Stores - 0.6%
53,341 May Department Stores Co. $ 1,466,344
------------
General Merchandise Stores - 2.1%
29,152 Family Dollar Stores, Inc. $ 886,804
109,408 Target Corp. 4,646,558
------------
$ 5,533,362
------------
Home Improvement Retail - 0.8%
39,604 Lowe's Companies, Inc. $ 2,081,190
------------
Specialty Stores - 0.3%
25,229 Barnes & Noble, Inc.* $ 857,281
------------
Total Retailing $ 10,656,806
------------
Food & Drug Retailing - 3.5%
Drug Retail - 1.6%
112,775 Walgreen Co. $ 4,083,583
------------
Food Distributors - 1.3%
12,492 Cardinal Health, Inc. $ 875,065
68,293 Sysco Corp. 2,449,670
------------
$ 3,324,735
------------
Hypermarkets & Supercenters - 0.6%
30,854 Wal-Mart Stores, Inc. $ 1,627,857
------------
Total Food & Drug Retailing $ 9,036,175
------------
Food, Beverage & Tobacco - 4.7%
Packaged Foods & Meats - 3.6%
70,267 Campbell Soup Co. $ 1,888,777
36,702 General Mills, Inc. 1,744,446
45,065 Hershey Foods Corp. 2,085,158
59,465 H.J. Heinz Co., Inc. 2,331,028
61,629 Sara Lee Corp. 1,416,851
------------
$ 9,466,260
------------
Soft Drinks - 1.1%
53,078 PepsiCo, Inc. $ 2,859,843
------------
Total Food, Beverage & Tobacco $ 12,326,103
------------
Household & Personal Products - 3.3%
Household Products - 3.3%
12,405 Clorox Co. $ 667,141
53,543 Colgate-Palmolive Co. 3,129,588
19,005 Estee Lauder Co. 927,064
70,848 Procter & Gamble Co. 3,856,965
------------
$ 8,580,758
------------
Total Household & Personal
Products $ 8,580,758
------------
Shares Value
Health Care Equipment & Services - 5.9%
Health Care Distributors - 2.4%
47,967 Abbott Laboratories $ 1,955,135
75,610 Johnson & Johnson 4,211,477
------------
$ 6,166,612
------------
Health Care Equipment - 2.7%
58,653 Becton, Dickinson & Co. $ 3,038,225
35,076 Biomet, Inc. 1,558,777
26,639 Guidant Corp. 1,488,587
13,291 St. Jude Medical, Inc.* 1,005,464
------------
$ 7,091,053
------------
Managed Health Care - 0.8%
20,042 United Healthcare Group, Inc. $ 1,247,615
7,549 Wellpoint Health Networks, Inc.* 845,563
------------
$ 2,093,178
------------
Total Health Care Equipment &
Services $ 15,350,843
------------
Pharmaceuticals & Biotechnology - 6.1%
Pharmaceuticals - 6.1%
33,785 Barr Laboratorie, Inc.* $ 1,138,555
35,772 Eli Lilly & Co. 2,500,821
55,400 Merck & Co., Inc. 2,631,500
67,544 Mylan Laboratories, Inc. 1,367,766
45,761 Novartis AG (A.D.R.) 2,036,364
62,253 Pfizer, Inc. 2,134,033
15,214 Roche Holdings AG (A.D.R.)* 1,508,088
145,764 Schering-Plough Corp. 2,693,719
------------
$ 16,010,846
------------
Total Pharmaceuticals &
Biotechnology $ 16,010,846
------------
Banks - 7.4%
Diversified Banks - 2.2%
32,784 Charter One Financial, Inc. $ 1,448,725
85,656 U.S. Bancorp 2,360,679
35,519 Wells Fargo & Co. 2,032,752
------------
$ 5,842,156
------------
Regional Banks - 4.2%
28,340 First Horizon National Corp. $ 1,288,620
114,053 National City Corp. 3,992,996
38,351 SouthTrust Corp. 1,488,402
47,329 SunTrust Banks, Inc. 3,075,912
19,396 Zions Bancorporation 1,191,884
------------
$ 11,037,814
------------
Thrifts & Mortgage Finance - 1.0%
64,028 Washington Mutual, Inc. $ 2,474,042
------------
Total Banks $ 19,354,012
------------
The accompanying notes are an integral part of these financial statements. 59
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Diversified Financials - 5.6%
Asset Management & Custody Banks - 3.8%
52,067 The Bank of New York Co., Inc. $ 1,534,935
37,051 Federated Investors Inc. 1,124,127
62,368 State Street Corp. 3,058,527
81,766 T. Rowe Price Associates, Inc. 4,121,006
------------
$ 9,838,595
------------
Consumer Finance - 0.8%
38,211 American Express Co. $ 1,963,281
------------
Investment Banking & Brokerage - 1.0%
49,593 Merrill Lynch & Co., Inc. $ 2,677,030
------------
Total Diversified Financials $ 14,478,906
------------
Insurance - 3.5%
Multi - Line Insurance - 1.0%
37,283 American International Group, Inc. $ 2,657,532
------------
Property & Casualty Insurance - 2.5%
46,109 Chubb Corp. $ 3,143,712
26,583 Safeco Corp. 1,169,652
52,652 St. Paul Travelers Companies, Inc. 2,134,512
------------
$ 6,447,876
------------
Total Insurance $ 9,105,408
------------
Software & Services - 4.7%
Application Software - 2.4%
35,888 Adobe Systems, Inc. $ 1,668,792
119,628 Microsoft Corp. 3,416,576
26,017 Symantec Corp.* 1,139,024
------------
$ 6,224,392
------------
Data Processing & Outsourced Services - 2.3%
39,373 Automatic Data Processing, Inc. $ 1,648,941
32,311 Computer Sciences Corp.* 1,500,200
21,836 DST Systems, Inc.* 1,050,093
25,494 Fiserv, Inc.* 991,462
32,184 SunGard Data Systems, Inc.* 836,784
------------
$ 6,027,480
------------
Total Software & Services $ 12,251,872
------------
Technology Hardware & Equipment - 5.4%
Communications Equipment - 2.0%
182,952 Motorola, Inc. $ 3,338,874
128,455 Nokia Corp (A.D.R.) 1,867,736
------------
$ 5,206,610
------------
Shares Value
Computer Hardware - 3.4%
17,403 Apple Computer, Inc.* $ 566,294
60,976 Dell, Inc.* 2,184,160
22,881 Diebold, Inc. 1,209,718
72,740 Hewlett-Packard Co. 1,534,814
24,634 IBM Corp.* 2,171,487
252,670 Sun Microsystems, Inc.* 1,096,588
------------
$ 8,763,061
------------
Total Technology Hardware &
Equipment $ 13,969,671
------------
Semiconductors - 3.4%
Semiconductor Equipment - 0.9%
120,790 Applied Materials, Inc.* $ 2,369,900
------------
Semiconductors - 2.5%
126,597 Intel Corp. $ 3,494,077
118,406 Texas Instruments, Inc. 2,863,057
------------
$ 6,357,134
------------
Total Semiconductors $ 8,727,034
------------
Telecommunication Services - 3.2%
Integrated Telecommunication Services - 3.2%
18,815 Alltel Corp. $ 952,415
116,841 BellSouth Corp. 3,063,571
176,887 SBC Communications, Inc. 4,289,510
------------
$ 8,305,496
------------
Total Telecommunication Services $ 8,305,496
------------
Utilities - 2.0%
Electric Utilities - 1.3%
26,945 American Electric Power Co., Inc. $ 862,240
29,268 Consolidated Edison, Inc. 1,163,696
46,790 Southern Co. 1,363,929
------------
$ 3,389,865
------------
Gas Utilities - 0.6%
22,532 KeySpan Energy Corp. (a) $ 826,924
31,011 Vectren Corp. 778,065
------------
$ 1,604,989
------------
Water Utilities - 0.1%
14,953 Aqua America, Inc. $ 299,808
------------
Total Utilities $ 5,294,662
------------
TOTAL COMMON STOCKS
(Cost $224,336,202) $251,286,474
------------
60 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 3.7%
Repurchase Agreement - 3.4%
$ 8,800,000 UBS Warburg, Inc., 1.25%,
dated 6/30/04, repurchase price of
$8,800,000 plus accrued interest on
7/1/04 collateralized by $8,068,000
U.S. Treasury Bill, 7.0%, 7/15/06 $ 8,800,000
------------
Shares
Security Lending Collateral - 0.3%
766,159 Securities Lending
Investment Fund, 1.29% $ 766,159
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $9,566,159) $ 9,566,159
------------
TOTAL INVESTMENT IN
SECURITIES - 100.2%
(Cost $233,902,361)(a) $260,852,633
------------
OTHER ASSETS AND
LIABILITIES - (0.2)% $ (506,268)
------------
TOTAL NET ASSETS - 100.0% $260,346,365
============
* Non-income producing security.
(A.D.R.) American Depositary Receipt
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
20,707 KeySpan Energy Corp. $751,043
The accompanying notes are an integral part of these financial statements. 61
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
CONVERTIBLE PREFERRED STOCKS - 1.4%
Automobiles & Components - 1.4%
Automobile Manufacturers - 1.4%
2,600 General Motors, 5.25%, 3/6/32 $ 64,025
55,600 Ford Capital Trust, 6.5%, 1/15/32 3,033,536
------------
$ 3,097,561
------------
Total Automobiles & Components $ 3,097,561
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $2,691,323) $ 3,097,561
------------
Principal
Amount
CONVERTIBLE CORPORATE BOND - 0.0%
Retailing - 0.0%
Apparel Retail - 0.0%
$200,000 Gap Inc., 5.75%, 3/15/09 $ 311,000
------------
Total Retailing $ 311,000
------------
TOTAL CONVERTIBLE CORPORATE BOND
(Cost $200,000) $ 311,000
------------
Shares
COMMON STOCKS - 95.5%
Energy - 11.7%
Integrated Oil & Gas - 11.7%
98,300 ChevronTexaco Corp. $ 9,251,013
114,865 ConocoPhillips 8,763,051
161,066 Exxon Mobil Corp. 7,152,941
35,000 Occidental Petroleum Corp. 1,694,350
------------
$ 26,861,355
------------
Total Energy $ 26,861,355
------------
Materials - 5.2%
Commodity Chemicals - 1.7%
50,300 Air Products & Chemicals, Inc. $ 2,638,235
27,341 E.I. du Pont de Nemours and Co. 1,214,487
------------
$ 3,852,722
------------
Construction Materials - 0.7%
35,000 Vulcan Materials Co. $ 1,664,250
------------
Diversified Chemical - 0.7%
25,300 PPG Industries, Inc. $ 1,580,997
------------
Paper Products - 0.8%
62,400 Meadwestvaco Corp. $ 1,833,936
------------
Specialty Chemicals - 0.3%
15,000 Valspar Corp. $ 755,850
------------
Steel - 1.0%
24,700 Nucor Corp. $ 1,895,972
20,050 Roanoke Electric Steel Corp. 272,680
------------
$ 2,168,652
------------
Total Materials $ 11,856,407
------------
Shares Value
Capital Goods - 8.6%
Aerospace & Defense - 3.0%
51,600 Boeing Co. $ 2,636,244
43,200 General Dynamics Corp. 4,289,760
------------
$ 6,926,004
------------
Electrical Components & Equipment - 1.6%
59,000 Emerson Electric Co. $ 3,749,450
------------
Industrial Conglomerates - 2.7%
58,100 Johnson Controls, Inc. $ 3,101,378
32,700 United Technologies Corp. 2,991,396
------------
$ 6,092,774
------------
Industrial Machinery - 1.3%
22,000 Gorman-Rupp Co. $ 597,740
92,200 The Timken Co. 2,442,378
------------
$ 3,040,118
------------
Total Capital Goods $ 19,808,346
------------
Transportation - 0.4%
Railroads - 0.4%
26,500 Burlington Northern, Inc. $ 929,355
------------
Total Transportation $ 929,355
------------
Automobiles & Components - 3.7%
Automobile Manufacturers - 3.7%
145,175 PACCAR, Inc. $ 8,418,698
------------
Total Automobiles & Components $ 8,418,698
------------
Media - 3.2%
Movies & Entertainment - 1.8%
132,400 Cedar Fair, L.P. (a) $ 4,177,220
------------
Publishing - 1.4%
40,500 McGraw-Hill Co., Inc. $ 3,101,085
------------
Total Media $ 7,278,305
------------
Retailing - 2.3%
Department Stores - 1.6%
30,000 J.C. Penney Co., Inc. $ 1,132,800
92,825 May Department Stores Co. 2,551,759
------------
$ 3,684,559
------------
General Merchandise Stores - 0.7%
40,300 Sears, Roebuck and Co. $ 1,521,728
------------
Total Retailing $ 5,206,287
------------
Food, Beverage & Tobacco - 5.4%
Packaged Foods & Meats - 4.4%
147,500 Campbell Soup Co. $ 3,964,800
47,300 General Mills, Inc. 2,248,169
73,700 H.J. Heinz Co., Inc. 2,889,040
46,900 Sara Lee Corp. 1,078,231
------------
$ 10,180,240
------------
62 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Soft Drinks - 1.0%
12,900 The Coca-Cola Co. $ 651,192
28,600 PepsiCo, Inc. 1,540,968
------------
$ 2,192,160
------------
Total Food, Beverage & Tobacco $ 12,372,400
------------
Household & Personal Products - 1.5%
Household Products - 1.5%
20,000 Clorox Co. $ 1,075,600
39,200 Colgate-Palmolive Co. 2,291,240
------------
$ 3,366,840
------------
Total Household & Personal
Products $ 3,366,840
------------
Health Care Equipment & Services - 3.7%
Health Care Distributors - 2.8%
88,900 Abbott Laboratories $ 3,623,564
50,600 Johnson & Johnson 2,818,420
------------
$ 6,441,984
------------
Health Care Equipment - 0.9%
38,200 Becton, Dickinson & Co. $ 1,978,760
------------
Total Health Care Equipment &
Services $ 8,420,744
------------
Pharmaceuticals & Biotechnology - 3.6%
Pharmaceuticals - 3.6%
57,900 Eli Lilly & Co. $ 4,047,789
74,300 Merck & Co., Inc. 3,529,250
20,000 Pfizer, Inc. 685,600
------------
$ 8,262,639
------------
Total Pharmaceuticals &
Biotechnology $ 8,262,639
------------
Banks - 12.6%
Diversified Banks - 5.4%
154,900 Charter One Financial, Inc. $ 6,845,031
86,100 U.S. Bancorp 2,372,916
53,700 Wells Fargo & Co. 3,073,251
------------
$ 12,291,198
------------
Regional Banks - 5.8%
62,200 First Horizon National Corp. $ 2,828,234
96,900 National City Corp. 3,392,469
79,600 SouthTrust Corp. 3,089,276
63,000 SunTrust Banks, Inc. 4,094,370
------------
$ 13,404,349
------------
Thrifts & Mortgage Finance - 1.4%
85,400 Washington Mutual, Inc. $ 3,299,856
------------
Total Banks $ 28,995,403
------------
Shares Value
Diversified Financials - 3.5%
Asset Management & Custody Banks - 2.9%
45,100 Eaton Vance Corp. $ 1,723,271
98,600 T. Rowe Price Associates, Inc. 4,969,440
------------
$ 6,692,711
------------
Investment Banking & Brokerage - 0.6%
43,100 A.G. Edwards, Inc. $ 1,466,693
------------
Total Diversified Financials $ 8,159,404
------------
Insurance - 4.4%
Property & Casualty Insurance - 4.4%
51,600 Chubb Corp. $ 3,518,088
86,800 Safeco Corp. 3,819,200
68,900 St. Paul Travelers Companies, Inc. 2,793,206
------------
$ 10,130,494
------------
Total Insurance $ 10,130,494
------------
Real Estate - 1.1%
Real Estate Investment Trusts - 1.1%
51,600 Simon DeBartolo Group, Inc. $ 2,653,272
------------
Total Real Estate $ 2,653,272
------------
Software & Services - 0.8%
Application Software - 0.4%
31,000 Microsoft Corp. $ 885,360
------------
Data Processing & Outsourced Services - 0.4%
25,000 Automatic Data Processing, Inc. $ 1,047,000
------------
Total Software & Services $ 1,932,360
------------
Technology Hardware & Equipment - 1.6%
Computer Hardware - 1.6%
44,300 Diebold, Inc. $ 2,342,141
40,000 Hewlett-Packard Co. 844,000
6,200 IBM Corp.* 546,530
------------
$ 3,732,671
------------
Total Technology Hardware &
Equipment $ 3,732,671
------------
Telecommunication Services - 6.6%
Integrated Telecommunication Services - 6.6%
41,800 Alltel Corp. $ 2,115,916
170,000 AT&T Corp. 2,487,100
98,500 BellSouth Corp. 2,582,670
169,800 SBC Communications, Inc. 4,117,650
110,000 Verizon Communications, Inc. 3,980,900
------------
$ 15,284,236
------------
Total Telecommunication Services $ 15,284,236
------------
The accompanying notes are an integral part of these financial statements. 63
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Utilities - 15.6%
Electric Utilities - 10.1%
60,000 Ameren Corp. $ 2,577,600
55,800 American Electric Power Co., Inc. 1,785,600
56,300 Consolidated Edison, Inc. 2,238,488
153,500 Constellation Energy Group 5,817,650
33,000 FPL Group, Inc. 2,110,350
94,900 Great Plains Energy, Inc. 2,818,530
64,000 NSTAR 3,064,320
98,700 Southern Co. 2,877,105
------------
$ 23,289,643
------------
Gas Utilities - 4.3%
111,700 KeySpan Energy Corp. (a) $ 4,099,390
110,300 Questar Corp. 4,261,992
61,100 Vectren Corp. 1,532,999
------------
$ 9,894,381
------------
Multi-Utilities & Unregulated Power - 0.6%
24,000 Equitable Resources, Inc. $ 1,241,040
------------
Water Utilities - 0.6%
71,000 Aqua America, Inc. $ 1,423,550
------------
Total Utilities $ 35,848,614
------------
TOTAL COMMON STOCKS
(Cost $178,138,936) $219,517,830
------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 4.5%
Repurchase Agreement - 2.9%
$ 6,700,000 UBS Warburg, Inc., 1.25%, dated 6/30/04,
repurchase price of $6,700,000 plus
accrued interest on 7/1/04
collateralized by $6,540,000 U.S.
Treasury Bill, 2.125%, 10/31/04 $ 6,700,000
------------
Shares
Security Lending Collateral - 1.6%
3,514,541 Securities Lending Investment
Fund, 1.29% $ 3,514,541
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $10,214,541) $ 10,214,541
------------
TOTAL INVESTMENT IN
SECURITIES - 101.4%
(Cost $191,244,800)(a) $233,140,932
------------
OTHER ASSETS AND
LIABILITIES - (1.4)% $ (3,183,134)
------------
TOTAL NET ASSETS - 100.0% $229,957,798
============
* Non-income producing security.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
40,000 Cedar Fair, L.P. $1,235,200
60,393 KeySpan Energy Corp. 2,190,454
----------
Total $3,425,654
==========
64 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 63.8%
Energy - 5.5%
Integrated Oil & Gas - 0.3%
3,900 Exxon Mobil Corp. $ 173,199
-----------
Oil & Gas Drilling - 4.2%
8,700 Encana Corp. $ 375,492
35,200 ENSCO International, Inc. 1,024,320
22,000 Varco International, Inc.* 481,580
-----------
$ 1,881,392
-----------
Oil & Gas Exploration &
Production - 0.9%
11,400 Pioneer Natural Resources Co. $ 399,912
-----------
Total Energy $ 2,454,503
-----------
Materials - 2.4%
Precious Metals & Minerals - 2.4%
27,000 Newmont Mining Corp. $ 1,046,520
-----------
Total Materials $ 1,046,520
-----------
Capital Goods - 3.7%
Aerospace & Defense - 3.1%
26,000 Northrop Grumman Corp. $ 1,396,200
-----------
Electrical Component & Equipment - 0.5%
8,500 Molex, Inc. $ 231,880
-----------
Total Capital Goods $ 1,628,080
-----------
Commercial Services & Supplies - 0.5%
Diversified Commercial Services - 0.5%
5,100 Cintas Corp. $ 243,117
-----------
Total Commercial Services &
Supplies $ 243,117
-----------
Transportation - 2.2%
Trucking - 2.2%
12,900 United Parcel Service $ 969,693
-----------
Total Transportation $ 969,693
-----------
Shares Value
Media - 2.9%
Broadcasting & Cable TV - 1.1%
5,800 Clear Channel Communications, Inc. $ 214,310
10,200 Comcast Corp. (Special)* 281,622
-----------
$ 495,932
-----------
Movies & Entertainment - 1.8%
21,840 Viacom, Inc. (Class B) $ 780,125
-----------
Total Media $ 1,276,057
-----------
Retailing - 3.1%
Apparel Retail - 0.5%
6,400 Liz Claiborne, Inc. $ 230,272
-----------
General Merchandise Stores - 2.6%
37,800 Family Dollar Stores, Inc. $ 1,149,876
-----------
Total Retailing $ 1,380,148
-----------
Drug Retail - 0.8% 6.7%
Food Distributors
8,200 CVS Corp. $ 344,564
-----------
Food Distributors - 1.9%
12,300 Cardinal Health, Inc. $ 861,615
-----------
Food Retail - 2.9%
20,600 Wm. Wrigley Jr. Co. $ 1,298,830
-----------
Hypermarkets & Supercenters - 1.1%
8,900 Wal-Mart Stores, Inc. $ 469,564
-----------
Total Food & Drug Retailing $ 2,974,573
-----------
Food Beverage & Tobacco - 6.3%
Distillers & Vintners - 2.7%
22,400 Anheuser-Busch Companies, Inc. $ 1,209,600
-----------
Soft Drinks - 3.6%
12,600 The Coca-Cola Co. $ 636,048
17,900 PepsiCo, Inc. 964,452
-----------
$ 1,600,500
-----------
Total Food Beverage & Tobacco $ 2,810,100
-----------
The accompanying notes are an integral part of these financial statements. 65
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Household & Personal Products - 4.1%
Household Products - 1.0%
9,300 Estee Lauder Co. $ 453,654
-----------
Personal Products - 3.1%
32,400 Gillette Co. $ 1,373,760
-----------
Total Household & Personal
Products $ 1,827,414
-----------
Health Care Equipment & Services - 3.5%
Health Care Distributors - 1.4%
17,800 Wyeth, Inc. $ 643,648
-----------
Health Care Equipment - 2.1%
17,300 Biomet, Inc. $ 768,812
2,900 Guidant Corp. 162,052
-----------
$ 930,864
-----------
Total Health Care Equipment &
Services $ 1,574,512
-----------
Pharmaceuticals & Biotechnology - 5.0%
Biotechnology - 0.5%
4,316 Amgen, Inc.* $ 235,524
-----------
Pharmaceuticals - 4.4%
4,000 Eli Lilly & Co. $ 279,640
6,500 Merck & Co., Inc. 308,750
40,788 Pfizer, Inc. 1,398,213
-----------
$ 1,986,603
-----------
Total Pharmaceuticals &
Biotechnology $ 2,222,127
-----------
Diversified Financials - 2.4%
Asset Management & Custody Banks - 1.0%
14,100 The Bank of New York Co., Inc. $ 415,668
-----------
Consumer Finance - 1.4%
12,300 American Express Co. $ 631,974
-----------
Total Diversified Financials $ 1,047,642
-----------
Shares Value
Insurance - 5.2%
Property & Casualty Insurance - 5.2%
515 Berkshire Hathaway, Inc. (Class B)* $ 1,521,825
9,000 Progressive Corp.* 767,700
-----------
$ 2,289,525
-----------
Total Insurance $ 2,289,525
-----------
Software & Services - 8.4%
Application Software - 5.1%
50,100 Microsoft Corp. $ 1,430,856
19,200 Symantec Corp.* 840,576
-----------
$ 2,271,432
-----------
Data Processing & Outsourced Services - 3.3%
32,700 First Data Corp. $ 1,455,804
-----------
Total Software & Services $ 3,727,236
-----------
Technology Hardware & Equipment - 1.5%
Computer Hardware - 1.5%
32,022 Hewlett-Packard Co. $ 675,664
-----------
Total Technology Hardware &
Equipment $ 675,664
-----------
Semiconductors - 0.4%
5,800 Intel Corp. $ 160,080
-----------
Total Semiconductors $ 160,080
-----------
TOTAL COMMON STOCKS
(Cost $24,340,428) $28,306,991
===========
66 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
ASSET BACKED SECURITIES - 0.4%
Diversified Financials - 0.2%
Diversified Financial Services - 0.2%
$ 89,819 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 88,571
-----------
$ 88,571
-----------
Real Estate - 0.2%
Real Estate Investment Trusts - 0.2%
100,000 BBB-/Baa3 Global Signal Trust, 5.395%, 1/15/34 (144A) $ 96,087
-----------
Total Real Estate $ 96,087
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $189,819) $ 184,658
-----------
CORPORATE BONDS - 12.7%
Energy - 0.3%
Integrated Oil & Gas - 0.1%
30,000 BBB+/Baa1 Occidental Petroleum, 7.65%, 2/15/06 $ 32,169
40,000 BBB+/Baa1 Occidental Petroleum, 6.75%, 1/15/12 44,054
-----------
$ 76,223
-----------
Oil & Gas Refining Marketing & Transportation - 0.1%
65,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%, 6/1/14 $ 65,292
-----------
Total Energy $ 141,515
-----------
Materials - 1.3%
Commodity Chemicals - 0.2%
100,000 BB+/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ 98,500
-----------
Diversified Metals & Mining - 0.3%
125,000 BBB-/Baa3 Inco, Ltd., 7.2%, 9/15/32 $ 131,707
-----------
Metal & Glass Containers - 0.1%
40,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 47,508
-----------
Paper Products - 0.2%
100,000 BB/Ba2 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 101,300
-----------
Specialty Chemicals - 0.3%
100,000 BBB-/Baa3 Ferro Corp., 9.125%, 1/1/09 $ 114,836
-----------
Steel - 0.2%
75,000 BB/Ba3 International Steel Group, 6.5%, 4/15/14 (144A) $ 70,313
-----------
Total Materials $ 564,164
-----------
Capital Goods - 0.8%
Aerospace & Defense - 0.1%
25,000 B/B3 K&F Industries, 9.625%, 12/15/10 $ 27,406
-----------
Electrical Components & Equipment - 0.2%
75,000 BBB-/Ba1 Thomas & Betts Corp., 7.25%, 6/1/13 $ 79,441
-----------
Industrial Conglomerates - 0.2%
55,000 AAA/Aaa General Electric Capital Corp., 6.125%, 2/22/11 $ 58,902
30,000 AAA/Aaa General Electric Capital Corp., 6.75%, 3/15/32 32,250
-----------
$ 91,152
-----------
The accompanying notes are an integral part of these financial statements. 67
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Industrial Machinery - 0.3%
$ 150,000 BBB-/Ba1 Timken Co., 5.75%, 2/15/10 $ 150,314
-----------
Total Capital Goods $ 348,313
-----------
Automobiles & Components - 0.8%
Automobile Manufacturers - 0.8%
200,000 BBB/Baa1 General Motors, 7.2%, 1/15/11 $ 209,559
50,000 BBB-/A3 Ford Motor Credit Co., 9.14%, 12/30/14 51,464
100,000 BB+/Ba1 Hyundai Motor Co., Ltd., 5.3%, 12/19/08 98,409
-----------
$ 359,432
-----------
Total Automobiles & Components $ 359,432
-----------
Hotels, Restaurants & Leisure - 0.5%
Casinos & Gaming - 0.0%
25,000 B+/B1 Turning Stone, 9.125%, 12/15/10 (144A) $ 26,125
-----------
Hotels, Resorts & Cruise Lines - 0.5%
200,000 BBB-/Ba1 Hilton Hotels, 7.625%, 12/1/12 $ 215,000
-----------
Total Hotels, Restaurants & Leisure $ 241,125
-----------
Media - 2.2%
Broadcasting & Cable TV - 1.5%
250,000 BBB/Baa3 Comcast Cable Corp., 7.125%, 6/15/13 $ 273,265
240,000 BBB/Baa2 Cox Communications, 7.125%, 10/1/12 263,028
160,000 BB-/Ba3 Echostar DBS Corp., 6.375%, 10/1/11 (144A) 157,600
-----------
$ 693,893
-----------
Movies & Entertainment - 0.2%
100,000 BBB+/Baa1 AOL Time Warner, Inc., 6.875%, 5/1/12 $ 108,059
-----------
Publishing - 0.4%
170,000 BBB-/Baa3 News America Inc., 7.3%, 4/30/28 $ 184,346
-----------
Total Media $ 986,298
-----------
Retailing - 0.2%
Specialty Stores - 0.2%
100,000 BB/Ba2 Toys "R" Us, 7.875%, 4/15/13 $ 100,375
-----------
Total Retailing $ 100,375
-----------
Food, Beverage & Tobacco - 0.3%
Tobacco - 0.3%
150,000 BBB/Baa2 Altria Group, Inc., 7.0%, 11/4/13 $ 152,748
-----------
Total Food, Beverage & Tobacco $ 152,748
-----------
Health Care Equipment & Services - 0.7%
Health Care Facilities - 0.5%
200,000 BBB-/Ba1 HCA, Inc., 6.3%, 10/1/12 $ 200,103
-----------
Health Care Supplies - 0.2%
100,000 BBB-/Ba1 Bausch & Lomb, 7.125%, 8/1/28 $ 100,118
-----------
Total Health Care Equipment & Services $ 300,221
-----------
68 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.0%
$ 40,000 AAA/Aaa Pharmacia Corp., 6.6%, 12/1/28 $ 43,322
-----------
Total Pharmaceuticals & Biotechnology $ 43,322
-----------
Banks - 0.5%
Diversified Banks - 0.3%
50,000 NR/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 $ 48,936
75,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 84,955
-----------
$ 133,891
-----------
Thrifts & Mortgage Finance - 0.2%
100,000 BBB-/Baa3 Sovereign Bank, 5.125%, 3/15/13 $ 95,060
-----------
Total Banks $ 228,951
-----------
Diversified Financials - 0.9%
Investment Banking & Brokerage - 0.1%
75,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11 (144A) $ 74,625
-----------
Diversified Financial Services - 0.4%
100,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 102,848
100,000 BBB/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) 92,754
-----------
$ 195,602
-----------
Specialized Finance - 0.2%
100,000 B/B2 MDP Acquistions, 9.625%, 10/1/12 $ 109,500
-----------
Total Diversified Financials $ 379,727
-----------
Insurance - 1.3%
Life & Health Insurance - 0.2%
100,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 $ 95,231
-----------
Multi - Line Insurance - 0.1%
50,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 46,598
-----------
Property & Casualty Insurance - 0.8%
150,000 BBB+/Baa2 Berkley (WR), 5.875%, 2/15/13 $ 153,089
85,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 83,538
100,000 BBB-/Baa3 Arch Capital Group, Ltd., 7.35%, 5/1/34 100,662
-----------
$ 337,289
-----------
Reinsurance - 0.2%
100,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 107,497
-----------
Total Insurance $ 586,615
-----------
Real Estate - 0.6%
Real Estate Investment Trusts - 0.5%
150,000 BBB-/Baa3 Hospitality Properties Trust, 6.75%, 2/15/13 $ 155,727
100,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 101,603
-----------
$ 257,330
-----------
Total Real Estate $ 257,330
-----------
Technology Hardware & Equipment - 1.3%
Computer Hardware - 0.8%
250,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 273,454
100,000 BB+/Ba1 UNISYS Corp., 6.875%, 3/15/10 103,000
-----------
$ 376,454
-----------
The accompanying notes are an integral part of these financial statements. 69
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Electronic Manufacturing Services - 0.2%
$ 75,000 bb+/Baa3 Jabil Circuit, Inc., 5.875%, 7/15/10 $ 77,475
-----------
Technology Distributors - 0.2%
100,000 BBB-/Baa3 Arrow Electronic Inc., 6.875%, 7/1/13 $ 104,456
-----------
Total Technology Hardware & Equipment $ 558,385
-----------
Telecommunication Services - 0.4%
Integrated Telecommunication Services - 0.4%
100,000 BBB+/Baa3 Intelsat, Ltd. 6.5%, 11/1/13 $ 88,343
100,000 BBB+/Baa2 Telecom Italia S.p.A., 5.25%, 11/15/13 (144A) 96,785
-----------
$ 185,128
-----------
Total Telecommunication Services $ 185,128
-----------
Utilities - 0.5%
Electric Utilities - 0.2%
95,000 BBB-/Baa3 FLP Energy American Wind Llc, 6.639%, 6/20/23 (144A) $ 96,999
-----------
Multi-Utilities & Unregulated Power - 0.3%
100,000 B/B1 Reliant Energy Inc., 9.5%, 7/15/13 $ 107,750
-----------
Total Utilities $ 204,749
-----------
TOTAL CORPORATE BONDS
(Cost $5,493,563) $ 5,638,398
-----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.2%
Government - 21.2%
396,360 AAA/Aaa Federal Home Loan Mortgage Corp., 5.0%, 4/1/34 $ 383,027
475,466 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 1/1/34 474,100
216,149 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 9/1/17 221,401
173,487 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 177,830
123,088 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 1/1/32 126,103
273,687 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 11/1/33 279,878
50,005 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 6/1/34 51,135
1,329,244 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 1,360,078
45,587 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 48,248
30,235 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 31,537
91,645 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 95,957
63,104 AAA/Aaa Federal National Mortgage Association, 6.5%, 10/1/32 65,753
150,000 AAA/Aaa Federal National Mortgage Association, 5.0%, 6/1/34 145,071
237,310 AAA/Aaa Federal National Mortgage Association, 5.5%, 11/1/33 236,860
221,223 AAA/Aaa Federal National Mortgage Association, 5.5%, 2/1/17 227,041
137,933 AAA/Aaa Federal National Mortgage Association, 5.5%, 3/1/34 137,452
249,122 AAA/Aaa Federal National Mortgage Association, 5.5%, 4/1/34 248,253
144,591 AAA/Aaa Federal National Mortgage Association, 6.%, 12/1/33 147,784
110,000 AAA/Aaa Federal National Mortgage Association, 6.125%, 3/15/12 118,615
20,007 AAA/Aaa Federal National Mortgage Association, 6.5%, 10/1/32 20,847
83,029 AAA/Aaa Federal National Mortgage Association, 6.5%, 4/1/29 87,034
180,906 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/32 188,502
120,726 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/32 125,900
25,302 AAA/Aaa Federal National Mortgage Association, 6.5%, 8/1/13 26,784
74,676 AAA/Aaa Federal National Mortgage Association, 6.5%, 9/1/32 78,006
82,862 AAA/Aaa Federal National Mortgage Association, 6.5%, 12/1/21 86,794
24,907 AAA/Aaa Federal National Mortgage Association, 6.5%, 8/1/14 26,343
10,000 AAA/Aaa Federal National Mortgage Association, 7.125%, 6/15/10 11,353
70 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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Principal S&P/Moody's
Amount Ratings Value
(U.S. Government and Agency Obligations Cont.)
$ 40,082 AAA/Aaa Federal National Mortgage Association, 9.0%, 4/1/33 $ 44,559
300,000 AAA/Aaa Freddie Mac, 3.25%, 2/25/08 293,859
150,000 AAA/Aaa Freddie Mac, 5.75%, 1/15/12 158,248
545,023 AAA/Aaa Government National Mortgage Association, 6.0%, 9/15/33 559,458
195,356 AAA/Aaa Government National Mortgage Association II, 5.5%, 2/20/34 195,193
34,489 AAA/Aaa Government National Mortgage Association II, 7.5%, 9/20/29 37,185
66,055 AAA/Aaa Government National Mortgage Association, 5.5%, 9/15/33 66,197
311,211 AAA/Aaa Government National Mortgage Association, 5.5%, 6/15/33 311,511
242,819 AAA/Aaa Government National Mortgage Association, 5.5%, 7/15/33 243,053
167,714 AAA/Aaa Government National Mortgage Association, 5.5%, 8/15/33 167,875
169,178 AAA/Aaa Government National Mortgage Association, 6.0%, 9/15/32 173,715
347,177 AAA/Aaa Government National Mortgage Association, 6.0%, 10/20/33 357,148
166,809 AAA/Aaa Government National Mortgage Association, 6.5%, 5/15/33 174,599
68,834 AAA/Aaa Government National Mortgage Association, 6.5%, 10/15/28 72,111
470,000 AAA/Aaa U.S. Treasury Notes, 4.0%, 11/15/12 455,037
500,000 AAA/Aaa U.S. Treasury Notes, 5.625%, 5/15/08 538,203
300,000 AAA/Aaa U.S. Treasury Notes, 4.75%, 11/15/08 313,314
-----------
$ 9,388,951
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $9,433,069) $ 9,388,951
-----------
TOTAL INVESTMENT IN SECURITIES - 98.1%
(Cost $39,456,879) $43,518,998
-----------
OTHER NET ASSETS - 1.9% $ 835,231
-----------
TOTAL NET ASSETS - 100.0% $44,354,229
===========
N/R Not rated by either S&P or Moddy's
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $799,859 or 1.8% of
total net assets. The accompanying notes are an integral part of these
financial statements.
The accompanying notes are an integral part of these financial statements. 71
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
S&P/Moody's
Shares Ratings Value
CONVERTIBLE PREFERRED STOCKS - 2.8%
Materials - 2.8%
Construction Materials - 0.0%
1,750 B-/B3 TXI Capital Trust I, 5.5%, 6/30/28 $ 80,325
-----------
Diversified Metals & Mining - 2.8%
3,000 CCC/NR Freeport-McCorp., 5.5% (144A) $ 2,688,750
-----------
Total Materials
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $3,077,338) $ 2,769,075
-----------
Principal
Amount
CONVERTIBLE CORPORATE BONDS - 35.4%
Materials - 5.4%
Commodity Chemicals - 0.3%
$ 200,000 BB-/B1 Millenium Chemicals, Inc., 4.0%, 11/15/23 (144A) $ 311,000
-----------
Diversified Metals & Mining - 1.6%
500,000 B+/B1 Massey Energy Co., 4.75% 5/15/23 $ 850,625
500,000 B-/NR Freeport McMoran Copper & Gold, Inc., 7.0%, 2/11/11 697,500
-----------
$ 1,548,125
-----------
Gold - 1.1%
1,000,000 NR/NR Coeur D'Alene Mines Corp. 1.25%, 1/15/24 $ 827,500
250,000 BBB+/Baa2 Placer Dome, Inc., 2.75%, 10/15/23 (144A) 282,500
-----------
$ 1,110,000
-----------
Specialty Chemicals - 0.5%
1,000,000 BBB/Baa3 RPM International, Inc., 1.389%, 5/13/33 $ 521,250
-----------
Steel - 1.9%
2,000,000 B-/NR Graftech International, 1.625%, 1/15/24 (144A) (a) $ 1,800,000
-----------
Total Materials $ 5,290,375
-----------
Capital Goods - 5.1%
Aerospace & Defense - 2.2%
400,000 NR/NR EDO Corp., 5.25%, 4/15/07 $ 418,500
1,725,000 B/B2 Alliant Technology Systems, 2.75%, 2/15/24 (144A) 1,785,375
-----------
$ 2,203,875
-----------
Constuction & Engineering - 1.3%
875,000 NR/NR Quanta Services, Inc., 4.0%, 7/1/07 $ 796,250
500,000 B/NR Quanta Services, 4.5%, 10/1/23 493,125
-----------
$ 1,289,375
-----------
Electrical Component & Equipment - 1.2%
2,595,000 NR/B1 Roper Industries, Inc., 1.4813%, 1/15/34 (a) $ 1,164,506
-----------
Industrial Machinery - 0.4%
300,000 BB-/Ba3 Kaydon Corp., 4.0%, 5/23/23 (144A) $ 361,125
-----------
Total Capital Goods $ 5,018,881
-----------
Media - 1.4%
Advertising - 1.4%
1,000,000 BB+/Baa3 Interpublic Group Companies, 4.5%, 3/15/23 $ 1,360,000
-----------
Total Media $ 1,360,000
-----------
72 The accompanying notes are an integral part of these financial statements.
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Principal S&P/Moody's
Amount Ratings Value
Retailing - 0.5%
Specialty Stores - 0.5%
$ 500,000 B+/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 (a) $ 484,375
-----------
Total Retailing $ 484,375
-----------
Health Care Equipment & Services - 2.1%
Health Care Equipment - 0.6%
300,000 NR/NR Wilson Greatbatch Technology, 2.25%, 6/15/13 $ 284,625
375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) 358,125
-----------
$ 642,750
-----------
Health Care Facilities - 1.5%
1,400,000 B-/B3 Community Health Systems, 4.25%, 10/15/08 $ 1,457,750
-----------
Total Health Care Equipment & Services $ 2,100,500
-----------
Pharmaceuticals & Biotechnology - 6.8%
Biotechnology - 1.9%
800,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 750,000
850,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 860,625
300,000 NR/NR Cubist Pharmaceuticals, 5.5%, 11/1/08 279,750
-----------
$ 1,890,375
-----------
Pharmaceuticals - 4.9%
400,000 NR/NR Vertex Pharmaceuticals, Inc., 5.75%, 2/15/11 (144A) $ 402,000
2,000,000 NR/NR Ivax Corp., 4.5%, 5/15/08 1,980,000
2,500,000 BB-/B1 Valeant Pharmaceuticals, 3.0%, 8/16/10 (144A) 2,381,250
-----------
$ 4,763,250
-----------
Total Pharmaceuticals & Biotechnology $ 6,653,625
-----------
Real Estate - 0.7%
Real Estate Management & Development - 0.7%
500,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 $ 698,750
-----------
Total Real Estate $ 698,750
-----------
Software & Services - 1.1%
Application Software - 0.8%
200,000 NR/NR Mentor Graphics, 6.875%, 6/15/07 $ 211,500
500,000 NR/NR Serena Software, 1.5%, 12/15/23 (144A) 537,500
-----------
$ 749,000
-----------
IT Consulting & Other Services - 0.3%
400,000 NR/NR Safeguard Scientifics, 2.625%, 3/15/24 (144A) $ 296,500
-----------
Total Software & Services $ 1,045,500
-----------
Technology Hardware & Equipment - 6.0%
Communications Equipment - 3.0%
1,500,000 B-/NR Adaptec, Inc., 0.75%, 12/22/23 $ 1,481,250
1,020,000 BB+/Ba2 Corning, Inc., 3.5%, 11/1/08 1,435,650
-----------
$ 2,916,900
-----------
Computer Storage & Peripherals - 0.8%
700,000 NR/B2 Maxtor Corp., 6.8%, 4/30/10 $ 738,500
-----------
Electronic Equipment & Instruments - 0.4%
300,000 B+/NR Flir Systems, Inc., 3.0%, 6/1/23 (a) $ 427,125
-----------
The accompanying notes are an integral part of these financial statements. 73
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
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Principal S&P/Moody's
Amount Ratings Value
Electronic Manufacturing Services - 1.4%
$ 1,500,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 1,402,500
-----------
Technology Distributors - 0.4%
400,000 NR/NR Bell Microproducts, Inc., 3.75%, 3/5/24 (144A) $ 397,500
-----------
Total Technology Hardware & Equipment $ 5,882,525
-----------
Semiconductors - 6.3%
Semiconductor Equipment - 3.5%
700,000 B-/NR Advanced Energy Industries, Inc., 5.25%, 11/15/06 $ 693,000
1,700,000 B-/NR FEI Co., 5.5%, 8/15/08 1,731,875
700,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 682,500
200,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 198,250
-----------
$ 3,305,625
-----------
Semiconductors - 2.8%
1,825,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 1,747,438
1,000,000 NR/NR Triquint Semiconductor, 4.0%, 3/1/07 (a) 957,500
-----------
$ 2,704,938
-----------
Total Semiconductors $ 6,010,563
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $33,516,548) $34,545,094
-----------
CORPORATE BONDS - 57.7%
Energy - 3.9%
Oil & Gas Equipment And Services - 0.3%
100,000 B+/B3 Transmontaigne, Inc., 9.125%, 6/1/10 $ 103,000
200,000 BB-/Ba3 Grant Prideco Escrow, 9.0%, 12/15/09 217,500
-----------
$ 320,500
-----------
Oil & Gas Refining Marketing & Transportation - 3.6%
1,255,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 1,374,225
1,900,000 B/B3 Tesoro Petroleum Corp., 9.625%, 4/1/12 2,132,750
-----------
$ 3,506,975
-----------
Total Energy $ 3,827,475
-----------
Materials - 13.9%
Commodity Chemicals - 4.6%
1,100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 1,078,000
2,500,000 BB+/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,375,000
1,000,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,045,000
-----------
$ 4,498,000
-----------
Diversified Metals & Mining - 1.3%
1,375,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 (a) $ 1,258,125
-----------
Metal & Glass Containers - 1.5%
1,000,000 B+/B1 Crown Holdings, 9.5%, 3/1/11 $ 1,090,000
500,000 B/B3 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 415,000
-----------
$ 1,505,000
-----------
Paper Products - 4.3%
685,000 BB/Ba2 Bowater Canada Finance, 7.95%, 11/15/11 $ 707,589
3,700,000 BB/Ba2 Bowater, Inc., 6.5%, 6/15/13 3,480,849
-----------
$ 4,188,438
-----------
74 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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Principal S&P/Moody's
Amount Ratings Value
Specialty Chemicals - 2.2%
$ 1,200,000 BB-/B1 Millenium America, Inc., 7.625%, 11/15/26 $ 1,026,000
1,000,000 BB-/B1 Millennium America, Inc., 9.25%, 6/15/08 1,075,000
-----------
$ 2,101,000
-----------
Total Materials $13,550,563
-----------
Capital Goods - 7.3%
Aerospace & Defense - 5.1%
1,000,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 1/15/14 $ 955,000
2,500,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 2,437,500
1,525,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 1,570,750
-----------
$ 4,963,250
-----------
Industrial Machinery - 2.2%
800,000 B+/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 (a) $ 800,000
517,000 BBB+/Ba3 SPX Corp., 7.5%, 1/1/13 529,925
800,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 814,000
-----------
$ 2,143,925
-----------
Total Capital Goods $ 7,107,175
-----------
Transportation - 0.5%
Air Freight & Couriers - 0.5%
500,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 525,000
-----------
Total Transportation $ 525,000
-----------
Automobiles & Components - 0.4%
Auto Parts & Equipment - 0.4%
400,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 360,000
-----------
Total Automobiles & Components $ 360,000
-----------
Consumer Durables & Apparel - 1.4%
Homebuilding - 1.4%
400,000 BB/Ba2 Beazer Homes USA, 8.375%, 4/15/12 $ 422,000
1,000,000 BB/Ba2 Beazer Homes USA, 6.5%, 11/15/13 945,000
-----------
$ 1,367,000
-----------
Total Consumer Durables & Apparel $ 1,367,000
-----------
Media - 2.2%
Advertising - 2.2%
2,000,000 BB+/Baa3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,139,558
-----------
Total Media $ 2,139,558
-----------
Retailing - 1.0%
Department Stores - 1.0%
1,000,000 BB+/Ba3 J.C. Penney Co., Inc., 7.625%, 3/1/97 $ 1,025,000
-----------
Total Retailing $ 1,025,000
-----------
Health Care Equipment & Services - 0.8%
Health Care Facilities - 0.5%
500,000 BBB-/Ba1 HCA, Inc., 6.25%, 2/15/13 $ 497,008
-----------
Health Care Supplies - 0.3%
350,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 357,875
-----------
Total Health Care Equipment & Services $ 854,883
-----------
The accompanying notes are an integral part of these financial statements. 75
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Pharmaceuticals & Biotechnology - 1.4%
Pharmaceuticals - 1.3%
$ 1,375,000 B/NR Valeant Pharmaceuticals, 7.0%, 12/15/11 (144A) $ 1,340,625
-----------
Total Pharmaceuticals & Biotechnology $ 1,340,625
-----------
Real Estate - 11.9%
Real Estate Management & Development - 6.4%
510,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 (144A) $ 712,725
800,000 B+/Ba3 LNR Property Corp., 7.625%, 7/15/13 796,000
2,115,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 2,062,125
2,635,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 2,648,175
-----------
$ 6,219,025
-----------
Real Estate Investment Trusts - 5.5%
500,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 495,000
2,300,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 2,403,500
2,500,000 CCC+/B2 Meristar Hospitality Corp., 9.125%, 1/15/11 2,525,000
-----------
$ 5,423,500
-----------
Total Real Estate $11,642,525
-----------
Technology Hardware & Equipment - 5.5%
Communications Equipment - 0.6%
700,000 BB+/Ba2 Corning, Inc., 6.2%, 3/15/16 $ 649,250
-----------
Electronic Equipment & Instruments - 2.0%
1,835,000 B/B2 General Cable Corp, 9.5%, 11/15/10 $ 1,972,625
-----------
Technology Distributors - 2.9%
1,550,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 $ 1,550,547
1,200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 1,253,473
-----------
$ 2,804,020
-----------
Total Technology Hardware & Equipment $ 5,425,895
-----------
Utilities - 7.4%
Electric Utilities - 7.5%
1,000,000 B+/B3 CMS Energy Corp., 7.5%, 1/15/09 $ 995,000
2,800,000 B+/B3 CMS Energy Corp., 7.75%, 8/1/10 2,786,000
2,000,000 CCC+/B3 Allegheny Energy Supply, 7.8%, 3/15/11 1,955,000
1,500,000 CCC+/B3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,483,125
-----------
$ 7,219,125
-----------
Total Utilities $ 7,219,125
-----------
TOTAL CORPORATE BONDS
(Cost $56,297,175) $56,384,824
-----------
76 The accompanying notes are an integral part of these financial statements.
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Principal S&P/Moody's
Amount Ratings Value
TEMPORARY CASH INVESTMENT - 4.1%
Security Lending Collateral - 4.1%
$ 3,990,710 Securities Lending Investment Fund, 1.29% $ 3,990,710
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $3,990,710) $ 3,990,710
------------
TOTAL INVESTMENT IN SECURITIES - 101.7%
(Cost $96,881,771)(a) $ 97,689,703
------------
OTHER ASSETS AND LIABILITIES - (1.7)% $ (1,635,148)
------------
TOTAL NET ASSETS - 100% $ 96,054,555
============
144A Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $15,138,100 or 15.8%
of net assets.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
285,000 Flir Systems Inc., 3.0%, 6/1/23 $ 403,251
1,306,250 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 1,225,358
329,000 Graftech International, 1.625%, 1/15/24 (144A) 295,568
760,000 Manitowoc Co. Inc., 7.125%, 11/1/13 768,875
404,000 Roper Industries Inc., 1.4813%, 1/15/34 184,681
100,000 Sonic Automotive Inc., 5.25%, 5/7/09 97,648
950,000 Triquint Semiconductor, 4.0%, 3/1/07 920,998
----------
Total $3,896,379
==========
The accompanying notes are an integral part of these financial statements. 77
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
CONVERTIBLE CORPORATE BONDS - 3.1%
Pharmaceuticals & Biotechnology - 0.8%
Biotechnology - 0.8%
90,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 84,375
150,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 151,875
-----------
Total Pharmaceuticals & Biotechnology $ 236,250
-----------
Technology Hardware & Equipment - 1.1%
Communications Equipment - 0.6%
200,000 B-/B3 Nortel Networks, 4.25%, 9/1/08 $ 191,500
-----------
Electronic Manufacturing Services - 0.4%
150,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 140,250
-----------
Total Technology Hardware & Equipment $ 331,750
-----------
Semiconductors - 1.2%
Semiconductor Equipment - 0.8%
170,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 $ 165,750
100,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 99,125
-----------
$ 264,875
-----------
Semiconductors - 0.4%
130,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 124,475
-----------
Total Semiconductors $ 389,350
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $852,165) $ 957,350
-----------
ASSET BACKED SECURITIES - 2.7%
Diversified Financials - 1.3%
Consumer Finance - 0.1%
DKK 98,058 AA+/Aa1 Realkredit Danmark, 7.0%, 10/1/32 $ 17,475
-----------
Diversified Financial Services - 1.3%
229,036 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 225,855
172,022 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 175,165
-----------
$ 401,020
-----------
Total Diversified Financials $ 418,495
-----------
Real Estate - 0.5%
Real Estate Investment Trusts - 0.5%
160,000 BBB-/Baa3 Global Signal Trust, 5.395%, 1/15/34 (144A) $ 153,739
-----------
Total Real Estate $ 153,739
-----------
Utilities - 0.8%
Electric Utilities - 0.8%
247,500 BBB-/Baa3 Empresa Electric Guacolda, 8.625%, 4/30/13 $ 256,835
-----------
Total Utilities $ 256,835
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $855,330) $ 829,069
-----------
78 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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Principal
Amount S&P/Moody's
USD ($) Ratings Value
CORPORATE BONDS - 55.7%
Miscellaneous - 0.5%
150,000 B/B3 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 151,500
-----------
Total Miscellaneous $ 151,500
-----------
Energy - 5.1%
Oil & Gas Drilling - 0.6%
ITL 275,000,000 BBB-/Baa2 Petroleos Mexicanos, 7.375%, 8/13/07 $ 186,963
-----------
Oil & Gas Equipment And Services - 0.3%
76,000 B+/B3 Transmontaigne Inc., 9.125%, 6/1/10 $ 78,280
-----------
Oil & Gas Exploration & Production - 3.3%
80,000 B/B2 Compton Petroleum Corp., 9.9%, 5/15/09 $ 87,400
200,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 209,500
200,000 BB/Ba3 Cie Generale De Geophysique SA, 10.625%, 11/15/07 213,000
55,000 B/B2 Comstock Resources, Inc., 6.875%, 3/1/12 52,250
50,000 B/B2 Paramount Resources, Ltd., 8.875%, 7/15/2014 49,875
300,000 BB-/Ba2 Gaz Capital SA, 8.625%, 4/28/34 (144A) 290,625
100,000 B/B3 Paramount Resources, Ltd., 7.875%, 11/1/10 95,500
-----------
$ 998,150
-----------
Oil & Gas Refining Marketing & Transportation - 0.9%
75,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 82,125
200,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%, 6/1/14 200,898
-----------
$ 283,023
-----------
Total Energy $ 1,546,416
-----------
Materials - 11.2%
Commodity Chemicals - 1.0%
100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 98,000
105,000 BBB-/Ba1 Methanex Corp., 7.75%, 8/15/05 109,463
25,000 B+/B1 Lyondell Petrochemical Co., 9.875%, 5/1/07 26,125
75,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 78,375
-----------
$ 311,963
-----------
Construction Materials - 1.9%
NOK 2,700,000 NR/NR Kvaerner A.S., 0.0%, 10/30/11 $ 245,373
NOK 60,000 NR/NR Kvaerner A.S., 0.0%, 10/30/11 37,800
300,000 B/B2 Ship Finance International, Ltd., 8.5%, 12/15/13 (144A) 289,500
-----------
$ 572,673
-----------
Diversified Chemical - 0.5%
EUR 130,000 CCC+/Caa1 Huntsman ICI Chemicals LLC, 10.125%, 7/1/09 $ 156,937
-----------
Diversified Metals & Mining - 2.0%
140,000 B-/B2 Freeport-McMoran Copper & Gold, 10.125%, 2/1/10 $ 154,700
250,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 228,750
150,000 NR/Ba2 Vale Overseas, Ltd., 8.25%, 1/17/34 130,500
100,000 BBB/Ba1 Kennametal, Inc., 7.2%, 6/15/12 105,762
-----------
$ 619,712
-----------
Forest Products - 0.2%
75,000 B+/B1 Ainsworth Lumber, 6.75%, 3/15/14 (144A) $ 70,312
-----------
The accompanying notes are an integral part of these financial statements. 79
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Metal & Glass Containers - 1.1%
130,000 B+/B2 Greif Brothers Corp., 8.875%, 8/1/12 $ 139,912
EUR 150,000 B+/NR Crown Holdings, 10.25%, 3/1/11 202,116
-----------
$ 342,028
-----------
Paper Packaging - 0.2%
10,000 B/B2 Stone Container Corp., 9.75%, 2/1/11 $ 11,000
50,000 B/B2 Stone Container Corp., 8.375%, 7/1/12 52,250
-----------
$ 63,250
-----------
Paper Products - 0.3%
100,000 BB/Ba2 Abitibi-Consolidated Inc., 6.0%, 6/20/13 $ 88,507
-----------
Specialty Chemicals - 2.0%
135,000 B-/B3 United Industries Co., 9.875%, 4/1/09 $ 140,400
170,000 B-/Caa2 OM Group, Inc., 9.25%, 12/15/11 174,250
100,000 BBB-/Baa3 Ferro Corp., 7.125%, 4/1/28 100,728
EUR 45,000 CCC+/Caa1 Rhodia SA, 9.25%, 6/1/11 (144A) 45,819
EUR 140,000 CCC+/B3 Rhodia SA, 8.0%, 6/1/10 (144A) 155,352
-----------
$ 616,549
-----------
Steel - 2.0%
150,000 BB/Ba3 International Steel Group, 6.5%, 4/15/14 (144A) $ 140,625
200,000 B-/Caa1 Ispat Inland ULC, 9.75%, 4/1/14 (144A) 206,000
325,000 B+/B1 CSN Islands VIII Corp., 9.75%, 12/16/13 (144A) 290,875
-----------
$ 637,500
-----------
Total Materials $ 3,479,431
-----------
Capital Goods - 6.3%
Aerospace & Defense - 1.3%
200,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 7/15/13 $ 193,000
100,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 97,500
100,000 CCC+/Caa2 Hexcel Corp., 9.75%, 1/15/09 104,875
-----------
$ 395,375
-----------
Building Products - 0.5%
50,000 B-/B3 US Concrete, Inc., 8.375%, 4/1/14 (144A) $ 49,875
90,000 B+/B2 NCI Building Systems, Inc., 9.25%, 5/1/09 94,500
-----------
$ 144,375
-----------
Construction & Farm Machinery & Heavy Trucks - 0.7%
75,000 BB+/Ba2 Cummins, Inc., 7.125%, 3/1/28 $ 71,250
140,000 B-/B3 American Rock Salt Co. LLC, 9.5%, 3/15/14 (144A) 143,500
-----------
$ 214,750
-----------
Constuction & Engineering - 0.3%
100,000 B+/B2 North American Energy Partners, 8.75%, 12/1/11 (144A) $ 99,000
-----------
Electrical Component & Equipment - 0.2%
50,000 BB-/Ba2 MSW Energy Holdings, 7.375%, 9/1/10 (144A) $ 49,750
-----------
Heavy Electrical Equipment - 0.6%
199,780 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 $ 188,792
-----------
80 The accompanying notes are an integral part of these financial statements.
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Principal
Amount S&P/Moody's
USD ($) Ratings Value
Industrial Machinery - 2.7%
125,000 B/B2 The Manitowoc Co., Inc., 10.5%, 8/1/12 (144A) $ 143,125
125,000 BB+/Ba3 SPX Corp., 7.5%, 1/1/13 128,125
175,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 (a) 178,062
250,000 B+/Ba2 Sun Sage BV, 8.25%, 3/26/09 (144A) 241,875
125,000 BBB-/Ba1 Timken Co., 5.75%, 2/15/10 125,262
-----------
$ 816,449
-----------
Total Capital Goods $ 1,908,491
-----------
Commercial Services & Supplies - 1.3%
Commercial Printing - 0.7%
200,000 B/B1 Sheridan Group, 10.25%, 8/15/11 (144A) $ 210,500
-----------
Diversified Commercial Services - 0.4%
115,000 B-/B3 Cornell Co's, Inc., 10.75%, 7/1/12 (144A) $ 116,150
-----------
Environmental Services - 0.2%
75,000 B-/B3 IESI Corp., 10.25%, 6/15/12 $ 81,750
-----------
Total Commercial Services & Supplies $ 408,400
-----------
Transportation - 2.2%
Air Freight & Couriers - 0.5%
130,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 136,500
-----------
Airlines - 0.5%
50,000 CCC/Caa2 AMR Corp., 9.0%, 9/15/16 $ 37,750
85,000 CCC/Caa2 AMR Corp., 9.8%, 10/1/21 61,200
35,000 CCC/Caa2 AMR Corp., 9.0%, 8/1/12 (a) 27,650
50,000 B-/Caa1 Northwest Airlines, Inc., 9.875%, 3/15/07 39,500
-----------
$ 166,100
-----------
Marine - 0.3%
100,000 B-/B3 Horizon Lines LLC, 9.0%, 11/1/12 (144A) $ 100,000
-----------
Railroads - 0.4%
120 B/B3 Atlantic Express Transport, 12.0%, 4/15/08 $ 118,800
-----------
Transportation - 0.5%
150,000 B/B2 TFM SA De CV, 11.75%, 6/15/09 $ 146,250
-----------
Total Transportation $ 667,650
-----------
Automobiles & Components - 0.5%
Auto Parts & Equipment - 0.4%
140,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 126,000
-----------
Automobile Manufacturers - 0.1%
35,000 BBB-/A3 Ford Motor Credit Co., 5.8%, 1/12/09 $ 35,329
-----------
Total Automobiles & Components $ 161,329
-----------
Hotels Restaurants & Leisure - 0.8%
Hotels, Resorts & Cruise Lines - 0.8%
100,000 BB+/Ba1 Starwood Hotels & Resorts, 7.875%, 5/1/12 $ 107,000
125,000 B/B2 John Q Hamons Hotels, 8.875%, 5/15/12 135,625
-----------
Total Hotels Restaurants & Leisure $ 242,625
-----------
The accompanying notes are an integral part of these financial statements. 81
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Media - 1.6%
Broadcasting & Cable TV - 1.3%
EUR 100,000 B-/B3 Telenet Communication NV, 9.0%, 12/15/13 (144A) $ 121,330
100,000 B/B3 Kabel Deutschland GMBH, 10.625%, 7/1/14 (144A) 102,750
175,000 BB-/Ba3 Echostar DBS Corp., 6.375%, 10/1/11 (144A) 172,375
-----------
$ 396,455
-----------
Publishing - 0.3%
80,000 BBB-/Baa3 News America Holdings, 8.5%, 2/23/25 $ 96,330
-----------
Total Media $ 492,785
-----------
Retailing - 1.3%
Department Stores - 0.5%
150,000 BB+/Ba3 J.C. Penney, 7.125%, 11/15/23 $ 153,750
-----------
Specialty Stores - 0.8%
100,000 BB/Ba2 Toys R Us, 7.375%, 10/15/18 $ 92,375
145,000 B/B3 Asbury Automotive Group, 8.0%, 3/15/14 138,475
-----------
$ 230,850
-----------
Total Retailing $ 384,600
-----------
Food, Beverage & Tobacco - 1.1%
Brewers - 0.7%
220,000 BBB-/Baa3 CIA Brasileira De Bebida, 8.75%, 9/15/13 (144A) $ 232,100
-----------
Soft Drinks - 0.3%
80,000 BBB-/Baa3 CIA Brasileira de Bebida, 10.5%, 12/15/11 $ 91,600
-----------
Total Food, Beverage & Tobacco $ 323,700
-----------
Household & Personal Products - 0.4%
Household Products - 0.4%
125,000 B-/B3 Solo Cup Co., 8.5%, 2/15/14 (144A) $ 116,250
-----------
Total Household & Personal Products $ 116,250
-----------
Health Care Equipment & Services - 1.8%
Health Care Distributors - 0.2%
60,000 BB+/Ba2 Omnicare, Inc., 6.125%, 6/1/13 $ 57,300
-----------
Health Care Facilities - 1.2%
165,000 B-/B3 Curative Health Services, 10.75%, 5/1/11 (144A) $ 158,400
200,000 BBB-/Ba1 HCA, Inc., 6.3%, 10/1/12 200,103
-----------
$ 358,503
-----------
Health Care Supplies - 0.4%
125,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 127,812
-----------
Total Health Care Equipment & Services $ 543,615
-----------
Pharmaceuticals & Biotechnology - 0.3%
Pharmaceuticals - 0.3%
80,000 B/B3 Alaris Medical, Inc., 7.25%, 7/1/11 $ 88,000
-----------
Total Pharmaceuticals & Biotechnology $ 88,000
-----------
Banks - 0.1%
Diversified Banks - 0.1%
15,000 BBB+/A1 Skandinaviska Enskilda Bank, 8.125%, 9/6/49 (144A) $ 16,394
-----------
Total Banks $ 16,394
-----------
82 The accompanying notes are an integral part of these financial statements.
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Principal
Amount S&P/Moody's
USD ($) Ratings Value
Diversified Financials - 5.6%
Investment Banking & Brokerage - 1.6%
EUR 200,000 B-/B3 BCP Caylux Holdings Lux SCA, 10.375%, 6/15/14 (144A) $ 257,903
225,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11 (144A) 223,875
-----------
$ 481,778
-----------
Diversified Financial Services - 2.2%
157,000 CCC/Caa1 Alamosa Delaware, Inc., 0.0%, 7/31/09 $ 151,505
210,000 B/B3 Dollar Financial Group, 9.75%, 11/15/11 (144A) 219,450
315,000 BBB/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) 292,175
-----------
$ 663,130
-----------
Specialized Finance - 1.8%
100,000 B-/B3 UGS Corp., 10.0%, 6/1/12 (144A) $ 106,500
200,000 B/B2 Inmarsat Finance Plc, 7.625%, 6/3/12 (144A) 193,500
80,000 BBB-/Baa3 GATX Financial Corp., 8.875%, 6/1/09 89,757
145,000 BB-/B3 Consolidated Commercial Holdings, 9.75%, 4/1/12 (144A) 147,175
-----------
$ 536,932
-----------
Total Diversified Financials $ 1,681,840
-----------
Insurance - 4.5%
Life & Health Insurance - 1.8%
265,000 B+/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 265,994
300,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 (a) 285,692
-----------
$ 551,686
-----------
Multi-Line Insurance - 0.6%
210,000 BB/Ba3 Allmerica Financial Corp., 7.625%, 10/15/25 $ 197,400
-----------
Property & Casualty Insurance - 1.4%
285,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 280,098
150,000 BB-/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 150,318
-----------
$ 430,416
-----------
Reinsurance - 0.7%
200,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 214,993
-----------
Total Insurance $ 1,394,495
-----------
Real Estate - 2.3%
Real Estate Management & Development - 0.9%
100,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 $ 97,500
185,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 185,925
-----------
$ 283,425
-----------
Real Estate Investment Trusts - 1.4%
120,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 118,800
155,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 161,975
150,000 B-/B1 Meristar Hospitality Operations Finance Corp., 10.5%, 6/15/09 159,750
-----------
$ 440,525
-----------
Total Real Estate $ 723,950
-----------
The accompanying notes are an integral part of these financial statements. 83
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
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Principal
Amount S&P/Moody's
USD ($) Ratings Value
Technology Hardware & Equipment - 2.0%
Communications Equipment - 0.7%
150,000 BB+/Ba2 Corning, Inc., 6.3%, 3/1/09 $ 152,749
50,000 BB+/Ba2 Corning, Inc., 5.9%, 3/15/14 46,750
-----------
$ 199,499
-----------
Electronic Manufacturing Services - 0.2%
50,000 BB-/Ba2 Sanmina-SCI Corp., 10.375%, 1/15/10 $ 57,250
-----------
Office Electronics - 0.4%
120,000 B-/B3 Xerox Corp., 8.0%, 2/1/27 $ 109,500
-----------
Technology Distributors - 0.7%
200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 $ 208,912
-----------
Total Technology Hardware & Equipment $ 575,161
-----------
Telecommunication Services - 5.9%
Integrated Telecom Services - 2.4%
125,000 B+/B2 GCI, Inc., 7.25%, 2/15/14 $ 119,375
125,000 CCC/B3 Primus Telecomm Group., 8.0%, 1/15/14 (144A) 110,000
150,000 B-/B3 TSI Telecommunication Services, 12.75%, 2/1/09 161,250
145,000 B+/B2 Innova S De R.L., 9.375%, 9/19/13 151,887
200,000 NR/Baa3 Tele Norte Leste Participacoes SA, 8.0%, 12/18/13 (144A) 179,001
-----------
$ 721,513
-----------
Wireless Telecom Services - 3.5%
150,000 CCC/Caa1 Alamosa Delaware, Inc., 8.5%, 1/31/12 (144A) $ 147,000
170,000 CCC+/B3 MetroPCS, Inc., 10.75%, 10/1/11 (144A) 184,450
275,000 CCC/Caa1 Ubiquitel Operating Co., 9.87%, 3/1/11 (144A) 275,000
CAD 240,000 BB+/Ba3 Rogers Cantel, Inc., 10.5%, 6/1/06 194,866
150,000 CCC+/B3 Mobifon Holdings, 12.5%, 7/31/10 (144A) 171,000
115,000 B+/Ba3 Mobile Telesystems Finance, 8.375%, 10/14/10 (144A) 108,388
-----------
$ 1,080,704
-----------
Total Telecommunication Services $ 1,802,217
-----------
Utilities - 0.9%
Electric Utilities - 0.6%
189,200 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) $ 185,416
-----------
Multi-Utilities & Unregulated Power - 0.3%
30,000 B/B1 Reliant Resources, Inc., 9.25%, 7/15/10 $ 32,025
60,000 B/B1 Reliant Resources, Inc., 9.5%, 7/15/13 64,650
-----------
$ 96,675
-----------
Total Utilities $ 282,091
-----------
TOTAL CORPORATE BONDS
(Cost $16,575,719) $16,990,940
-----------
84 The accompanying notes are an integral part of these financial statements.
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Principal
Amount S&P/Moody's
USD ($) Ratings Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.4%
395,358 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 to 11/1/33 $ 404,327
350,035 AAA/Aaa Federal Home Loan Mortgage Corp. (Gold), 5.0%, 6/1/34 338,260
91,229 AAA/Aaa Federal Home Loan Mortgage Corp. (Gold), 6.0%, 11/1/33 93,293
86,744 AAA/Aaa Federal Home Loan Bank, 5.5%, 10/1/16 88,915
415,710 AAA/Aaa Federal Home Loan Bank, 6.0%, 6/1/17 433,784
250,000 AAA/Aaa Federal National Mortgage Association, 6.0%, TBA 255,156
414,338 AAA/Aaa Federal National Mortgage Association, 5.5%, 3/1/18 to 5/1/34 419,071
767,760 AAA/Aaa Federal National Mortgage Association, 6.0%, 7/1/17 to 1/1/34 788,211
AUD 300,000 AAA/Aaa Federal National Mortgage Association, 6.375%, 8/15/07 212,738
28,419 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/31 to 2/1/32 29,638
2,293 AAA/Aaa Federal National Mortgage Association, 7.0%, 9/1/29 2,428
462 AAA/Aaa Federal National Mortgage Association, 7.5%, 6/1/30 496
198,714 AAA/Aaa Government National Mortgage Association, 5.5%, 4/20/34 198,549
1,588,679 AAA/Aaa Government National Mortgage Association, 6.0%, 6/15/17 to 10/15/33 1,638,648
628,729 AAA/Aaa Government National Mortgage Association, 6.5% 3/15/29 to 1/15/34 657,893
10,160 AAA/Aaa Government National Mortgage Association, 7.0%, 3/15/31 10,800
33,092 AAA/Aaa Government National Mortgage Association, 7.5% 5/15/23 35,339
445,636 AAA/Aaa Government National Mortgage Association II, 6.0%, 11/20/33 456,882
196,808 AAA/Aaa Government National Mortgage Association II, 5.5%, 3/20/34 196,644
75,000 AAA/Aaa U.S. Treasury Bond, 5.25%, 2/15/29 73,535
190,000 AAA/Aaa U.S. Treasury Notes 5.375%, 2/15/31 191,625
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $6,520,373) $ 6,526,232
-----------
FOREIGN GOVERNMENT BONDS - 12.8%
ITL 410,000,000 B+/B2 Banco Nac De Desen Econo , 8.0% 4/28/10 $ 229,962
CAD 27,000 AAA/Aaa Canadian Government, 4.25%, 9/1/08 20,345
CAD 315,000 AAA/Aaa Canadian Government, 5.25%, 6/1/12 243,276
CAD 200,000 AAA/Aaa Candian Government, 5.75%, 9/1/06 157,301
100,000 B+/B2 Federal Republic of Brazil, 11.0%,1/11/12 100,600
AUD 150,000 AAA/Aaa Government of Australia, 4.0%, 8/20/15 145,242
EUR 343,000 AAA/Aaa Government of France, 3.0%, 7/25/09 486,153
SEK 5,000 TSY/Aaa Swedish Government, 5.25%, 3/15/11 698
NOK 3,410,000 TSY/Aaa Norwegian Government, 6.75%, 1/15/07 534,409
AUD 332,000 AA/Aa2 Ontario Province, 5.5%, 4/23/13 219,785
AUD 207,000 NR/Aaa Queensland Treasury, 6.0%, 8/14/13 144,105
253,509 BB+/Ba2 Republic of Columbia, 9.75%, 4/9/11 280,127
185,000 BB-/Ba3 Republic of Peru, 8.375%, 5/3/16 172,050
EUR 125,000 BBB/Baa2 Republic of South Africa, 5.25%, 5/16/13 148,233
145,000 BB+/Baa3 Russia Regs., 5.0%, 3/31/30 132,385
SEK 2,955,000 TSY/Aaa Swedish Government, 5.5%, 10/08/12 418,061
SEK 2,150,000 TSY/Aaa Swedish Government, 8.0%, 8/15/07 322,873
AUD 25,000 AA+/Aa1 Swedish Export Credit, 4.1%, 2/13/06 16,994
DEM 180,000 BBB-/Baa3 United Mexican States, 8.25%, 2/24/09 127,161
-----------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $3,492,603) $ 3,899,760
-----------
The accompanying notes are an integral part of these financial statements. 85
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
SOVEREIGN ISSUES - 0.7%
75,000 CC/B3 Dominican Republic, 9.04%, 1/23/13 (144A) $ 47,250
75,000 BB-/Ba3 Republic of Peru, 9.125%, 2/21/12 76,875
100,000 BB-/Ba3 Republic of Peru, 9.875%, 2/6/15 104,500
-----------
TOTAL SOVEREIGN ISSUES
(Cost $267,376) $ 228,625
-----------
SUPERNATIONAL BONDS - 0.5%
Insurance - 0.5%
NZD 258,000 AAA/Aaa International Finance Corp., 6.75%, 7/15/09 $ 164,996
-----------
TOTAL SUPERNATIONAL BONDS
(Cost $113,817) $ 164,996
-----------
MUNICIPAL BONDS - 1.2%
90,000 BBB/Baa3 Golden State Tobacco Securitization, 6.75%, 6/1/39 $ 80,862
100,000 NR/NR Wayne Charter County SPL, 6.75%, 12/1/15 85,344
175,000 B/Caa2 New Jersey Economic Development Authority
Special Facility Revenue, 7.0%, 11/15/30 135,630
60,000 BBB/Baa3 Tobacco Settlement Financing Corp., 7.0%, 6/1/41 55,553
-----------
TOTAL MUNICIPAL BONDS
(Cost $346,230) $ 357,389
-----------
Shares
TEMPORARY CASH INVESTMENT - 1.9%
Securities Lending Collateral - 1.8%
578,396 Securities Lending Investment Fund, 1.29% $ 578,395
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $578,396) $ 578,395
-----------
TOTAL INVESTMENT IN SECURITIES - 97.8%
(Cost $29,602,009)(a) $30,532,756
-----------
OTHER ASSETS AND LIABILITIES - 2.2% $ 696,710
-----------
TOTAL NET ASSETS - 100.0% $31,229,467
===========
86 The accompanying notes are an integral part of these financial statements.
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N/R Not rated by either S&P or Moddy's
TSY Treasury Security
* Non-income producing security.
TBA TBA (To Be Assigned) securities are purchased on a forward commitment
basis with an approximate (generally plus/minus 2.5%) principal and no
definite maturity date period The actual principal amount and maturity
date will be determined upon settlement when the specific mortgage pools
are assigned.
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $7,731,379 or 24.7%
of total net assets.
Note: The Porfolio's investments in mortgage-backed securites of the Government
Mortgage Association (GNMA) and the Federal National Mortgage Association
(FNMA) are interests in separate pools of mortgages. All separate
investments in the issuer which have the same coupon rate have been
aggregated for the purpose of presentation in the schedule of
investments.
Note: Principal amounts are denominated in US dollars unless otherwise denoted.
AUD Australian dollar
DKK Danish kroner.
EURO Euro dollar.
NZD New Zealand dollar.
DEM Deutsche Marks.
CAD Canadian Dollar.
ITL Italian Lira.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
33,250 AMR Corp., 9.0%, 8/1/12 $ 27,174
166,250 JLG Industries Inc., 8.375%, 6/15/12 169,740
95,000 Lucent Technologies, Inc., 5.5%, 11/15/08* 90,190
285,000 Provident Companies Inc., 7.0%, 7/15/18 278,708
----------
Total $ 565,812*
==========
*Security sold as of June 30, 2004, but not returned from loan.
The accompanying notes are an integral part of these financial statements. 87
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
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Principal
Amount Value
CORPORATE BONDS - 0.6%
Miscellaneous - 0.6%
$ 250,000 Private Export Funding, 3.375%, 2/15/09 $ 242,131
-----------
TOTAL CORPORATE BONDS
(Cost $240,945) $ 242,131
-----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 93.1%
550,000 Federal Farm Credit Bank, 6.5%, 9/29/06 $ 589,480
100,000 Federal Farm Credit Bank, 5.88%, 9/8/08 107,242
400,000 Federal Farm Credit Bank, 4.9%, 3/17/14 375,846
200,000 Federal Farm Credit Bank, Medium Term Note, 6.38%, 11/27/06 214,430
400,000 Federal Home Loan Mortgage Corp., 4.53%, 10/30/06 411,843
850,000 Federal Home Loan Mortgage Corp., 5.875%, 11/15/07 909,101
300,000 Federal Home Loan Mortgage Corp., 5.89%, 6/30/08 322,359
3,921,848 Federal Home Loan Mortgage Corp., 6.0%, 10/1/32 to 5/1/34 4,011,435
901,212 Federal Home Loan Mortgage Corp., 6.5%, 1/1/29 to 7/1/32 940,477
140,000 Federal Home Loan Mortgage Corp., 6.7%, 1/5/07 151,495
185,833 Federal Home Loan Mortgage Corp., 7.0%, 4/1/30 to 4/1/32 196,977
73,070 Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 78,699
2,419,765 Federal National Mortgage Association, 5.5%, 3/1/18 to 3/1/34 2,436,771
2,289,692 Federal National Mortgage Association, 6.0%, 12/1/11 to 6/1/33 2,349,031
500,000 Federal National Mortgage Association, 6.5%, TBA 30 Year 520,469
1,720,919 Federal National Mortgage Association, 6.5%, 7/1/21 to 9/1/32 1,794,641
467,446 Federal National Mortgage Association, 7.0%, 9/1/18 to 1/1/32 495,003
35,476 Federal National Mortgage Association, 7.5%, 2/1/31 38,031
81,061 Federal National Mortgage Association, 9.0%, 4/1/33 90,116
500,000 Government National Mortgage Association, 4.5%, TBA 30 Year 469,375
723,092 Government National Mortgage Association, 4.5%, 8/15/33 to 6/15/34 680,471
374,405 Government National Mortgage Association, 5.0%, 7/15/17 379,866
1,305,089 Government National Mortgage Association, 5.5%, 4/15/31 to 7/1/33 1,306,546
3,966,710 Government National Mortgage Association, 6.0%, 5/15/17 to 9/15/33 4,079,080
3,312,786 Government National Mortgage Association, 6.5%, 4/15/17 to 1/15/34 3,470,454
940,004 Government National Mortgage Association, 7.0%, 1/15/26 to 4/15/33 999,827
172,281 Government National Mortgage Association, 7.5%, 10/15/22 to 1/15/32 185,983
148,618 Government National Mortgage Association I, 6.0%, 11/15/30 152,523
275,243 Government National Mortgage Association I, 6.5%, 5/15/29 to 5/15/31 288,099
125,788 Government National Mortgage Association I, 7.0%, 11/15/30 to 12/15/30 133,783
35,837 Government National Mortgage Association I, 7.5%, 1/15/31 38,624
416,154 Government National Mortgage Association II, 5.0%, 12/20/18 418,994
488,390 Government National Mortgage Association II, 5.5%, 12/20/34 487,983
607,748 Government National Mortgage Association II, 6.0%, 12/20/18 to 6/20/34 624,636
200,086 Government National Mortgage Association II, 6.5%, 8/20/28 to 9/20/31 209,062
255,695 Government National Mortgage Association II, 7.0%, 5/20/26 to 1/20/31 271,797
13,284 Government National Mortgage Association II, 7.5%, 8/20/27 14,326
4,640 Government National Mortgage Association II, 8.0%, 8/20/25 5,091
12,000 Tennessee Valley Authority, 6.75%, 6/1/28 282,000
400,000 U.S. Treasury Bonds, 7.25%, 5/15/16 483,578
925,000 U.S. Treasury Bonds, 6.375%, 8/15/27 1,044,058
4,700,000 U.S. Treasury Notes, 6.5%, 2/15/10 5,295,946
88 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. Government and Agency Obligations - (Cont.)
$ 200,000 U.S. Treasury Notes, 4.75%, 5/15/14 $ 202,086
1,850,000 U.S. Treasury Notes, 6.25%, 8/15/23 2,048,587
------------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $39,224,189) $ 39,606,221
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.7%
Government - 1.7%
250,000 Freddie Mac 3.2%, 5/21/08 $ 244,210
300,000 Freddie Mac 5.25%, 11/15/12 294,354
191,180 Freddie Mac 5.0%, 1/15/16 195,031
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS - 1.72%
(Cost $749,943) $ 733,595
------------
TEMPORARY CASH INVESTMENT - 7.0%
Repurchase Agreement - 7.0%
3,000,000 UBS Warburg 1.25% dated 6/30/04, repurchase price of $3.000,000 plus
accrued interest on 7/1/04, collateralized by $2,911,000 U.S.
Treasury Note, 5.75%, 11/15/05 $ 3,000,000
------------
TOTAL TEMPORARY CASH INVESTMENT - 7.0%
(Cost $3,000,000) $ 3,000,000
------------
TOTAL INVESTMENTS IN SECURITIES - 102.4%
(Cost $43,215,077) $ 43,581,947
------------
OTHER ASSETS AND LIABILITIES - (2.4%) $ (1,028,597)
------------
TOTAL NET ASSETS - 100.0% $ 42,553,350
============
TBA (To Be Assigned) securities are purchased on a forward commitment basis
with an approximate (generally plus/minus 2.5%) principal and no definite
maturity date period. The actual principal amount and maturity date will be
determined upon settlement when the specific mortgage pools are assigned.
The accompanying notes are an integral part of these financial statements. 89
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Principal
Amount Value
CORPORATE BONDS - 53.8%
Energy - 5.1%
Integrated Oil & Gas - 5.1%
$ 1,500,000 Exxon Capital Corp., 0.00%, 11/15/04 $ 1,491,384
-----------
Total Energy $ 1,491,384
-----------
Capital Goods - 3.1%
Industrial Conglomerates - 3.1%
400,000 Tennessee Valley Authority, 4.75%,
7/15/04 $ 400,539
500,000 GE Capital Corp., Floating Rate, 2/16/05 500,095
-----------
$ 900,634
-----------
Total Capital Goods $ 900,634
-----------
Food, Beverage & Tobacco - 4.2%
Soft Drinks - 4.2%
1,220,000 Pepsico, Inc., 4.5%, 9/15/04 $ 1,228,102
-----------
Total Food, Beverage & Tobacco $ 1,228,102
-----------
Household & Personal Products - 1.8%
Household Products - 1.8%
500,000 Procter & Gamble Co., 6.6%, 12/15/04 $ 512,116
-----------
Total Household & Personal
Products $ 512,116
-----------
Pharmaceuticals & Biotechnology - 4.3%
Pharmaceuticals - 4.3%
1,250,000 Abbott Laboratories, 5.125%, 7/1/04 $ 1,250,000
-----------
Total Pharmaceuticals &
Biotechnology $ 1,250,000
-----------
Banks - 16.5%
Diversified Banks - 16.5%
1,000,000 Associates Corp., Floating Rate, 6/27/05 $ 1,000,000
750,000 Bank of America Corp., Floating Rate,
1/31/05 751,623
750,000 Bank of America Corp., Floating Rate,
4/28/05 751,377
1,000,000 First Union Corp., Floating Rate, 3/31/05 1,003,015
300,000 First USA Bank, Floating Rate, 7/21/04 300,034
1,000,000 Wells Fargo Co., 6.625%, 7/15/04 1,002,086
-----------
$ 4,808,135
-----------
Total Banks $ 4,808,135
-----------
Diversified Financials - 14.9%
Consumer Finance - 5.6%
1,635,000 National Rural Utilities, 5.25%, 7/15/04 $ 1,637,655
-----------
Investment Banking & Brokerage - 9.3%
500,000 Merrill Lynch, Floating Rate, 4/11/05 $ 500,000
500,000 Merril Lynch, Floating Rate, 10/29/04 500,775
Principal
Amount Value
$ 1,200,000 American Express, Floating Rate,
4/18/05 1,201,453
500,000 American Express, Floating Rate,
12/16/04 500,395
-----------
$ 2,702,623
-----------
Total Diversified Financials $ 4,340,278
-----------
Technology Hardware & Equipment - 3.9%
Computer Hardware - 3.9%
500,000 IBM Corp., 6.0%, 11/30/04 $ 508,695
650,000 IBM Corp., Floating Rate, 9/10/04 650,197
-----------
Total Technology Hardware &
Equipment $ 1,158,892
-----------
Total Corporate Bonds
(Cost $15,689,541) $15,689,541
-----------
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - 37.8%
Banks - 29.2%
Thrifts & Mortgage Finance - 29.2%
2,500,000 Federal Home Loan Mortgage Corp.,
4.5%, 8/15/04 $ 2,510,409
2,500,000 Federal National Mortgage Association,
6.5%, 8/15/04 2,515,785
500,000 Federal National Mortgage Association,
3.5%, 9/15/04 502,413
1,000,000 Federal National Mortgage Association,
1.56%, 5/16/05 1,000,000
2,000,000 Freddie Mac, Floating Rate, 2/4/05 1,999,667
-----------
$ 8,528,274
-----------
Total Banks $ 8,528,274
-----------
Government - 8.6%
500,000 Federal Home Loan Bank, 1.47%,
3/01/05 $ 500,000
1,000,000 Federal Home Loan Bank, 1.38%,
3/28/05 1,000,000
1,000,000 Federal Home Loan Bank, 1.28%,
4/22/05 1,000,000
-----------
$ 2,500,000
-----------
Total Government $ 2,500,000
-----------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS
(Cost $11,028,275) $11,028,274
-----------
90 The accompanying notes are an integral part of these financial statements.
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 24.1%
Commercial Paper - 24.1%
$ 1,500,000 American General Finance Corp., 1.17%,
7/19/04 $ 1,499,123
1,400,000 Coca-Cola Co., 1.08%, 7/12/04 1,399,538
1,500,000 EI Dupont, 1.16%, 7/22/04 1,498,985
1,300,000 Paccar Financial, 1.10%, 8/04/04 1,298,649
1,350,000 Toyota Motor Credit Corp., 1.18%,
7/23/04 1,349,027
-----------
$ 7,045,322
-----------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $7,045,321) $ 7,045,322
-----------
TOTAL INVESTMENT IN SECURITIES - 115.7%
(Cost $33,763,137) $33,763,137
-----------
OTHER ASSETS AND
LIABILITIES - (15.7)% $(4,584,371)
-----------
TOTAL NET ASSETS - 100.0% $29,178,766
===========
The accompanying notes are an integral part of these financial statements. 91
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/04 Year Ended Year Ended Year Ended Year Ended Year Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $17.37 $11.03 $11.23 $12.10 $ 18.75 $10.49
------ ------ ------ ------ ------- ------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.13 $ 0.20 $ 0.06 $ 0.15 $ (0.12) $(0.03)
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.98) 6.20 (0.19) (1.02) (6.20) 8.29
------ ------ ------ ------ ------- ------
Net increase (decrease) from investment operations $(0.85) $ 6.40 $(0.13) $(0.87) $ (6.32) $ 8.26
Distributions to shareowners:
Net investment income (0.15) (0.06) (0.07) -- -- --
Net realized gain -- -- -- -- (0.33) --
------ ------ ------ ------ ------- ------
Net increase (decrease) in net asset value $(1.00) $ 6.34 $(0.20) $(0.87) $ (6.65) $ 8.26
------ ------ ------ ------ ------- ------
Net asset value, end of period $16.37 $17.37 $11.03 $11.23 $ 12.10 $18.75
====== ====== ====== ====== ======= ======
Total return* (4.94)% 58.17% (1.20)% (7.19)% (34.20)% 78.74%
Ratio of net expenses to average net assets+ 1.75%** 1.75% 1.75% 1.66% 1.79% 1.88%
Ratio of net investment income (loss) to average net assets+ 1.24%** 1.43% 0.63% 1.30% (0.59)% (0.74)%
Portfolio turnover rate 64%** 79% 124% 175% 156% 144%
Net assets, end of period (in thousands) $7,300 $8,399 $5,886 $6,896 $ 9,446 $9,679
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.87%** 2.51% 2.88% 3.83% 2.45% 6.56%
Net investment income (loss) 1.12%** 0.67% (0.50)% (0.87)% (1.25)% (5.42)%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.75%** 1.75% 1.75% 1.66% 1.75% 1.75%
Net investment income (loss) 1.24%** 1.43% 0.63% 1.30% (0.55)% (0.61)%
* 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.
92 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 9.05 $ 6.82 $ 8.42 $ 11.07 $ 13.61 $ 10.60
------ ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.11 $ 0.09 $ 0.05 $ 0.01 $ (0.06) $ 0.05
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.01 2.17 (1.65) (2.51) (2.45) 2.97
------ ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.12 $ 2.26 $ (1.60) $ (2.50) $ (2.51) $ 3.02
Distributions to shareowners:
Net investment income (0.07) (0.03) -- (0.15) (0.02) --
Net realized gain -- -- -- -- (0.01) (0.01)
------ ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.05 $ 2.23 $ (1.60) $ (2.65) $ (2.54) $ 3.01
------ ------- ------- ------- ------- -------
Net asset value, end of period $ 9.10 $ 9.05 $ 6.82 $ 8.42 $ 11.07 $ 13.61
====== ======= ======= ======= ======= =======
Total return* 1.33% 33.26% (19.00)% (22.66)% (18.46)% 28.47%
Ratio of net expenses to average net assets+ 1.50%** 1.50% 1.50% 1.50% 1.48% 1.53%
Ratio of net investment income (loss) to average net assets+ 2.12%** 1.14% 0.68% 0.25% (0.28)% 0.56%
Portfolio turnover rate 74%** 52% 94% 73% 92% 60%
Net assets, end of period (in thousands) $8,563 $ 9,330 $ 8,696 $12,417 $18,474 $12,735
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.93%** 2.52% 2.21% 1.99% 1.55% 2.58%
Net investment income (loss) 1.69%** 0.12% 0.03% (0.24)% (0.35)% (0.49)%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.50%** 1.50% 1.50% 1.50% 1.48 1.50%
Net investment income (loss) 2.12%** 1.14% 0.68% 0.25% (0.28)% 0.60%
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 10.06 $ 7.79 $ 9.00 $ 11.83 $ 15.38 $ 10.79
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.07 $ 0.07 $ 0.03 $ 0.02 $ 0.01 $ 0.07
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.28 2.26 (1.23) (2.83) (3.45) 4.67
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.35 $ 2.33 $ (1.20) $ (2.81) $ (3.44) $ 4.74
Distributions to shareowners:
Net investment income (0.05) (0.06) (0.01) (0.02) (0.11) (0.15)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.30 $ 2.27 $ (1.21) $ (2.83) $ (3.55) $ 4.59
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.36 $ 10.06 $ 7.79 $ 9.00 $ 11.83 $ 15.38
======= ======= ======= ======= ======= =======
Total return* 3.52% 30.06% (13.31)% (23.74)% (22.50)% 44.38%
Ratio of net expenses to average net assets+ 1.68%** 1.69% 1.46% 1.38% 1.25% 1.22%
Ratio of net investment income (loss) to average net assets+ 1.28%** 0.68% 0.62% 0.21% 0.10% 0.01%
Portfolio turnover rate 189%** 99% 31% 39% 55% 90%
Net assets, end of period (in thousands) $21,711 $22,506 $21,271 $32,083 $48,380 $69,192
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.68%** 1.69% 1.46% 1.38% 1.25% 1.22%
Net investment income (loss) 1.28%** 0.68% 0.62% 0.21% 0.10% 0.01%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.68%** 1.69% 1.46% 1.38% 1.25% 1.22%
Net investment income (loss) 1.28%** 0.68% 0.62% 0.21% 0.10% 0.01%
* 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.
The accompanying notes are an integral part of these financial statements. 93
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year 11/8/01
6/30/04 Ended Ended to
Class I (unaudited) 12/31/03 12/31/02 12/31/01(a)
Net asset value, beginning of period $ 12.50 $ 9.23 $ 10.87 $10.00
------- ------- ------- ------
Increase (decrease) from investment operations:
Net investment income (loss) $ (0.02) $ -- $ (0.01) $ 0.01
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 1.02 3.27 (1.63) 0.86
------- ------- ------- ------
Net increase (decrease) from investment operations $ 1.00 $ 3.27 $ (1.64) $ 0.87
Distributions to shareowners:
Net investment income -- -- (0.00)(b) (0.00)
Net realized gain -- -- (0.00)(b) --
------- ------- ------- ------
Net increase (decrease) in net asset value $ 1.00 $ 3.27 $ (1.65) $ 0.87
------- ------- ------- ------
Net asset value, end of period $ 13.50 $ 12.50 $ 9.23 $10.87
======= ======= ======= ======
Total return* 8.00% 35.43% (15.08)% 8.70%
Ratio of net expenses to average net assets 1.25%* * 1.25% 1.25% 1.21%**
Ratio of net investment income (loss) to average net assets 0.34%* * 0.03% (0.05)% 0.86%**
Portfolio turnover rate 43%** 74% 50% 0%**
Net assets, end of period (in thousands) $14,543 $12,049 $ 6,603 $ 504
Ratios with no waiver of management fees and assumption of expenses
by PIM:
Net expenses 1.32%* * 2.40% 2.76% 77.48%**
Net investment income (loss) (0.41)%** (1.12)% (1.56)% (75.41)%**
Ratios with waiver of management fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 1.25%* * 1.25% 1.25% 1.21%**
Net investment income (loss) (0.34)%** 0.03% (0.05)% 0.86%**
(a) Shares of Pioneer Small Cap Value VCT Portfolio were first publicly offered
on November 8, 2001.
(b) Amount rounds to less than one cent per share
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
94 The accompanying notes are an integral part of these financial statements.
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year 1/19/01
6/30/04 Ended Ended to
Class I (unaudited) 12/31/03 12/31/02 12/31/01(a)
Net asset value, beginning of period $11.44 $ 9.13 $ 10.97 $10.00
------ ------ ------- ------
Increase (decrease) from investment operations:
Net investment income (loss) $(0.02) $ 0.00(b) $ 0.00(b) $ 0.02
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.73 2.31 (1.84) 0.95
------ ------ ------- ------
Net increase (decrease) from investment operations $ 0.71 $ 2.31 $ (1.84) $ 0.97
Distributions to shareowners:
Net investment income -- -- (0.00)(b) --
------ ------ ------- ------
Net increase (decrease) in net asset value $ 0.71 $ 2.31 $ (1.84) $ 0.97
------ ------ ------- ------
Net asset value, end of period $12.15 $11.44 $ 9.13 $10.97
====== ====== ======= ======
Total return* 6.21% 25.30% (16.75)% 9.70%
Ratio of net expenses to average net assets+ 1.25%** 1.25% 1.25%** 1.24%**
Ratio of net investment income (loss) to average net assets+ (0.35)%** 0.02% 0.07%** 0.30%**
Portfolio turnover rate 46%** 38% 53%** 72%**
Net assets, end of period (in thousands) $3,574 $3,875 $ 3,441 $2,375
Ratios with no waiver of management fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 1.52%** 2.42% 2.68%** 7.49%**
Net investment income (loss) (0.62)%** (1.15)% (1.36)%** (5.95)%**
Ratio with waiver of management fees and assumption of expenses by PIM
and reduction for fees paid indirectly:
Net expenses 1.25%* * 1.25% 2.68% 1.24%**
Net investment income (loss) (0.35)%** 0.02% 1.36% 0.30%**
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 20.47 $ 14.94 $ 17.35 $ 17.79 $ 16.26 $ 14.49
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.05 $ 0.14 $ 0.07 $ 0.07 $ 0.13 $ 0.13
Net realized and unrealized gain (loss) on investments 1.76 5.45 (1.97) 1.06 2.62 1.77
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 1.81 $ 5.59 $ (1.90) $ 1.13 $ 2.75 $ 1.90
Distributions to shareowners:
Net investment income (0.08) (0.06) (0.05) (0.10) (0.13) (0.13)
Net realized gain (0.21) -- (0.46) (1.47) (1.09) --
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 1.52 $ 5.53 $ (2.41) $ (0.44) $ 1.53 $ 1.77
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 21.99 $ 20.47 $ 14.94 $ 17.35 $ 17.79 $ 16.26
======== ======== ======== ======== ======== ========
Total return* 8.85% 37.48% (11.21)% 6.49% 18.00% 13.13%
Ratio of net expenses to average net assets+ 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76%
Ratio of net investment income (loss) to average net assets+ 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77%
Portfolio turnover rate 71%** 52% 68% 95% 85% 91%
Net assets, end of period (in thousands) $198,767 $170,237 $120,687 $128,340 $111,466 $120,526
Ratio with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76%
Net investment income (loss) 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77%
Ratio with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76%
Net investment income (loss) 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77%
(a) Shares of Pioneer Small Company VCT Portfolio were first publicly offered on
January 19, 2001.
(b) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 95
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 12.22 $ 9.75 $ 14.95 $ 18.39 $ 21.92 $ 20.34
------- ------- ------- ------- ------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.00 $ (0.01) $ 0.00(a) $ 0.01 $ (0.03) $ (0.02)
Net realized and unrealized gain (loss) on investments (0.12) 2.48 (5.19) (3.45) (1.91) 1.64
------- ------- ------- ------- ------- --------
Net increase (decrease) from investment operations $ (0.12) $ 2.47 $ (5.19) $ (3.44) $ (1.94) $ 1.62
Distributions to shareowners:
Net investment income -- (0.00)(a) ( 0.01) -- (0.00) (0.01)
Net realized gain -- -- -- -- (1.59) (0.03)
------- ------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ (0.12) $ 2.47 $ (5.20) $ (3.44) $ (3.53) $ 1.58
------- ------- ------- ------- ------- --------
Net asset value, end of period $ 12.10 $ 12.22 $ 9.75 $ 14.95 $ 18.39 $ 21.92
======= ======= ======= ======= ======= ========
Total return* (0.98)% 25.35% (34.71)% (18.71)% (7.88)% 7.93%
Ratio of net expenses to average net assets+ 0.90%** 1.08% 0.97% 0.85% 0.73% 0.76%
Ratio of net investment income (loss) to average net assets+ 0.04%** (0.05)% 0.01% 0.07% (0.11)% (0.08)%
Portfolio turnover rate 208%** 58% 86% 111% 95% 47%
Net assets, end of period (in thousands) $32,969 $35,750 $34,746 $72,456 $105,855 $162,730
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.90%** 1.08% 0.97% 0.85% 0.73% 0.76%
Net investment income (loss) 0.04%** (0.05)% 0.01% 0.07% (0.11)% (0.08)%
Ratios with waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.90%** 1.08% 0.97% 0.85% 0.73% 0.76%
Net investment income (loss) 0.04%** (0.05)% 0.01% 0.07% (0.11)% (0.08)%
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 $ 13.07
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.42 $ 0.74 $ 0.62 $ 0.68 $ 0.71 $ 0.66
Net realized and unrealized gain (loss) on investments 0.96 4.16 (0.23) 0.40 2.67 (1.20)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 1.38 $ 4.90 $ 0.39 $ 1.08 $ 3.38 $ (0.54)
Distributions to shareowners:
Net investment income (0.40) (0.64) (0.69) (0.56) (0.59) (0.60)
Net realized gain -- -- -- -- -- (0.12)
Tax return of capital -- (0.16) -- (0.17) (0.10) (0.08)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.98 $ 4.10 $ (0.30) $ 0.35 $ 2.69 $ (1.34)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 19.55 $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73
======= ======= ======= ======= ======= =======
Total return* 7.40% 34.75% (2.53)% 7.80% 29.51% (4.17)%
Ratio of net expenses to average net assets+ 0.94%** 1.03% 1.07% 1.16% 1.10% 1.15%
Ratio of net investment income (loss) to average net assets+ 4.22%** 4.49% 4.76% 4.71% 5.02% 5.07%
Portfolio turnover rate 43%** 20% 29% 34% 31% 54%
Net assets, end of period (in thousands) $30,297 $31,891 $29,873 $33,026 $32,982 $28,318
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.30%
Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 4.92%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.14%
Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 5.08%
(a) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
96 The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Fund VCT Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 18.70 $ 15.28 $ 19.08 $ 22.67 $ 22.70 $ 19.76
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.10 $ 0.20 $ 0.19 $ 0.17 $ 0.18 $ 0.16
Net realized and unrealized gain (loss) on investments 0.28 3.41 (3.81) (2.57) 0.10 2.97
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 0.38 $ 3.61 $ (3.62) $ (2.40) $ 0.28 $ 3.13
Distributions to shareowners:
Net investment income (0.10) (0.19) (0.18) (0.17) (0.18) (0.17)
Net realized gain -- -- -- (1.02) (0.13) (0.02)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 0.28 $ 3.42 $ (3.80) $ (3.59) $ (0.03) $ 2.94
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 18.98 $ 18.70 $ 15.28 $ 19.08 $ 22.67 $ 22.70
======== ======== ======== ======== ======== ========
Total return* 2.04% 23.76% 19.03% (10.85)% 1.22% 15.91%
Ratio of net expenses to average net assets+ 0.71%** 0.76% 0.80% 0.74% 0.69% 0.70%
Ratio of net investment income (loss) to average net assets+ 1.03%** 1.16% 1.09% 0.83% 0.78% 0.82%
Portfolio turnover rate 25%** 11% 11% 7.0% 37% 8%
Net assets, end of period (in thousands) $149,565 $154,839 $141,892 $199,160 $222,107 $204,927
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.71%** 0.76% 0.80% 0.74% 0.69% 0.70%
Net investment income (loss) 1.03%** 1.16% 1.09% 0.83% 0.78% 0.82%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.71%** 0.76% 0.80% 0.74% 0.69% 0.70%
Net investment income (loss) 1.03%** 1.16% 1.09% 0.83% 0.78% 0.82%
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 18.09 $ 15.11 $ 18.40 $ 21.28 $ 20.72 $ 21.44
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.22 $ 0.41 $ 0.42 $ 0.40 $ 0.51 $ 0.42
Net realized and unrealized gain (loss) on investments 0.49 2.96 (3.30) (1.86) 2.28 (0.15)
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 0.71 $ 3.37 $ (2.88) $ (1.46) $ 2.79 $ 0.27
Distributions to shareowners:
Net investment income (0.18) (0.39) (0.41) (0.36) (0.49) (0.41)
Net realized gain -- -- -- (1.06) (1.74) (0.58)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 0.53 $ 2.98 $ (3.29) $ (2.88) $ 0.56 $ (0.72)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 18.62 $ 18.09 $ 15.11 $ 18.40 $ 21.28 $ 20.72
======== ======== ======== ======== ======== ========
Total return* 3.94% 22.61% (15.82)% (6.97)% 14.85% 1.21%
Ratio of net expenses to average net assets+ 0.72%** 0.78% 0.80% 0.75% 0.71% 0.70%
Ratio of net investment income (loss) to average net assets+ 2.34%** 2.55% 2.48% 2.07% 2.40% 1.97%
Portfolio turnover rate 18%** 12% 12% 13% 13% 23%
Net assets, end of period (in thousands) $158,805 $155,634 $133,258 $164,019 $181,920 $226,379
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.72%** 0.78% 0.80% 0.75% 0.71% 0.70%
Net investment income (loss) 2.34%** 2.55% 2.48% 2.07% 2.40% 1.97%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.72%** 0.78% 0.80% 0.75% 0.71% 0.70%
Net investment income (loss) 2.34%** 2.55% 2.48% 2.07% 2.40% 1.97%
* 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.
The accompanying notes are an integral part of these financial statements. 97
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01(a) 12/31/00 12/31/99
Net asset value, beginning of period $ 14.04 $ 12.27 $ 13.91 $ 14.60 $ 14.31 $ 14.47
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.13 $ 0.23 $ 0.21 $ 0.34 $ 0.48 $ 0.51
Net realized and unrealized gain (loss) on investments 0.14 1.80 (1.63) (0.67) 0.29 (0.16)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.27 $ 2.03 $ (1.42) $ (0.33) $ 0.77 $ 0.35
Distributions to shareowners:
Net investment income (0.13) (0.26) (0.22) (0.36) (0.48) (0.51)
Net realized gain -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.14 $ 1.77 $ (1.64) $ (0.69) $ 0.29 $ (0.16)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 14.18 $ 14.04 $ 12.27 $ 13.91 $ 14.60 $ 14.31
======= ======= ======= ======= ======= =======
Total return* 1.93% 16.71% (10.27)% (2.26)% 5.45% 2.53%
Ratio of net expenses to average net assets+ 0.88%** 0.91% 0.95% 0.84% 0.82% 0.78%
Ratio of net investment income (loss) to average net assets+ 1.76%** 1.75% 1.62% 2.42% 3.21% 3.58%
Portfolio turnover rate 35%** 37% 179% 136% 15% 59%
Net assets, end of period (in thousands) $37,641 $40,773 $42,849 $56,890 $59,545 $72,669
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.88%** 0.91% 0.95% 0.84% 0.82% 0.78%
Net investment income (loss) 1.76%** 1.75% 1.62% 2.42% 3.21% 3.58%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.88%** 0.91% 0.95% 0.84% 0.82% 0.77%
Net investment income (loss) 1.76%** 1.75% 1.62% 2.42% 3.21% 3.59%
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year 5/1/00
6/30/04 Ended Ended Ended to
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00(b)
Net asset value, beginning of period $ 11.45 $ 9.27 $ 10.33 $ 9.82 $10.00
------- ------- ------- ------- ------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.31 $ 0.76 $ 0.92 $ 0.95 $ 0.61
Net realized and unrealized gain (loss) on investments (0.28) 2.18 (1.06) 0.62 (0.18)
------- ------- ------- ------- ------
Net increase (decrease) from investment operations $ 0.03 $ 2.94 $ (0.14) $ 1.57 $ 0.43
Distributions to shareowners:
Net investment income (0.31) (0.76) ( 0.92) (0.95) (0.61)
Net realized gain (0.05) -- -- (0.11) --
------- ------- ------- ------- ------
Net increase (decrease) in net asset value $ (0.33) $ 2.18 $ (1.06) $ 0.51 $(0.18)
------- ------- ------- ------- ------
Net asset value, end of period $ 11.12 $ 11.45 $ 9.27 $ 10.33 $ 9.82
======= ======= ======= ======= ======
Total return* 0.25% 32.78% (1.42)% 16.60% 4.12%
Ratio of net expenses to average net assets+ 0.77%** 0.89% 1.02% 1.15% 1.25%**
Ratio of net investment income (loss) to average net assets+ 5.53%** 7.22% 9.39% 9.15% 9.18%**
Portfolio turnover rate 67%** 48% 42% 36% 33%**
Net assets, end of period (in thousands) $63,375 $66,587 $41,111 $32,331 $6,849
Ratios with no waiver of management fees and assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 0.77%** 0.89% 1.02% 1.28% 2.35%**
Net investment income (loss) 5.53%** 7.22% 9.39% 9.02% 8.08%**
(a) The Portfolio began accreting discounts and amortizing premiums on debt
securities. The effect of this change for the year ended December 31, 2001,
was to decrease net investment income by $0.00, increase net realized and
unrealized gain (loss) by $0.00 (both amounts round to less than one cent
per share) and to decrease the ratio of net investment income to average net
assets with waiver of management fees by PIM and reduction for fees paid
indirectly. Per share ratios and supplemental data for periods prior to
January 1, 2001, have not been restated to reflect this change in
presentation.
(b) Shares of High Yield VCT Portfolio 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.
98 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year Year 7/29/99
6/30/04 Ended Ended Ended Ended to
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99(a)
Net asset value, beginning of period $ 11.01 $ 9.67 $ 9.33 $ 9.43 $ 9.75 $10.00
------- ------- ------- ------ ------- ------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.31 $ 0.62 $ 0.65 $ 0.67 $ 0.73 $ 0.28
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.28) 1.38 0.32 (0.04) (0.32) (0.21)
------- ------- ------- ------ ------- ------
Net increase (decrease) from investment operations $ 0.03 $ 2.00 $ 0.97 $ 0.63 $ 0.41 $ 0.07
Distributions to shareowners:
Net investment income (0.32) (0.66) (0.63) (0.67) (0.73) (0.28)
Tax return of capital (0.16) -- -- (0.06) -- (0.04)
------- ------- ------- ------ ------- ------
Net increase (decrease) in net asset value $ (0.45) $ 1.34 $ 0.34 $(0.10) $ (0.32) $(0.25)
------- ------- ------- ------ ------- ------
Net asset value, end of period $ 10.56 $ 11.01 $ 9.67 $ 9.33 $ 9.43 $ 9.75
======= ======= ======= ====== ======= ======
Total return* 0.32% 21.24% 10.72% 6.90% 4.51% 0.70%
Ratio of net expenses to average net assets+ 1.08%** 1.25% 1.25% 1.25% 1.30% 1.54%**
Ratio of net investment income (loss) to average net assets+ 5.87%** 5.95% 6.75% 7.16% 7.53% 6.46%**
Portfolio turnover rate 51%** 68% 50% 55% 54% 49%
Net assets, end of period (in thousands) $19,396 $19,312 $14,692 $7,479 $ 3,265 $1,244
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.08%** 1.25% 1.62% 2.44% 2.97% 8.68%**
Net investment income (loss) 5.87%** 5.95% 6.38% 5.97% 5.86% (0.68)%**
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.08%** 1.25% 1.25% 1.25% 1.25% 1.25%**
Net investment income (loss) 5.87%** 5.95% 6.75% 7.16% 7.58% 6.75%**
(a) Shares of Strategic Income VCT Portfolio were first publicly offered on July
29, 1999.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of the period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 99
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01(a) 12/31/00 12/31/99
Net asset value, beginning of period $ 10.35 $ 10.59 $ 10.06 $ 9.97 $ 9.47 $ 10.29
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.23 $ 0.35 $ 0.46 $ 0.52 $ 0.58 $ 0.56
Net realized and unrealized gain (loss) on investments (0.21) (0.16) 0.56 0.12 0.50 (0.81)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.02 $ 0.19 $ 1.02 $ 0.64 $ 1.08 $ (0.25)
Distributions to shareowners:
Net investment income (0.34) (0.43) (0.49) (0.55) (0.58) (0.55)
Net realized gain -- -- -- -- -- (0.01)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.32) $ (0.24) $ 0.53 $ 0.09 $ 0.50 $ (0.82)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.03 $ 10.35 $ 10.59 $ 10.06 $ 9.97 $ 9.47
======= ======= ======= ======= ======= =======
Total return* 0.15% 1.81% 10.32% 6.48% 11.76% (2.52)%
Ratio of net expenses to average net assets+ 0.78% 0.78% 0.81% 83.00% 0.84% 0.81%
Ratio of net investment income (loss) to average net assets+ 4.47% 3.45% 4.39% 5.19% 6.00% 5.64%
Portfolio turnover rate 28% 34% 54% 71% 55% 41%
Net assets, end of period (in thousands) $35,435 $44,526 $69,551 $37,381 $25,791 $29,779
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.78% 0.78% 0.81% 0.85% 0.84% 0.81%
Net investment income (loss) 4.47% 3.45% 4.39% 5.17% 6.00% 5.64%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.78% 0.78% 0.81% 0.82% 0.81% 0.79%
Net investment income (loss) 4.47% 3.45% 4.39% 5.20% 6.03% 5.66%
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.003 $ 0.006 $ 0.01 $ 0.03 $ 0.06 $ 0.04
------- ------- ------- ------- ------- -------
Distributions to shareowners:
Net investment income (0.003) (0.006) (0.01) (0.03) (0.06) (0.04)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 1.000 $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total return* 0.25% 0.56% 1.19% 3.39% 5.71% 4.38%
Ratio of net expenses to average net assets+ 0.68% 0.72% 0.78% 0.78% 0.76% 0.79%
Ratio of net investment income (loss) to average net assets+ 0.49% 0.58% 1.11% 3.16% 5.58% 4.34%
Net assets, end of period (in thousands) $29,179 $34,736 $59,521 $49,545 $36,979 $37,347
Ratios with no waiver of fees and assumption of expenses by
PIM and no reduction for fees paid indirectly:
Net expenses 0.72% 0.72% 0.78% 0.78% 0.76% 0.79%
Net investment income (loss) 0.49% 0.58% 1.11% 3.16% 5.58% 4.34%
Ratios with waiver of fees and assumption of expenses by
PIM and reduction for fees paid indirectly:
Net expenses 0.72% 0.72% 0.78% 0.78% 0.75% 0.78%
Net investment income (loss) 0.49% 0.58% 1.11% 3.16% 5.59% 4.35%
(a) The Portfolio began accreting discounts and amortizing premiums on debt
securities. The effect of this change for the year ended December 31, 2001,
was to decrease net investment income by $0.00, increase net realized and
unrealized gain (loss) by $0.00 (both amounts round to less than one cent
per share) and to decrease the ratio of net investment income to average net
assets with waiver of management fees by PIM and reduction for fees paid
indirectly from 5.38% to 5.17%. Per share ratios and supplemental data for
periods prior to January 1, 2001, have not been restated to reflect this
change in presentation.
* 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.
100 The accompanying notes are an integral part of these financial statements.
(This page has been left blank intentionally.)
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Emerging Pioneer
Markets Europe
VCT Portfolio VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $1,264,443, $0,
$977,587, $1,136,534, $855,251, $25,821,135, and $0, respectively)
(Cost $26,418,556, $11,935,102, $21,427,015, $15,991,691, $11,015,956,
$547,111,834, and $38,249,059, respectively) $32,153,781 $14,273,318
Cash 2,806,900 295,005
Foreign currencies, at value (Cost $97,982) 97,118 --
Receivables --
Investment securities sold 97,441 47,786
Fund shares sold 26,435 37,989
Variation margin -- --
Dividends, interest and foreign taxes withheld 105,985 45,476
Forward foreign currency settlement contracts, net 32 --
Due from Pioneer Investment Management, Inc. -- 2,606
Other 3,186 369
----------- -----------
Total assets $35,290,878 $14,702,549
----------- -----------
LIABILITIES:
Payables --
Investment securities purchased $ 1,303,499 $ 71,100
Fund shares repurchased 37,473 3,968
Dividends -- --
Upon return of securities loaned 1,335,560 --
Forward foreign currency settlement contracts, net -- 437
Reserve for repatriation taxes 86,981 --
Due to bank -- --
Due to affiliates 28,056 10,679
Accrued expenses 74,448 31,661
----------- -----------
Total liabilities $ 2,866,017 $ 117,845
----------- -----------
NET ASSETS:
Paid-in capital $31,725,483 $20,406,813
Accumulated net investment income (loss) 122,425 155,154
Accumulated undistributed net realized gain (loss) (5,068,348) (8,317,054)
Net unrealized gain (loss) on:
Investments 5,648,244 2,338,216
Futures contracts -- --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (2,943) 1,575
----------- -----------
Total net assets $32,424,861 $14,584,704
----------- -----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 7,300,338 $ 8,562,896
Shares outstanding 445,997 940,919
----------- -----------
Net asset value per share $ 16.37 $ 9.10
Class II:
No par value (unlimited number of shares authorized)
Net assets $25,124,523 $ 6,021,808
Shares outstanding 1,544,610 673,287
----------- -----------
Net asset value per share $ 16.27 $ 8.94
102 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer Pioneer Pioneer Pioneer Pioneer
International Small Cap Small Mid Cap Growth
Value Value Company Value Shares
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
$ 24,625,668 $19,052,797 $12,615,363 $623,337,278 $ 38,392,430
343,632 2,718,102 704,756 232,088 166,266
-- -- -- -- --
945,383 23,852 923 9,079,092 350,395
-- 21,160 2,836 824,503 --
-- 7,700 -- -- --
43,287 15,498 9,766 422,351 44,334
-- -- -- -- --
-- -- -- -- --
338 584 408 -- 470
------------ ----------- ----------- ------------ ------------
$ 25,958,308 $21,839,693 $13,334,052 $633,895,312 $ 38,953,895
------------ ----------- ----------- ------------ ------------
$ 896,946 $ 10,897 $ -- $ 9,767,200 $ 328,381
50,440 20,907 4,118 17,620 8,488
-- -- -- -- --
1,038,146 1,202,726 906,300 25,038,825 --
3,112 -- -- -- --
-- -- -- -- --
584 -- -- -- --
24,038 6,556 11,625 439,928 27,887
29,328 41,630 28,619 31,864 27,509
------------ ----------- ----------- ------------ ------------
$ 2,042,594 $ 1,282,716 $ 950,662 $ 35,295,437 $ 392,265
------------ ----------- ----------- ------------ ------------
$ 35,249,709 $17,643,559 $11,122,927 $491,654,895 $ 78,004,905
148,255 (32,380) (26,069) 1,141,650 2,672
(14,677,563) (170,680) (312,875) 29,577,886 (39,589,318)
3,198,653 3,061,106 1,599,407 76,225,444 143,371
-- 55,372 -- -- --
(3,340) -- -- -- --
------------ ----------- ----------- ------------ ------------
$ 23,915,714 $20,556,977 $12,383,390 $598,599,875 $ 38,561,630
------------ ----------- ----------- ------------ ------------
$ 21,710,796 $14,543,028 $ 3,574,012 $198,767,124 $ 32,969,391
2,096,193 1,077,380 294,266 9,037,285 2,724,557
------------ ----------- ----------- ------------ ------------
$ 10.36 $ 13.50 $ 12.15 $ 21.99 $ 12.10
$ 2,204,918 $ 6,013,949 $ 8,809,378 $399,832,751 $ 5,592,239
213,362 447,131 731,606 18,321,840 467,443
------------ ----------- ----------- ------------ ------------
$ 10.33 $ 13.45 $ 12.04 $ 21.82 $ 11.96
The accompanying notes are an integral part of these financial statements. 103
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Real Estate Pioneer
Shares Fund
VCT Portfolio VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $0, $751,043,
$3,425,654, $0, $3,896,379, $565,812, $0, and $0 respectively)
(Cost $55,838,852, $233,902,361, $191,244,800, $39,456,879, $96,881,771,
$29,602,009, $43,215,077, and $33,763,137, respectively) $72,899,325 $260,852,633
Cash 1,906,225 63,820
Foreign currencies, at value (cost $0, $0, $0, $0, $0, $452,063, $0, and $0, -- --
respectively)
Receivables --
Investment securities sold 2,124,520 --
Fund shares sold 181,129 150,340
Dividends, interest and foreign taxes withheld 428,504 264,315
Other 354 622
----------- ------------
Total assets $77,540,057 $261,331,730
----------- ------------
LIABILITIES:
Payables --
Investment securities purchased $ 2,208,201 $ --
Fund shares repurchased 378,282 14,838
Dividends -- --
Upon return for securities loaned -- 766,159
Forward foreign currency portfolio hedge contracts, open -- net -- --
Due to bank -- --
Due to affiliates 66,321 184,570
Accrued expenses 19,954 19,798
Other -- --
----------- ------------
Total liabilities $ 2,672,758 $ 985,365
----------- ------------
NET ASSETS:
Paid-in capital $57,527,714 $268,906,525
Accumulated net investment income (loss) 160,542 (75,908)
Accumulated undistributed net realized gain (loss) 118,570 (35,434,524)
Net unrealized gain (loss) on:
Investments 17,060,473 26,950,272
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies -- --
----------- ------------
Total net assets $74,867,299 $260,346,365
----------- ------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $30,296,916 $149,564,869
Shares outstanding 1,549,560 7,879,911
----------- ------------
Net asset value per share $ 19.55 $ 18.98
Class II:
No par value (unlimited number of shares authorized)
Net assets $44,570,383 $110,781,496
Shares outstanding 2,283,389 5,850,266
----------- ------------
Net asset value per share $ 19.52 $ 18.94
104 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer Pioneer Pioneer Pioneer Pioneer
Equity Pioneer High Strategic America Money
Income Balanced Yield Income Income Market
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
$ 233,140,932 $ 43,518,998 $ 97,689,703 $30,532,756 $43,581,947 $33,763,137
165,432 935,566 4,966,498 1,103,312 31,752 --
-- -- -- 452,882 -- --
-- 242,436 1,251,309 99,189 -- --
107,679 1,060 129,186 63,956 58,936 22,617
386,897 160,986 1,389,274 518,040 357,466 269,795
272 427 240 395 418 824
------------- ------------ ------------- ----------- ----------- -----------
$ 233,801,212 $ 44,859,473 $ 105,426,210 $32,770,530 $44,030,519 $34,056,373
------------- ------------ ------------- ----------- ----------- -----------
$ -- $ 452,482 $ 5,290,138 $ 732,931 $ 1,424,051 $ 1,502,658
129,721 1,345 22 182,840 45 22,201
-- -- -- 2,901 -- --
3,514,541 -- 3,990,710 578,396 -- --
-- -- -- 5,662 -- --
-- -- -- -- -- 3,320,254
157,442 29,685 62,907 22,297 24,632 17,023
41,710 21,732 27,878 16,036 28,441 15,471
-- -- -- -- -- --
------------- ------------ ------------- ----------- ----------- -----------
$ 3,843,414 $ 505,244 $ 9,371,655 $ 1,541,063 $ 1,477,169 $ 4,877,607
------------- ------------ ------------- ----------- ----------- -----------
$ 202,494,815 $ 45,716,039 $ 92,183,318 $29,754,738 $43,324,529 $29,185,735
1,549,361 (5,493) 42,466 136,607 (239,082) (3,910)
(15,982,510) (5,418,436) 3,020,839 412,206 (898,967) (3,059)
41,896,132 4,062,119 807,932 930,747 366,870 --
-- -- -- (4,831) -- --
------------- ------------ ------------- ----------- ----------- -----------
$ 229,957,798 $ 44,354,229 $ 96,054,555 $31,229,467 $42,553,350 $29,178,766
------------- ------------ ------------- ----------- ----------- -----------
$ 158,805,031 $ 37,640,853 $ 63,375,020 $19,396,101 $35,435,314 $29,178,766
8,530,519 2,654,818 5,697,234 1,836,427 3,533,687 29,189,692
------------- ------------ ------------- ----------- ----------- -----------
$ 18.62 $ 14.18 $ 11.12 $ 10.56 $ 10.03 $ 1.00
$ 71,152,767 $ 6,713,376 $ 32,679,535 $11,833,366 $ 7,118,036 $ --
3,801,847 474,365 2,937,735 1,120,547 708,630 --
------------- ------------ ------------- ----------- ----------- -----------
$ 18.72 $ 14.15 $ 11.12 $ 10.56 $ 10.04 $ --
The accompanying notes are an integral part of these financial statements. 105
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Pioneer
Emerging Markets Europe
VCT Portfolio VCT Portfolio
Six Months Six Months
Ended Ended
6/30/04 6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $65,563, $40,379,
$37,883, $61, $49, $5,324, and $1,046, respectively) $ 514,353 $ 264,706
Interest 4,135 1,946
Income on securities loaned, net 4,740 --
Other -- --
------------ ----------
Total investment income $ 523,228 $ 266,652
------------ ----------
EXPENSES:
Management fees $ 201,264 $ 72,527
Transfer agent fees 1,508 1,536
Distribution fees (Class II) 33,390 7,024
Administrative fees 9,250 9,250
Custodian fees 72,734 28,760
Professional fees 33,721 25,032
Printing 5,746 2,983
Fees and expenses of nonaffiliated trustees -- --
Miscellaneous 1,870 735
------------ ----------
Total expenses $ 359,483 $ 147,847
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (21,299) (31,868)
------------ ----------
Net expenses $ 338,184 $ 115,979
------------ ----------
Net investment income (loss) $ 185,044 $ 150,673
------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 3,090,302 $ 706,240
Futures contracts -- --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (38,564) (3,507)
------------ ----------
$ 3,051,738 $ 702,733
------------ ----------
Change in net unrealized gain or loss from:
Investments (includes the change in reserve for repatriation taxes of
$86,981, $0, $0, $0, $0, $0 and $0, respectively) $ (4,991,310) $ (667,025)
Futures contracts -- --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (5,835) (5,768)
------------ ----------
$ (4,997,145) $ (672,793)
------------ ----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ (1,945,407) $ 29,940
============ ==========
Net increase (decrease) in net assets resulting
from operations $ (1,760,363) $ 180,613
============ ==========
106 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer Pioneer Pioneer Pioneer Pioneer
International Value Small Cap Value Small Company Mid Cap Value Growth Shares
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
Six Months Six Months Six Months Six Months Six Months
Ended Ended Ended Ended Ended
6/30/04 6/30/04 6/30/04 6/30/04 6/30/04
$ 341,167 $ 74,837 $ 50,058 $ 3,149,536 $ 179,113
910 4,917 1,876 61,832 2,776
5,408 1,081 1,378 6,732 --
-- -- -- -- --
------------ ---------- --------- ----------- ------------
$ 347,485 $ 80,835 $ 53,312 $ 3,218,100 $ 181,889
------------ ---------- --------- ----------- ------------
$ 116,707 $ 65,883 $ 43,522 $ 1,558,884 $ 135,655
1,458 (1,877) 497 1,432 1,508
1,882 5,351 9,708 369,014 5,230
9,250 9,250 9,250 41,873 9,250
27,002 18,376 12,204 39,878 11,802
36,283 22,386 10,476 37,060 14,662
5,128 2,274 10,106 23,211 30
-- -- -- -- --
1,425 1,004 496 5,011 1,080
------------ ---------- --------- ----------- ------------
$ 199,135 $ 122,647 $ 96,259 $ 2,076,363 $ 179,217
-- (5,768) (14,892) -- --
------------ ---------- --------- ----------- ------------
$ 199,135 $ 116,879 $ 81,367 $ 2,076,363 $ 179,217
------------ ---------- --------- ----------- ------------
$ 148,350 $ (36,044) $ (28,055) $ 1,141,737 $ 2,672
------------ ---------- --------- ----------- ------------
$ 2,344,688 $ 839,832 $ 393,255 $31,570,054 $ 1,809,705
-- 26,278 13,667 -- --
(40,661) -- (3,327) -- --
------------ ---------- --------- ----------- ------------
$ 2,304,027 $ 866,110 $ 403,595 $31,570,054 $ 1,809,705
------------ ---------- --------- ----------- ------------
$ (1,630,701) $ 481,469 $ 325,045 $ 7,930,499 $ (2,214,548)
-- 32,938 (11,218) -- --
(13,527) -- -- -- --
------------ ---------- --------- ----------- ------------
$ (1,644,228) $ 514,407 $ 313,827 $ 7,930,499 $ (2,214,548)
------------ ---------- --------- ----------- ------------
$ 659,799 $1,380,517 $ 717,422 $39,500,553 $ (404,843)
============ ========== ========= =========== ============
$ 808,149 $1,344,473 $ 689,367 $40,642,290 $ (402,171)
============ ========== ========= =========== ============
The accompanying notes are an integral part of these financial statements. 107
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Pioneer
Real Estate Shares Fund
VCT Portfolio VCT Portfolio
Six Months Six Months
Ended Ended
6/30/04 6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $1,676, $19,683,
$0, $341, $0, $0, $0, and $0, respectively) $1,885,996 $ 2,102,920
Interest (net of foreign taxes withheld of $0, $0,
$94, $0, $2,145, $0 and $0, respectively) 18,128 57,470
Income on securities loaned, net 535 7,876
Other -- --
---------- ------------
Total investment income $1,904,659 $ 2,168,266
---------- ------------
EXPENSES:
Management fees $ 294,190 $ 811,005
Transfer agent fees 1,494 1,223
Distribution fees (Class II) 53,188 123,119
Administrative fees 9,250 15,324
Custodian fees 13,052 20,922
Professional fees 19,250 26,346
Printing 8,855 3,962
Fees and expenses of nonaffiliated trustees -- --
Miscellaneous 899 3,740
---------- ------------
Total expenses $ 400,178 $ 1,005,641
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. -- --
---------- ------------
Net expenses $ 400,178 $ 1,005,641
---------- ------------
Net investment income (loss) $1,504,481 $ 1,162,625
---------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $3,075,780 $ (1,304,040)
Futures contracts -- --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies -- (3,646)
---------- ------------
$3,075,780 $ (1,307,686)
---------- ------------
Change in net unrealized gain or loss from:
Investments $ 359,869 $ 5,111,020
Futures contracts -- --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies -- --
---------- ------------
$ 359,869 $ 5,111,020
---------- ------------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $3,435,649 $ 3,803,334
========== ============
Net increase (decrease) in net assets resulting
from operations $4,940,130 $ 4,965,959
========== ============
108 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer Pioneer
Pioneer Pioneer Pioneer Pioneer America Money
Equity Income Balanced High-Yield Strategic Income Income Market
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
Six Months Six Months Six Months Six Months Six Months Six Months
Ended Ended Ended Ended Ended Ended
6/30/04 6/30/04 6/30/04 6/30/04 6/30/04 6/30/04
$ 3,355,605 $ 135,243 $ 25,646 $ -- $ -- $ --
44,410 451,405 2,986,213 940,961 1,130,558 179,500
5,416 -- 2,414 1,048 -- --
-- -- -- -- -- --
----------- ---------- ------------ ------------ ---------- --------
$ 3,405,431 $ 586,648 $ 3,014,273 $ 942,009 $1,130,558 $179,500
----------- ---------- ------------ ------------ ---------- --------
$ 723,317 $ 144,037 $ 311,486 $ 87,824 $ 118,586 $ 77,434
1,488 1,475 293 1,383 1,383 754
81,276 6,237 34,430 9,221 5,992 --
22,108 9,250 9,604 9,250 9,250 9,250
20,776 8,120 9,660 11,172 10,276 12,186
24,135 26,333 26,244 34,553 26,051 10,880
6,146 5,838 8,162 4,607 3,519 (8,151)
1,681 -- -- -- -- --
5,460 1,694 1,996 1,010 573 2,106
----------- ---------- ------------ ------------ ---------- --------
$ 886,387 $ 202,984 $ 401,875 $ 159,020 $ 175,630 $104,459
-- -- -- -- -- --
----------- ---------- ------------ ------------ ---------- --------
$ 886,387 $ 202,984 $ 401,875 $ 159,020 $ 175,630 $104,459
----------- ---------- ------------ ------------ ---------- --------
$ 2,519,044 $ 383,664 $ 2,612,398 $ 782,989 $ 954,928 $ 75,041
----------- ---------- ------------ ------------ ---------- --------
$ (626,853) $ 934,310 $ 3,020,965 $ 416,409 $ (18,903) $ --
-- -- -- -- -- --
-- -- -- (3,412) -- --
----------- ---------- ------------ ------------ ---------- --------
$ (626,853) $ 934,310 $ 3,020,965 $ 412,997 $ (18,903) $ --
----------- ---------- ------------ ------------ ---------- --------
$ 6,585,509 $ (500,826) $ (6,002,478) $ (1,181,610) $ (878,602) $ --
-- -- -- -- -- --
-- -- -- 12,963 -- --
----------- ---------- ------------ ------------ ---------- --------
$ 6,585,509 $ (500,826) $ (6,002,478) $ (1,168,647) $ (878,602) $ --
----------- ---------- ------------ ------------ ---------- --------
$ 5,958,656 $ 433,484 $ (2,981,513) $ (755,650) $ (897,505) $ --
=========== ========== ============ ============ ========== ========
$ 8,477,700 $ 817,148 $ (369,115) $ 27,339 $ 57,423 $ 75,041
=========== ========== ============ ============ ========== ========
The accompanying notes are an integral part of these financial statements. 109
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Emerging Pioneer
Markets VCT Portfolio Europe VCT Portfolio
Six Months Six Months
Ended Year Ended Year
6/30/04 Ended 6/30/04 Ended
(unaudited) 12/31/03 (unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 185,044 $ 262,378 $ 150,673 $ 110,674
Net realized gain (loss) on investments 3,051,738 1,187,664 702,733 (108,393)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (4,997,145) 10,449,480 (672,793) 3,419,238
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations $ (1,760,363) $ 11,899,522 $ 180,613 $ 3,421,519
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (65,091) $ (25,889) $ (65,952) $ (36,322)
Class II (196,317) (60,429) (38,910) (9,367)
Net realized gain
Class I -- -- -- --
Class II -- -- -- --
Tax return of capital
Class I -- -- -- --
Class II -- -- -- --
------------ ------------ ------------ ------------
Total distributions to shareowners $ (196,317) $ (86,319) $ (104,862) $ (45,689)
------------ ------------ ------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 5,260,358 $ 16,360,576 $ 1,713,293 $ 6,502,123
Reinvestment of distributions 259,912 85,767 104,862 45,689
Cost of shares repurchased (6,009,356) (8,062,148) (1,644,175) (6,113,517)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ (489,086) $ 8,384,195 $ 173,980 $ 434,295
------------ ------------ ------------ ------------
Net increase (decrease) in net assets $ (2,510,857) $220,197,398 $ 249,731 $ 3,810,125
------------ ------------ ------------ ------------
NET ASSETS:
Beginning of period $ 34,935,718 $ 14,738,320 $ 14,334,973 $ 10,524,848
------------ ------------ ------------ ------------
End of period $ 32,424,861 $ 34,935,718 $ 14,584,704 $ 14,334,973
============ ============ ============ ============
Accumulated/(distributions in excess of)
net investment income (loss) $ 122,425 $ 198,789 $ 155,154 $ 109,343
============ ============ ============ ============
110 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer International Pioneer Small Cap Value Pioneer Small Company
Value VCT Portfolio VCT Portfolio VCT Portfolio
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
6/30/04 Ended 6/30/04 Ended 6/30/04 Ended
(unaudited) 12/31/03 (unaudited) 12/31/03 (unaudited) 12/31/03
$ 148,350 $ 136,624 $ (36,044) $ 2,125 $ (28,055) $ (9,162)
2,304,027 (857,791) 866,110 (334,168) 403,595 (296,269)
(1,644,228) 6,236,488 514,407 3,353,942 313,827 2,171,849
------------ ------------ ------------ ------------- ------------ ------------
$ 808,149 $ 5,515,321 $ 1,344,473 $ 3,021,899 $ 689,367 $ 1,866,418
------------ ------------ ------------ ------------- ------------ ------------
$ (113,572) $ (146,246) $ -- $ -- $ -- $ --
(8,890) (4) -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
------------ ------------ ------------ ------------- ------------ ------------
$ (122,462) $ (146,250) $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------- ------------ ------------
$ 2,046,605 $ 39,187,523 $ 6,450,844 $ 15,752,093 $ 2,429,035 $ 6,156,243
122,459 146,246 -- -- -- --
(2,526,547) (42,386,651) (2,046,639) (10,568,904) (1,705,541) (3,911,566)
------------ ------------ ------------ ------------- ------------ ------------
$ (357,483) $ (3,052,882) $ 4,404,205 $ 5,183,189 $ 723,494 $ 2,244,677
------------ ------------ ------------ ------------- ------------ ------------
$ 328,204 $ 2,316,189 $ 5,748,678 $ 8,205,088 $ 1,412,861 $ 4,111,095
------------ ------------ ------------ ------------- ------------ ------------
$ 23,587,510 $ 21,271,321 $ 14,808,299 $ 6,603,211 $ 10,970,529 $ 6,859,434
------------ ------------ ------------ ------------- ------------ ------------
$ 23,915,714 $ 23,587,510 $ 20,556,977 $ 14,808,299 $ 12,383,390 $ 10,970,529
============ ============ ============ ============= ============ ============
$ 148,255 $ 122,367 $ (32,380) $ 3,664 $ (26,069) $ 1,986
============ ============ ============ ============= ============ ============
The accompanying notes are an integral part of these financial statements. 111
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Mid Cap Pioneer Growth
Value VCT Portfolio Shares VCT Portfolio
Six Months Six Months
Ended Year Ended Year
6/30/04 Ended 6/30/04 Ended
(unaudited) 12/31/03 (unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 1,141,737 $ 1,803,484 $ 2,672 $ (20,270)
Net realized gain (loss) on investments 31,570,054 6,004,760 1,809,705 (3,697,565)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 7,930,499 75,230,670 (2,214,548) 11,680,101
------------- ------------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 40,642,290 $ 83,038,914 $ (402,171) $ 7,962,266
------------- ------------- ------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (711,725) $ (438,494) $ -- $ (4,477)
Class II (1,067,643) (236,135) -- --
Net realized gain
Class I (1,863,831) -- -- --
Class II (3,740,321) -- -- --
Tax return of capital
Class I -- -- -- --
Class II -- -- -- --
------------- ------------- ------------ ------------
Total distributions to shareowners $ (7,383,520) $ (674,629) $ -- $ (4,477)
------------- ------------- ------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 196,943,386 $ 161,143,658 $ 3,453,095 $ 4,104,812
Reinvestment of distributions 7,383,520 674,611 -- 4,477
Cost of shares repurchased (20,342,972) (44,550,616) (3,287,636) (8,277,302)
------------- ------------- ------------ ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 183,983,934 $ 117,267,653 $ 165,459 $ (4,168,013)
------------- ------------- ------------ ------------
Net increase (decrease) in net assets $ 217,242,704 $ 199,631,938 $ (236,712) $ 3,789,776
------------- ------------- ------------ ------------
NET ASSETS:
Beginning of period $ 381,357,171 $ 181,725,233 $ 38,798,342 $ 35,008,566
------------- ------------- ------------ ------------
End of period $ 598,599,875 $ 381,357,171 $ 38,561,630 $ 38,798,342
============= ============= ============ ============
Accumulated/(distributions in excess of)
net investment income (loss) $ 1,141,650 $ 1,779,281 $ 2,672 $ --
============= ============= ============ ============
112 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer Real Estate Pioneer Fund Pioneer Equity
Shares VCT Portfolio VCT Portfolio Income VCT Portfolio
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
6/30/04 Ended 6/30/04 Ended 6/30/04 Ended
(unaudited) 12/31/03 (unaudited) 12/31/03 (unaudited) 12/31/03
$ 1,504,481 $ 3,062,870 $ 1,162,625 $ 2,086,873 $ 2,519,044 $ 4,413,641
3,075,780 (474,302) (1,307,686) (8,525,302) (626,853) (634,370)
359,869 15,553,008 5,111,020 49,662,141 6,585,509 34,115,732
------------ ------------- ------------- ------------- ------------- -------------
$ 4,940,130 $ 18,141,576 $ 4,965,959 $ 43,223,712 $ 8,477,700 $ 37,895,003
------------ ------------- ------------- ------------- ------------- -------------
$ (637,400) $ (1,422,912) $ (793,149) $ (1,580,150) $ (1,543,147) $ (3,313,897)
(859,854) (1,519,594) (445,384) (520,900) (583,520) (860,942)
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
------------ ------------- ------------- ------------- ------------- -------------
$ (1,497,254) $ (2,942,506) $ (1,238,533) $ (2,101,050) $ (2,126,667) $ (4,174,839)
------------ ------------- ------------- ------------- ------------- -------------
$ 7,974,724 $ 9,753,610 $ 33,243,901 $ 58,651,489 $ 23,048,590 $ 52,433,019
1,497,254 2,942,506 1,238,553 2,101,050 2,126,667 4,174,840
(9,831,522) (17,969,003) (20,190,548) (37,658,369) (17,557,375) (34,680,633)
------------ ------------- ------------- ------------- ------------- -------------
$ (359,544) $ (5,272,887) $ 14,291,886 $ 23,940,170 $ 7,617,882 $ 21,927,226
------------ ------------- ------------- ------------- ------------- -------------
$ 3,083,332 $ 9,926,183 $ 18,019,312 $ 64,216,832 $ 13,968,915 $ 55,647,390
------------ ------------- ------------- ------------- ------------- -------------
$ 71,783,967 $ 61,857,784 $ 242,327,053 $ 178,110,221 $ 215,988,883 $ 160,341,493
------------ ------------- ------------- ------------- ------------- -------------
$ 74,867,299 $ 71,783,967 $ 260,346,365 $ 242,327,053 $ 229,957,798 $ 215,988,883
============ ============= ============= ============= ============= =============
$ 160,542 $ 153,315 $ (75,908) $ -- $ 1,549,361 $ 1,156,984
============ ============= ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. 113
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Pioneer High Yield
Balanced VCT Portfolio VCT Portfolio
Six Months Six Months
Ended Year Ended Year
6/30/04 Ended 6/30/04 Ended
(unaudited) 12/31/03 (unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 383,664 $ 718,572 $ 2,612,398 $ 4,106,902
Net realized gain (loss) on investments 934,310 336,352 3,020,965 1,124,588
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (500,826) 5,309,842 (6,002,478) 10,301,474
------------ ------------ ------------- -------------
Net increase (decrease) in net assets
resulting from operations $ -- $ 6,364,766 $ (369,115) $ 15,532,964
------------ ------------ ------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (353,982) $ (800,491) $ (1,887,530) $ (3,817,405)
Class II (47,983) (20,067) (724,685) (279,944)
Net realized gain
Class I -- -- (265,040) --
Class II -- -- (135,300) --
Tax return of capital
Class I -- -- -- --
Class II -- -- -- --
------------ ------------ ------------- -------------
Total distributions to shareowners $ (401,965) $ (820,558) $ (3,012,555) $ (4,097,349)
------------ ------------ ------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 4,614,728 $ 4,068,440 $ 40,007,704 $ 45,609,360
Reinvestment of distributions 401,960 820,551 2,994,517 4,059,022
Cost of shares repurchased (5,240,015) (9,119,455) (27,753,753) (18,254,761)
------------ ------------ ------------- -------------
Net increase (decrease) in net assets
resulting from fund share transactions $ (223,327) $ (4,230,464) $ 15,248,468 $ 31,413,621
------------ ------------ ------------- -------------
Net increase (decrease) in net assets $ 191,856 $ 1,313,744 $ 11,866,798 $ 42,849,236
------------ ------------ ------------- -------------
NET ASSETS:
Beginning of period $ 44,162,373 $ 42,848,629 $ 84,187,757 $ 41,338,521
------------ ------------ ------------- -------------
End of period $ 44,354,229 $ 44,162,373 $ 96,054,555 $ 84,187,757
============ ============ ============= =============
Accumulated/(distributions in excess of)
net investment income (loss) $ (5,493) $ 12,808 $ 42,466 $ 42,283
============ ============ ============= =============
114 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer Strategic Pioneer America Pioneer Money
Income VCT Portfolio Income VCT Portfolio Market VCT Portfolio
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
6/30/04 Ended 6/30/04 Ended 6/30/04 Ended
(unaudited) 12/31/03 (unaudited) 12/31/03 (unaudited) 12/31/03
$ 782,989 $ 1,068,721 $ 954,928 $ 2,011,935 $ 75,041 $ 277,950
412,997 713,901 (18,903) 193,917 -- 2,354
(1,168,647) 1,695,515 (878,602) (1,192,882) -- --
------------ ------------ ------------- ------------- ------------- -------------
$ 27,339 $ 3,478,137 $ 57,423 $ 1,012,960 $ 75,041 $ 280,304
------------ ------------ ------------- ------------- ------------- -------------
$ (586,082) $ (1,087,224) $ (1,275,683) $ (2,321,232) $ (78,951) $ (277,950)
(212,869) (52,386) (149,828) (26,127) -- --
(294,735) -- -- -- -- --
(171,204) -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
------------ ------------ ------------- ------------- ------------- -------------
$ (1,264,890) $ (1,139,610) $ (1,425,511) $ (2,347,359) $ (78,951) $ (277,950)
------------ ------------ ------------- ------------- ------------- -------------
$ 11,917,524 $ 11,160,025 $ 6,288,054 $ 10,875,454 $ 11,576,926 $ 27,291,288
1,239,783 1,105,582 1,425,494 2,347,346 56,332 277,946
(3,666,138) (6,320,659) (10,954,747) (34,276,542) (17,186,820) (52,356,043)
------------ ------------ ------------- ------------- ------------- -------------
$ 9,491,169 $ 5,944,948 $ (3,241,200) $ (21,053,742) $ (5,553,562) $ (24,786,809)
------------ ------------ ------------- ------------- ------------- -------------
$ 8,253,618 $ 8,283,475 $ (4,609,288) $ (22,388,136) $ (5,557,472) $ (24,784,455)
------------ ------------ ------------- ------------- ------------- -------------
$ 22,975,849 $ 14,692,374 $ 47,162,638 $ 69,550,779 $ 34,736,238 $ 59,520,693
------------ ------------ ------------- ------------- ------------- -------------
$ 31,229,467 $ 22,975,849 $ 42,553,350 $ 47,162,643 $ 29,178,766 $ 34,736,238
============ ============ ============= ============= ============= =============
$ 136,607 $ 152,569 $ (239,082) $ 231,501 $ -- $ --
============ ============ ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. 115
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Variable Contracts Trust (the Trust) is a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of nineteen 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)
Portfolio shares may be purchased by insurance companies for the purpose of
funding variable annuity or variable life insurance contracts, and may also be
purchased by qualified pension and retirement plans.
The financial statements of Value Portfolio, Papp America Pacific Rim
Portfolio, Papp Small & Mid Cap Growth Portfolio and Oak Ridge Large Cap Growth
Portfolio and the Class II financial highlights of all the Portfolios are
presented in separate books.
The investment objective of Emerging Markets Portfolio, Europe Portfolio and
International Value Portfolio is to seek long-term capital growth. Small
Company Portfolio, Small Cap Value Portfolio, Mid-Cap Value Portfolio and
Growth Shares Portfolio seek capital appreciation. Real Estate Shares Portfolio
pursues long-term capital growth, with current income as a secondary objective.
Fund Portfolio seeks reasonable income and growth of capital. Equity Income
Portfolio seeks current income and long-term capital growth. Balanced
Portfolio's investment objectives are capital growth and current income. High
Yield Portfolio seeks to maximize total return through a combination of income
and capital appreciation. Strategic Income Portfolio seeks to produce a high
level of current income. America Income Portfolio seeks a high level of current
income as consistent with preservation of capital. Money Market Portfolio
invests for current income consistent with preserving capital and providing
liquidity.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses and gains and losses
on investments during the reporting period. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
consistently followed by the Trust, which are in conformity with those
generally accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the Portfolios are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Trading in foreign equity securities is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The value of such securities used in computing the net
asset value of the Portfolio's shares, based on the last sale
116
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
price on the principal exchange where they traded, are determined as of
such times.
Fixed income securities are valued at prices supplied by independent
pricing services, which consider such factors as Treasury spreads, yields,
maturities and ratings. Valuations may be supplemented by dealers and other
sources, as required. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the Board of Trustees.
The Portfolios also may use the fair value of a security, including a
non-U.S. security, when the closing market price on the primary exchange
where the security is traded no longer accurately reflects the value of the
security as of the close of the exchange. At June 30, 2004, there were no
fair valued securities except as follows. All securities that trade in
foreign markets whose closing prices are as of times prior to the close of
the New York Stock Exchange ("NYSE") and that are held by Emerging markets
Portfolio, Europe Portfolio and International Value Portfolio are fair
valued using vendor-supplied pricing updates for each security to the time
of the close of the NYSE.
Temporary cash investments and securities held by any Portfolio are valued
at amortized cost.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable diligence. Interest income,
including interest on income bearing cash accounts, is recorded on the
accrual basis. Discounts and premiums on fixed income securities are
accreted and amortized, respectively, on a yield-to-maturity basis and are
included in interest income. Dividend and interest income from foreign
securities are reported net of unrecoverable foreign taxes withheld at the
applicable country rates.
Gains and losses from sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
Because Real Estate Shares Portfolio invests a substantial portion of its
assets in real estate investment trusts (REITs), the Portfolio may be subject
to certain risks associated with direct investments in REITs. REITs may be
affected by changes in the value of their underlying properties and by
defaults by borrowers or tenants. REITs depend generally on their ability to
generate cash flow to make distributions to shareowners, and certain REITs
have self-liquidation provisions by which mortgages held may be paid in full
and distributions of capital returns may be made at any time. In addition,
the performance of a REIT may be affected by its failure to qualify for
tax-free pass-through of income under the Internal Revenue Code or its
failure to maintain exemption from registration under the Investment Company
Act of 1940.
Emerging Markets, International Value and Europe Portfolios' investments in
emerging markets or countries with limited or developing markets may
subject the Portfolios to a greater degree of risk than in a developed
market. Risks associated with these developing markets include political,
social or economic factors and may affect the price of the Portfolios'
investments and income generated by these investments, as well as the
Portfolios' ability to repatriate such amounts.
High Yield and Strategic Income Portfolios invest in below investment grade
(high yield) debt securities and preferred stocks. Some of these high yield
securities may be convertible into equity securities of the issuer. Debt
securities rated below investment grade are commonly referred to as "junk
bonds" and are considered speculative. These securities involve greater
risk of loss, are subject to greater price volatility, and are less liquid,
especially during periods of economic uncertainty or change, than higher
rated debt securities.
Small capitalization stocks, while offering the potential for higher
returns, such as those in Small Company and Small Cap Value Portfolio may
be subject to greater short-term price fluctuations than securities of
larger companies.
B. Futures Contracts
The Portfolios may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. Upon entering into a futures contract, the
- -----------------------------------------------------------------------------------------------------------------
Number of
Contracts Settlement Unrealized
Portfolio Type Long/(Short) Month Market Value Gain/(Loss)
- -----------------------------------------------------------------------------------------------------------------
Small Cap Value Portfolio Russell 2000 4 September 2004 $1,184,700 $55,372
- -----------------------------------------------------------------------------------------------------------------
117
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Portfolios are required to deposit with a broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Portfolios, depending on
the daily fluctuation in the value of the contracts, and are recorded by
the Portfolios as unrealized gains or losses. When the contract is closed,
the Portfolios realize a gain or loss equal to the difference between the
opening and closing value of the contract. The use of futures contracts
involves, to varying degrees, elements of market risk such as the changes
in the value of the contracts may not directly correlate to the changes in
the value of the underlying securities. These risks may decrease the
effectiveness of the Portfolios' hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, open contracts are shown
in the table at the bottom of the preceding page.
C. Foreign Currency Translation
The books and records of the Portfolios are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollars actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
Certain Portfolios are authorized to enter into forward foreign currency
contracts (contracts) for the purchase or sale of a specific foreign
currency at a fixed price on a future date as a hedge or cross-hedge
against either specific investment transactions (settlement hedges) or
portfolio positions (portfolio hedges). All contracts are marked to market
daily at the applicable exchange rates, and any resulting unrealized gains
or losses are recorded in the Portfolios' financial statements. The
Portfolios record realized gains and losses at the time a portfolio hedge
is offset by entry into a closing transaction or extinguished by delivery
of the currency. Risks may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of the contract
and from unanticipated movements in the value of foreign currencies
relative to the U.S. dollar (see Note 8).
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
In addition to the requirements of the Internal Revenue Code, the
Portfolios may also be required to pay local taxes on the recognition of
capital gains and/or the repatriation of foreign currencies in certain
countries. During the six months ended June 30, 2004, no such taxes were
paid. In determining the daily net asset value, the Portfolios estimate the
reserve for such taxes, if any, associated with investments in certain
countries. Any estimated reserve for taxes on capital gains is based on the
net unrealized appreciation on certain portfolio securities, the holding
period of such securities and the related tax rates, tax loss carryforward
(if applicable) and other such factors. Any estimated reserve for taxes on
repatriation of foreign currencies is based on principal balances and/or
unrealized appreciation of applicable securities, the holding period of
such investments and the related tax rates and other such factors. As of
June 30, 2004, the Portfolios had no reserves related to taxes on capital
gains. Except that Emerging Markets Portfolio had a reserve of $86,981 for
the taxes on the repatriation of foreign currencies.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
A portion of the dividend income recorded by Real Estate Shares Portfolio
is from distributions by publicly traded REITs, and such distributions for
tax purposes may also consist of capital gains and return of capital. The
actual return of capital and capital gains portions of such distributions
will be determined by formal notifications from the REITs subsequent to the
calendar year-end. Distributions received from the REITs that are
determined to be a return of capital are recorded by the Trust as a
reduction of the cost basis of the securities held.
118
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, certain Portfolios had capital loss
carryforwards as follows:
- --------------------------------------------------------------------------------
Small
Fiscal Emerging International Cap
Year Markets Europe Value Value
Ending Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------
2003 $ -- $ -- $ -- $ --
2004 $ -- $ -- $ -- $ --
2005 $ -- $ -- $ -- $ --
2006 $ -- $ -- $ -- $ --
2007 $ -- $ -- $ 2,465,434 $ --
2008 $1,376,025 $ 837,566 $ -- $ --
2009 $5,058,209 $ 4,365,566 $ 7,057,019 $ --
2010 $1,176,783 $ 1,896,288 $ 5,309,516 $ 508,141
2011 $ -- $ 783,043 $ 2,130,998 $ 5,487
--------------------------------------------------------------------
Total $7,611,017 $ 7,882,463 $16,962,967 $ 513,628
====================================================================
Real
Fiscal Small Growth Estate
Year Company Shares Shares Fund
Ending Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------
2003 $ -- $ -- $ -- $ --
2004 $ -- $ -- $ -- $ --
2005 $ -- $ -- $ -- $ --
2006 $ -- $ -- $ -- $ --
2007 $ -- $ -- $ 2,238,480 $ --
2008 $ -- $ 4,132,928 $ 619,294 $ --
2009 $ 92,858 $ 9,820,202 $ -- $ 6,699,261
2010 $ 235,402 $19,245,183 $ -- $14,227,957
2011 $ 284,913 $ 7,319,241 $ 453,069 $13,017,527
--------------------------------------------------------------------
Total $ 613,173 $40,517,554 $ 3,310,843 $33,944,745
====================================================================
Fiscal Equity America Money
Year Income Balanced Income Market
Ending Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------
2003 $ -- $ -- $ -- $ --
2004 $ -- $ -- $ -- $ --
2005 $ -- $ -- $ -- $ --
2006 $ -- $ 985,646 $ -- $ --
2007 $ -- $ -- $ -- $ --
2008 $ -- $ -- $ 382,424 $ --
2009 $ 6,328,025 $ -- $ -- $ 2,813
2010 $ 6,407,206 $ 2,699,582 $ -- $ --
2011 $ 2,620,426 $ 2,590,145 $ 435,523 $ --
--------------------------------------------------------------------
Total $15,355,657 $ 6,275,373 $ 817,947 $ 2,813
====================================================================
- --------------------------------------------------------------------------------
119
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
The following Portfolios elected to defer capital and/or currency losses
recognized between November 1, 2003 and December 31, 2003 to their fiscal
year ending December 31, 2004.
- --------------------------------------------------------------------------------
Portfolio Capital Losses Currency Losses
- --------------------------------------------------------------------------------
Europe Portfolio $ 49,695 $ --
Growth Shares Portfolio 85,372 --
America Income Portfolio 54,391 --
Money Market Portfolio 246 --
- --------------------------------------------------------------------------------
The following chart shows the components of distributable earnings
(accumulated losses) as of December 31, 2003 and the distributions paid
during the year ended December 31, 2003 on a tax basis. The tax character
of current year distributions will be determined at the end of the current
fiscal year.
- -------------------------------------------------------------------------------------------------------------------------------
Pioneer Pioneer Pioneer
Emerging Pioneer International Small Cap
Markets Europe Value Value
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
2003 2003 2003 2003
- -------------------------------------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 86,319 $ 45,689 $ 146,250 $ --
Long-Term capital gain -- -- -- --
-----------------------------------------------------------------------------------
$ 86,319 $ 45,689 $ 146,250 $ --
Return of Capital -- -- -- --
-----------------------------------------------------------------------------------
Total distributions $ 86,319 $ 45,689 $ 146,250 $ --
-----------------------------------------------------------------------------------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 261,372 $ 104,830 $ 122,367 $ 3,397
Undistributed long-term gain/
(capital loss carryforward) (7,611,017) (7,882,463) (16,962,967) (513,628)
Unrealized appreciation (depreciation) 10,070,794 1,929,468 4,820,918 2,079,176
-----------------------------------------------------------------------------------
Total $ 2,721,149 $(5,848,165) $ (12,019,682) $ 1,568,945
===================================================================================
Pioneer Pioneer Pioneer Pioneer
Small Mid Cap Growth Real Estate
Company Value Shares Shares
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
2003 2003 2003 2003
- -------------------------------------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ -- $ 674,629 $ 4,477 $ 2,171,485*
Long-Term capital gain -- -- -- --
-----------------------------------------------------------------------------------
$ -- $ 674,629 $ 4,477 $ 2,171,485
Return of Capital -- -- -- 771,021
-----------------------------------------------------------------------------------
Total distributions $ -- $ 674,629 $ 4,477 $ 2,942,906
===================================================================================
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ -- $ 3,095,345 $ -- $ --
Undistributed long-term gain/
(capital loss carryforward) (613,173) 4,286,038 (40,517,554) (2,665,210)
Unrealized appreciation (depreciation) 1,184,269 66,304,827 1,561,822 16,408,604
-----------------------------------------------------------------------------------
Total $ 571,096 $73,686,210 $ (38,955,732) $ 13,743,394
===================================================================================
- -------------------------------------------------------------------------------------------------------------------------------
120
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Pioneer
Pioneer Equity Pioneer Pioneer
Fund Income Balanced High Yield
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
2003 2003 2003 2003
- -------------------------------------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 2,101,050 $ 4,174,839 $ 820,558 $4,097,349
Long-Term capital gain -- -- -- --
-------------------------------------------------------------------------------------
$ 2,101,050 $ 4,174,839 $ 820,558 $4,097,349
Return of Capital -- -- -- --
-------------------------------------------------------------------------------------
Total distributions $ 2,101,050 $ 4,174,839 $ 820,558 $4,097,349
-------------------------------------------------------------------------------------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ -- $ 82,058 $ 400 $ 42,283
Undistributed long-term gain/
(capital loss carryforward) (33,944,745) (15,355,657) (6,275,373) 400,214
Unrealized appreciation (depreciation) 21,657,159 36,385,549 4,497,980 6,810,410
-------------------------------------------------------------------------------------
Total $(12,287,586) $ 21,111,950 $(1,776,993) $7,252,907
=====================================================================================
Pioneer Pioneer Pioneer
Strategic America Money
Income Income Market
VCT Portfolio VCT Portfolio VCT Portfolio
2003 2003 2003
- ------------------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $1,139,610 $2,347,359 $277,950
Long-Term capital gain -- -- --
------------------------------------------------------------------
$1,139,610 $2,347,359 $277,950
Return of Capital -- -- --
------------------------------------------------------------------
Total distributions $1,139,610 $2,347,359 $277,950
------------------------------------------------------------------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 380,350 $ 422,952 $ --
Undistributed long-term gain/
(capital loss carryforward) 212,557 (817,947) (2,813)
Unrealized appreciation (depreciation) 2,119,373 1,046,300 --
------------------------------------------------------------------
Total $2,712,280 $ 651,305 (2,813)
==================================================================
- -------------------------------------------------------------------------------------------------------------------------------
* Included in the Portfolio's distributions from 2003 ordinary income is
$192,564 in excess of investment company taxable income, which, in accordance
with U.S. tax law, is taxable to shareowners as ordinary income
distributions.
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on wash
sales, returns of capital on REITs, and the recognition of unrealized gains or
losses on certain futures contracts.
Prior to June 30, 2004, Real Estate Shares Portfolio has reclassified $21,639
to decrease net unrealized gain on investments, $6,268 to decrease accumulated
undistributed net realized gain on investments and $27,907 to increase paid-in
capital. The reclassification has no impact on the net assets of the Portfolio
and presents the Portfolio's capital accounts on a tax basis.
F. Portfolio Shares
The Portfolios record sales and repurchases of their shares as of trade
date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004.
Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively. Shareowners of each class share all expenses and fees paid to
the
121
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
transfer agent, Pioneer Investment Management Shareholder Services, Inc.
(PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3). Income, common expenses and realized and unrealized
gains and losses are calculated at the Portfolio level and allocated daily
to each class of share based on their respective percentage of adjusted net
assets at the beginning of the day. High Yield, Strategic Income, America
Income and Money Market Portfolios declare as daily dividends substantially
all of their respective net investment income. All dividends are paid on a
monthly basis. Short-term capital gain distributions, if any, may be
declared with the daily dividends. Dividends and distributions to
shareowners are recorded on the ex-dividend date. Distributions paid by the
Portfolio with respect to each class of shares are calculated in the same
manner, at the same time, and in the same amount, except that Class I and
Class II shares can bear different transfer agent and distribution fees.
Income, expenses (excluding 12b-1 fees) and gains and losses are calculated
at the Portfolio level and are allocated daily based on the respective
percentage of adjusted net assets at the beginning of the day.
G. Securities Lending
The Portfolios lend securities in their portfolios to certain
broker-dealers or other institutional investors, with the Portfolios'
custodian acting as the lending agent. When entering into a loan, the
Portfolio receives collateral which is maintained by the custodian and
earns income in the form of negotiated lenders' fees. The Portfolios also
continue to receive interest or dividends on the securities loaned, and
gain or loss on the fair value of the loaned securities that may occur
during the term of the loan will be for account of the Portfolios. The
loans are secured by collateral of at least 102%, at all times, of the fair
value of the securities loaned. The amount of the collateral will be
adjusted daily to reflect any price fluctuation in the value of the loaned
securities. The Portfolios have the right under the lending agreements to
recover the securities on loan from the borrower on demand. The Portfolios
invest cash collateral in the Securities Lending Investment Fund, which is
managed by Brown Brothers Harriman & Co., the Portfolios' custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolios, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreements at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Trust's custodian, or subcustodians. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolios, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rates:
- -----------------------------------------------------------------------------
Management Fee as a Percentage
of each Portfolio's Average
Portfolio Daily Net Assets
- -----------------------------------------------------------------------------
Emerging Markets Portfolio 1.15%
Europe Portfolio 1.00%
International Value Portfolio 1.00%
Small Cap Value Portfolio 0.75%
Small Company Portfolio 0.75%
Mid Cap Value Portfolio 0.65%
Growth Shares Portfolio 0.70%
Real Estate Shares Portfolio 0.80%
Fund Portfolio 0.65%
Equity Income Portfolio 0.65%
Balanced Portfolio 0.65%
High Yield Portfolio 0.65%
Strategic Income Portfolio 0.65%
America Income Portfolio 0.55%
Money Market Portfolio 0.50%
- -----------------------------------------------------------------------------
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Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PIM has agreed not to impose a portion of its management fees and to assume
other operating expenses for certain Portfolios through June 30, 2004 to the
extent necessary to limit expenses of Class I shares (Class II shares in the
case of High Yield and Value Portfolios) to the following percentages of the
Portfolios' average daily net assets attributable to Class I shares:
- --------------------------------------------------------------------------------
Expense Limitation as a
Percentage of each Portfolio's
Portfolio Average Daily Net Assets
- --------------------------------------------------------------------------------
Emerging Markets Portfolio 1.75%
Europe Portfolio 1.50%
Small Cap Value Portfolio 1.25%
Small Company Portfolio 1.25%
High Yield Portfolio 1.30%
Strategic Income Portfolio 1.25%
- --------------------------------------------------------------------------------
The portion of the Portfolios' expenses attributable to Class II (or Class I
for shares in the case of High Yield Portfolio) will be reduced only to the
extent such expenses are reduced for Class I shares (or Class II shares). PIM
may subsequently recover reimbursed expenses (within three years of being
incurred) from certain Portfolios if the expense ratio of the Class I (or Class
II) shares would otherwise be less than the expense limitation of the class.
Each class will reimburse PIM no more than the amount by which that class'
expenses were reduced. At June 30, 2004, $7,270 was reimbursed by High Yield
Portfolio under this arrangement and is included in miscellaneous expense.
The Expense limit agreement for Emerging Markets, Europe and Strategic Income
Portfolios does not provide for the expense reimbursement described above.
There can be no assurance that Pioneer will extend any expense limitation
beyond June 30, 2004.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolios. At June 30, 2004, the following amounts
were payable to PIM related to management fees, administrative fees and certain
other services and are included in due to affiliates:
- --------------------------------------------------------------------------------
Portfolio Amount
- --------------------------------------------------------------------------------
Emerging Markets Portfolio $ 22,079
Europe Portfolio 9,045
International Value Portfolio 23,315
Small Cap Value Portfolio 5,022
Small Company Portfolio 9,419
Mid Cap Value Portfolio 352,423
Growth Shares Portfolio 26,397
Real Estate Shares Portfolio 55,958
Fund Portfolio 159,258
Equity Income Portfolio 141,022
Balanced Portfolio 27,997
High Yield Portfolio 56,197
Strategic Income Portfolio 19,621
America Income Portfolio 22,840
Money Market Portfolio 16,894
- --------------------------------------------------------------------------------
123
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano, provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates. The
following amounts of transfer agent fees payable to PIMSS are included in due
to affiliates at June 30, 2004:
- --------------------------------------------------------------------------------
Portfolio Amount
- --------------------------------------------------------------------------------
Emerging Markets Portfolio $258
Europe Portfolio 258
International Value Portfolio 259
Small Cap Value Portfolio 255
Small Company Portfolio 255
Mid Cap Value Portfolio 258
Growth Shares Portfolio 258
Real Estate Shares Portfolio 257
Fund Portfolio 257
Equity Income Portfolio 258
Balanced Portfolio 259
High Yield Portfolio 255
Strategic Income Portfolio 258
America Income Portfolio 258
Money Market Portfolio 129
- --------------------------------------------------------------------------------
4. Distribution Plans
The Portfolios have adopted plans of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plans, each Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with each Portfolio's
Class II shares. The following amounts of distribution fees payable to PFD are
included in due to affiliates at June 30, 2004:
- --------------------------------------------------------------------------------
Portfolio Amount
- --------------------------------------------------------------------------------
Emerging Markets Portfolio $ 5,719
Europe Portfolio 1,376
International Value Portolio 464
Small Cap Value Portfolio 1,279
Small Company Portfolio 1,951
Mid Cap Value Portfolio 87,247
Growth Shares Portfolio 1,232
Real Estate Shares Portfolio 10,106
Fund Portfolio 25,055
Equity Income Portfolio 16,162
Balanced Portfolio 1,429
High Yield Portfolio 6,455
Strategic Income Portfolio 2,418
America Income Portfolio 1,534
- --------------------------------------------------------------------------------
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Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes were as follows:
- -------------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Portfolio Tax Cost Appreciation Depreciation (Depreciation)
- -------------------------------------------------------------------------------------------------------
Emerging Markets Portfolio $26,991,159 $ 5,927,418 $ (764,796) $ 5,162,622
Europe Portfolio 13,022,731 1,297,351 (46,764) 1,250,587
International Value Portfolio 21,445,638 3,451,463 (271,433) 3,180,030
Small Cap Value Portfolio 16,492,152 2,915,941 (355,296) 2,560,645
Small Company Portfolio 11,106,049 1,913,795 (404,481) 1,509,314
Mid Cap Value Portfolio 549,097,482 120,657,540 (46,417,744) 74,239,796
Growth Shares Portfolio 39,045,156 1,123,103 (1,775,829) (652,726)
Real Estate Shares Portfolio 56,411,455 16,815,051 (327,181) 16,487,870
Fund Portfolio 234,084,454 39,850,461 (13,082,282) 26,768,179
Equity Income Portfolio 190,169,874 47,191,020 (4,219,962) 42,971,058
Balanced Portfolio 39,521,844 4,458,969 (461,815) 3,997,154
High Yield Portfolio 96,881,771 3,691,838 (2,883,906) 807,932
Strategic Income Portfolio 29,602,495 1,359,738 (429,477) 930,261
America Income Portfolio 43,414,254 391,118 (223,425) 167,693
Money Market Portfolio 33,763,137 -- -- --
- -------------------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were as follows:
- --------------------------------------------------------------------------------
Portfolio Purchases Sales
- --------------------------------------------------------------------------------
Emerging Markets Portfolio $ 10,761,173 $ 12,315,024
Europe Portfolio 5,352,378 5,238,860
International Value Portfolio 21,825,171 21,914,026
Small Cap Value Portfolio 7,241,266 3,313,196
Small Company Portfolio 3,888,393 2,470,587
Mid Cap Value Portfolio 343,646,689 167,846,365
Growth Shares Portfolio 39,697,597 38,914,354
Real Estate Shares Portfolio 17,444,652 15,240,948
Fund Portfolio 50,667,140 30,168,567
Equity Income Portfolio 27,101,040 19,453,205
Balanced Portfolio 4,672,761 5,692,754
High Yield Portfolio 47,769,685 31,032,220
Strategic Income Portfolio 14,699,615 6,400,106
America Income Portfolio -- --
Money Market Portfolio 417,166,777 416,535,000
- --------------------------------------------------------------------------------
125
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
The cost of purchases and the proceeds from sales of long-term U.S. Government
obligations for the six months ended June 30, 2004, were as follows:
- --------------------------------------------------------------------------------
Portfolio Purchases Sales
- --------------------------------------------------------------------------------
Balanced Portfolio $3,231,879 $ 1,924,745
Strategic Income Portfolio 192,761 398,065
America Income Portfolio 5,943,558 10,883,367
Money Market Portfolio -- --
- --------------------------------------------------------------------------------
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2004 and the fiscal year ended December 31, 2003:
- -------------------------------------------------------------------------------------------
'04 Shares '04 Amount '03 Shares '03 Amount
- -------------------------------------------------------------------------------------------
Emerging Markets Portfolio
CLASS I:
Shares sold 46,186 $ 815,949 143,611 $ 1,837,255
Reinvestment of distributions 3,952 63,595 2,017 25,338
Shares repurchased (87,603) (1,501,936) (195,769) (2,390,909)
-------------------------------------------------------
Net increase (decrease) (37,465) $ (622,392) (50,141) (528,316)
=======================================================
CLASS II:
Shares sold 255,499 $ 4,444,409 1,162,017 $14,523,321
Reinvestment of distributions 12,278 196,317 4,838 60,429
Shares repurchased (260,491) (4,507,420) (435,883) (5,671,239)
-------------------------------------------------------
Net increase (decrease) 7,286 $ 133,306 730,972 $ 8,912,511
=======================================================
Europe Portfolio
CLASS I:
Shares sold 13,195 $ 121,336 59,876 $ 462,031
Reinvestment of distributions 7,232 65,952 4,817 36,322
Shares repurchased (110,796) (1,006,213) (308,777) (2,225,749)
-------------------------------------------------------
Net increase (decrease) (90,369) $ (818,925) (244,084) $(1,727,396)
=======================================================
CLASS II:
Shares sold 176,925 $ 1,591,957 836,602 $ 6,040,092
Reinvestment of distributions 4,343 38,910 1,262 9,637
Shares repurchased (70,861) (637,962) (547,441) (3,887,768)
-------------------------------------------------------
Net increase (decrease) 110,407 $ 992,905 290,423 $ 2,161,691
=======================================================
International Value Portfolio:
CLASS I:
Shares sold 82,417 $ 841,974 148,266 $ 1,260,116
Reinvestment of distributions 10,994 113,572 17,452 146,246
Shares repurchased (234,008) (2,386,367) (658,580) (5,442,461)
-------------------------------------------------------
Net increase (decrease) (140,597) $(1,430,821) (492,862) $(4,036,099)
=======================================================
CLASS II:
Shares sold 113,388 $ 1,204,631 108,723 $ 993,224
Reinvestment of distributions 862 8,887 -- --
Shares repurchased (13,519) (140,180) (1,092) (10,007)
-------------------------------------------------------
Net increase (decrease) 105,731 $ 1,073,338 107,631 $ 983,217
=======================================================
- -------------------------------------------------------------------------------------------
126
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
'04 Shares '04 Amount '03 Shares '03 Amount
- ------------------------------------------------------------------------------------------------
Small Cap Value Portfolio
CLASS I:
Shares sold 239,892 $ 3,132,677 1,276,588 $ 13,058,675
Reinvestment of distributions -- -- -- --
Shares repurchased (126,447) (1,650,422) (1,028,432) (10,409,382)
------------------------------------------------------------
Net increase (decrease) 113,445 $ 1,482,255 248,156 $ 2,649,293
============================================================
CLASS II:
Shares sold 255,800 $ 3,318,167 235,328 $ 2,693,418
Reinvestment of distributions -- -- -- --
Shares repurchased (29,908) (396,217) (14,089) (159,522)
------------------------------------------------------------
Net increase (decrease) 225,892 $ 2,921,950 221,239 $ 2,533,896
============================================================
Small Company Portfolio
CLASS I:
Shares sold 26,644 $ 310,139 286,397 $ 2,774,242
Reinvestment of distributions -- -- -- --
Shares repurchased (71,189) (828,339) (324,514) (3,132,628)
------------------------------------------------------------
Net increase (decrease) (44,545) $ (518,200) (38,117) $ (358,386)
============================================================
CLASS II:
Shares sold 180,783 $ 2,118,896 328,726 $ 3,382,001
Reinvestment of distributions -- -- -- --
Shares repurchased (74,557) (877,202) (80,215) (778,938)
------------------------------------------------------------
Net increase (decrease) 106,226 $ 1,241,694 248,511 $ 2,603,063
============================================================
Mid Cap Value Portfolio
CLASS I:
Shares sold 1,350,399 $ 28,801,387 2,677,744 $ 46,157,551
Reinvestment of distributions 117,892 2,575,556 26,084 438,476
Shares repurchased (746,981) (15,842,125) (2,465,836) (40,592,863)
------------------------------------------------------------
Net increase (decrease) 721,400 $ 15,534,818 237,992 $ 6,003,164
============================================================
CLASS II:
Shares sold 7,925,107 $168,141,999 6,515,291 $114,986,107
Reinvestment of distributions 221,974 4,807,964 93,450 14,131
Shares repurchased (214,474) (4,500,847) (1,080,224) (249,002)
------------------------------------------------------------
Net increase (decrease) 7,932,607 $168,449,116 6,280,420 $111,264,489
============================================================
Growth Shares Portfolio
CLASS I:
Shares sold 50,359 $ 618,962 91,892 $ 1,012,931
Reinvestment of distributions -- -- 403 4,477
Shares repurchased (251,629) (3,068,841) (731,375) (7,757,809)
------------------------------------------------------------
Net increase (decrease) (201,270) $ (2,449,879) (639,080) $ (6,740,401)
============================================================
CLASS II:
Shares sold 233,502 $ 2,834,133 271,796 $ 3,091,881
Reinvestment of distributions -- -- -- --
Shares repurchased (18,080) (218,795) (46,885) (519,493)
------------------------------------------------------------
Net increase (decrease) 215,422 $ 2,615,338 224,911 $ 2,572,388
============================================================
- ------------------------------------------------------------------------------------------------
127
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
'04 Shares '04 Amount '03 Shares '03 Amount
- ------------------------------------------------------------------------------------------------
Real Estate Shares Portfolio
CLASS I:
Shares sold 46,990 $ 914,044 153,884 $ 2,545,266
Reinvestment of distributions 31,935 637,400 87,137 1,422,912
Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017)
------------------------------------------------------------
Net increase (decrease) (167,581) $ (3,090,354) (347,178) $ (5,232,839)
============================================================
CLASS II:
Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344
Reinvestment of distributions 43,174 859,854 92,474 1,519,594
Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986)
------------------------------------------------------------
Net increase (decrease) 132,798 $ 2,730,810 (62,278) $ (40,048)
============================================================
Fund Portfolio
CLASS I:
Shares sold 184,697 $ 3,484,043 519,126 $ 8,479,870
Reinvestment of distributions 42,211 793,149 94,945 1,580,150
Shares repurchased (628,636) (11,825,399) (1,616,113) (25,564,887)
------------------------------------------------------------
Net increase (decrease) (401,728) $ (7,548,207) (1,002,042) $(15,504,867)
============================================================
CLASS II:
Shares sold 1,580,694 $ 29,759,858 3,031,681 $ 50,171,619
Reinvestment of distributions 23,726 445,384 30,685 520,900
Shares repurchased (443,565) (8,365,149) (747,392) (12,093,482)
------------------------------------------------------------
Net increase (decrease) 1,160,855 $ 21,840,093 2,314,974 $ 38,599,037
============================================================
Equity Income Portfolio
CLASS I:
Shares sold 537,739 $ 9,891,118 1,544,529 $ 24,668,979
Reinvestment of distributions 84,147 1,543,147 204,954 3,313,898
Shares repurchased (694,977) (12,774,712) (1,964,325) (30,892,038)
------------------------------------------------------------
Net increase (decrease) (73,091) $ (1,340,447) (214,842) $ (2,909,161)
============================================================
CLASS II:
Shares sold 712,923 $ 13,157,472 1,723,515 $ 27,764,040
Reinvestment of distributions 31,627 583,520 52,432 860,942
Shares repurchased (261,146) (4,782,663) (242,114) (3,788,595)
------------------------------------------------------------
Net increase (decrease) 483,404 $ 8,958,329 1,533,833 $ 24,836,387
============================================================
Balanced Portfolio
CLASS I:
Shares sold 64,930 $ 924,475 58,603 $ 777,329
Reinvestment of distributions 25,041 353,982 60,877 800,492
Shares repurchased (339,465) (4,804,032) (705,902) (9,066,098)
------------------------------------------------------------
Net increase (decrease) (249,494) $ (3,525,575) (586,422) $ (7,488,277)
============================================================
CLASS II:
Shares sold 260,134 $ 3,690,253 244,252 $ 3,291,111
Reinvestment of distributions 3,399 47,978 1,455 20,059
Shares repurchased (30,909) (435,983) (3,966) (53,357)
------------------------------------------------------------
Net increase (decrease) 232,624 $ 3,302,248 241,741 $ 3,257,813
============================================================
- ------------------------------------------------------------------------------------------------
128
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
'04 Shares '04 Amount '03 Shares '03 Amount
- ---------------------------------------------------------------------------------------------------
High Yield Portfolio
CLASS I:
Shares sold 1,201,971 $ 13,743,588 2,515,726 $ 26,817,319
Reinvestment of distributions 187,908 2,134,532 357,809 3,779,086
Shares repurchased (1,508,494) (17,051,802) (1,491,103) (15,895,254)
----------------------------------------------------------------
Net increase (decrease) (118,615) $ (1,173,682) 1,382,432 $ 14,701,151
================================================================
CLASS II:
Shares sold 2,297,852 $ 26,264,116 1,708,526 $ 18,792,041
Reinvestment of distributions 75,932 859,985 25,089 279,936
Shares repurchased (972,496) (10,701,951) (221,726) (2,359,507)
----------------------------------------------------------------
Net increase (decrease) 1,401,288 $ 16,422,150 1,511,889 $ 16,712,470
================================================================
Strategic Income Portfolio
CLASS I:
Shares sold 276,859 $ 3,041,159 712,653 $ 7,385,764
Reinvestment of distributions 79,451 855,733 100,561 1,053,192
Shares repurchased (273,985) (2,992,605) (579,108) (6,045,569)
----------------------------------------------------------------
Net increase (decrease) 82,325 $ 904,287 234,106 $ 2,393,387
================================================================
CLASS II:
Shares sold 813,612 $ 8,876,365 353,538 $ 3,774,292
Reinvestment of distributions 35,881 384,050 4,862 52,365
Shares repurchased (61,738) (673,533) (25,608) (275,096)
----------------------------------------------------------------
Net increase (decrease) 787,755 $ 8,586,882 332,792 $ 3,551,561
================================================================
America Income Portfolio
CLASS I:
Shares sold 168,394 $ 1,696,627 711,258 $ 8,118,733
Reinvestment of distributions 124,770 1,275,682 221,712 2,321,232
Shares repurchased (1,059,762) (10,858,369) (3,202,256) (34,132,706)
----------------------------------------------------------------
Net increase (decrease) (766,598) $ (7,886,060) 2,269,286 (23,692,741)
================================================================
CLASS II:
Shares sold 449,092 $ 4,591,427 265,643 $ 2,756,721
Reinvestment of distributions 14,695 149,812 2,521 26,114
Shares repurchased (9,832) (96,378) (13,939) (143,836)
----------------------------------------------------------------
Net increase (decrease) 454,405 $ 4,644,861 254,225 $ 2,638,999
================================================================
Money Market Portfolio
CLASS I:
Shares sold 11,576,927 $ 11,576,926 27,291,288 $ 27,291,288
Reinvestment of distributions 56,332 56,332 277,946 277,946
Shares repurchased (17,186,821) (17,186,820) (52,356,043) (52,356,043)
----------------------------------------------------------------
Net increase (decrease) (5,553,562) $ (5,553,562) (24,786,809) $ (24,786,809)
================================================================
- ---------------------------------------------------------------------------------------------------
129
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts
During the six months ended June 30, 2004, certain Portfolios had entered into
various contracts that obligate the Portfolios to deliver currencies at
specified future dates. At the maturity of a contract, the Portfolios must make
delivery of the foreign currency. Alternatively, prior to the settlement date
of a portfolio hedge, the Portfolio may close out such contracts by entering
into an offsetting hedge contract.
As of June 30, 2004, the Portfolios' open portfolio hedges were as follows:
- --------------------------------------------------------------------------------------------------------------------------------
Contracts to In Exchange Settlement Net
Portfolio Deliver For Date Value Unrealized Gain (Loss)
- --------------------------------------------------------------------------------------------------------------------------------
Strategic Income Portfolio EURO (970,000) $(1,176,610) 7/21/04 $(1,182,307) $ 5,697
Strategic Income Portfolio EURO (118,399) $ (143,014) 7/2/04 $ (144,459) $ 1,445
Strategic Income Portfolio NOK (500,000) $ 72,171 7/6/04 $ 72,192 $ (21)
Strategic Income Portfolio NOK (1,000,000) $ 143,014 7/2/04 $ 144,473 $(1,459)
- --------------------------------------------------------------------------------------------------------------------------------
Outstanding forward currency settlement contracts as of June 30, 2004 were as
follows:
- -----------------------------------------------------------------------------------------------------------------
Net
Gross Settlement Gross Receivable/
Portfolio Receivable Date Payable (Payable)
- -----------------------------------------------------------------------------------------------------------------
Emerging Markets Portfolio $ (22,235) 7/1/04 $ (22,235) $ --
Emerging Markets Portfolio $ 21,527 7/1/04 $ 21,485 $ 42
Emerging Markets Portfolio $ (3,613) 7/1/04 $ (3,623) $ (10)
Europe Portfolio $ (39,985) 7/1/04 $ (40,379) $ (394)
Europe Portfolio $ 42,274 7/1/04 $ 42,317 $ (43)
International Value Portfolio $(215,870) 7/1/04 $(218,202) $(2,332)
International Value Portfolio $ (61,833) 7/1/04 $ (61,783) $ 50
International Value Portfolio $ 150,662 7/1/04 $ 151,021 $ (359)
International Value Portfolio $(177,285) 7/1/04 $(178,089) $ (804)
International Value Portfolio $ (28,328) 7/1/04 $ (28,528) $ (200)
International Value Portfolio $ 104,214 7/1/04 $ 103,313 $ 901
International Value Portfolio $(220,184) 7/1/04 $(220,185) $ (1)
International Value Portfolio $ 121,036 7/1/04 $ 121,403 $ (367)
- -----------------------------------------------------------------------------------------------------------------
130
[Pioneer Investments Logo]
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
16059-00-0804
[PIONEER LOGO]
PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Fund VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
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Table of Contents
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Pioneer Fund VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 8
Notes to Financial Statements 12
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO UPDATE 6/30/04
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Portfolio Diversification
(As a percentage of total investment portfolio)
[REPRESENTATION OF PIE CHART]
U.S. Common Stocks 94.7%
Depositary Receipts for International Stocks 3.5%
International Common Stocks 1.8%
Sector Distribution
(As a percentage of equity holdings)
[REPRESENTATION OF PIE CHART]
Financials 17.1%
Information Technology 13.9%
Consumer Discretionary 13.0%
Health Care 12.5%
Industrials 12.3%
Consumer Staples 11.9%
Energy 8.2%
Materials 5.7%
Telecommunication Services 3.3%
Utilities 2.1%
Five Largest Holdings
(As a percentage of equity holdings)
1. ChevronTexaco Corp. 2.17%
2. Exxon Mobil Corp. 2.11
3. McGraw-Hill Co., Inc. 1.93
4. Target Corp. 1.85
5. SBC Communications, Inc. 1.71
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
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PERFORMANCE UPDATE 6/30/04
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Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 18.94 $ 18.66
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.080 $ - $ -
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Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Fund VCT Portfolio at net asset value, compared to that of the Standard &
Poor's (S&P) 500 Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[REPRESENTATION OF LINE CHART]
Pioneer Fund VCT
S&P 500 Portfolio
10/97 10000 10000
10643 10545
12/98 13686 13257
16565 15312
12/00 15060 15561
13275 13836
12/02 10342 11173
13306 13791
6/04 13764 14058
The S&P 500 Index is an unmanaged measure of 500 widely held common stocks
listed on the New York Stock Exchange, American Stock Exchange and the
over-the-counter market. Index returns assume reinvestment of dividends and,
unlike Portfolio returns, do not reflect any fees, expenses or sales charges.
Portfolio returns are based on net asset value and do not reflect any
annuity-related costs. You cannot invest directly in the Index.
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Average Annual Total Returns
(As of June 30, 2004)
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Net Asset Value
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Life-of-Class 5.24%
(10/31/97)
5 Years -0.82%
1 Year 17.55%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results.
Assumes reinvestment of all distributions at net asset value. Investment return
and principal value fluctuate, and shares, when redeemed, may be worth more or
less than their original cost. Current performance may be lower or higher than
the performance shown. For performance data that is current to the most recent
month-end, please call 1-800-225-6292 or visit our web site at
www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
2
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
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In the following discussion, portfolio manager John Carey, reviews the
investment environment and the performance of Pioneer Fund VCT Portfolio over
the six months ended June 30, 2004.
Q: How did the Portfolio perform over the first six months of 2004?
A: Class II shares of Pioneer Fund VCT Portfolio recorded a positive total
return of 1.93% at net asset value in the six months ended June 30, 2004.
Pioneer Fund VCT Portfolio lagged the Standard & Poor's 500 Index, which
showed a total return of 3.44% over the same period. While the mild returns
might suggest a calm market, the reality was a market of sharp contrasts.
With reference to performance of the respective sectors in the S&P 500,
information technology, the darling of investors in 2003, barely moved, with
a gain of 0.44% for the period, while energy, industrials and consumer
staples advanced, respectively, 12.97%, 7.42%, and 6.12%. Investors appeared
to be "rotating" out of more highly priced stocks and into shares more
moderately priced, with dividends and steadier earnings outlooks.
Q: Please discuss the Portfolio's performance versus the S&P 500 Index.
A: Our underperformance versus the S&P was attributable mainly to our stock
holdings in four sectors: information technology, materials, industrials and
telecommunications services. Our strongest positive contributors were our
investments in consumer discretionary, consumer staples and health care.
Taking first the negative contributors, our technology holdings showed an
overall decline of 1.59% versus the S&P sector gain of 0.44%. The main
culprits were our positions in Texas Instruments, Novellus Systems, Synopsys
and Nokia. After analyzing the different situations, we retained shares in
Texas Instruments and Nokia, but liquidated our positions in Novellus and
Synopsys. With regard to materials, where again we showed a negative return
(3.80%) versus a slight positive return (0.71%) for the S&P sector, the
largest factor was our position in Rio Tinto. In the case of the materials,
we believe that the fundamentals are strong for the group looking out at
least over the next couple of years and that it was mainly "profit taking"
behind the weak share prices. Perhaps, too, there was some concern about a
potential slow-down in the Chinese economy, which has been a prime user of
many raw materials as that country rapidly industrializes. Following our
evaluation of the "pros and cons," we retained Rio Tinto, a prominent
worldwide mining company, as well as our shares of other companies in the
sector.
Industrials presented a mixed picture, with our investments rising 5.13%
versus an increase for the sector of 7.42%. We had very good performance from
our railroad holding Norfolk Southern, but our capital-goods stocks were more
sluggish. Finally, in telecomm services, we did not own AT&T Wireless, which
received a premium take-over bid, but instead owned BellSouth and SBC
Communications, the companies in the joint venture, Cingular, that made the
bid. BellSouth and SBC both declined as investors worried that they
"overpaid."
On the bright side, we had some nice gains from stocks in consumer
discretionary, consumer staples and health care. They were, respectively,
John Wiley & Sons, publisher of scientific and technical books and journals
and also owner of the "For Dummies" imprint; Colgate-Palmolive, major brand
in toothpaste; and Becton Dickinson, provider of medical supplies including
disposable syringes.
Q: What changes have you made to the Portfolio so far this year?
A: We were fairly active during the six months, adding 18 positions and
eliminating 18. The combined effect of securities transactions and market
fluctuations produced overall increases for our weightings in the energy,
consumer discretionary, consumer staples, health care and financials sectors;
overall decreases for our weightings in industrials and information
technology; and no meaningful change for our weightings in materials,
telecommunications services and utilities. In energy, we initiated positions
in Apache, British Petroleum, Pioneer Natural Resources and Occidental
Petroleum and sold positions in Transocean, Royal Dutch Petroleum, and Shell
Transport & Trading. We believed that Transocean was fairly valued, and in
the cases of Royal Dutch and the allied Shell Transport we had developed
reservations about management in the wake of significant downward revisions
in oil and gas reserves estimates. On the other hand, we thought that
prospects were positive for the companies we added and that the larger number
of holdings would provide the portfolio with more diversification.
In consumer discretionary we invested in three companies we thought were
poised to do better with the stronger economy, Ford Motor, Liz Claiborne, and
Walt Disney, and sold two stocks that had been longer-term disappointments,
Dow Jones and Eastman Kodak. We also added Clorox, formulator of bleaches and
other household cleansers, and Estee Lauder, cosmetics manufacturer, in
consumer staples. Our health care additions were among our most significant
and included equipment makers Guidant and St. Jude Medical, distributor
Cardinal Health, and generic-drug companies Barr Pharmaceuticals and Mylan
Laboratories.
One of our purchases in financials proved to be particularly well timed, as
SouthTrust, a regional bank headquartered in Birmingham, Alabama, received a
generous acquisition offer from another bank, Wachovia, not long after we had
bought it. Another entry we made to the portfolio was U.S. Bancorp, based in
Minneapolis, Minnesota. In other sectors, we bought, in materials, Ecolab,
supplier of industrial and institutional cleaning chemicals, and, in
information technology, Apple Computer, survivor, against all odds, in the
personal-computer business as well as innovative producer of the very hot
iPod digital-music player.
Along with the seven names already mentioned in energy and consumer
discretionary and (above) in information technology, we deleted the
following: Boeing, Lockheed Martin, Robert Half, Union Pacific, Medco Health
Solutions, Bank of America, Electronics Data Systems, BMC Software, Cisco
Systems, QUALCOMM and Altera. As always, we had a variety of reasons, in some
instances recognizing difficulties for the companies that appeared beyond a
reasonable time horizon in their resolution, in other instances seeing a
fully valued stock relative to identifiable earnings power, and in still
other cases just thinking we had more attractive alternatives.
Q: What is your outlook on the stock market and economy for the remainder of
2004?
A: At the midpoint of 2004, the market appears in disarray. Truth be told,
interest rates have not really moved very much at all, but there appears
great anxiety about greater moves to come. Inflation is not a current
problem, yet the high oil and raw-materials prices, as well as the prospect
of rising wages with growth in employment, provide the worriers a reason to
focus on the risk of inflation. Corporate earnings are generally very strong
and also strongly up from last year, but the expressed concern is with
respect to slowing of the impressive comparisons.
The market to us remains attractive, even if more moderately attractive than
it was in early 2003 when prices were much lower and the economy was still
just poised for its rebound rather than underway with the rebound as it is
currently. We see especially good values, however, among the good companies
with good long-term records in which we like to invest on your behalf and
which were relatively neglected by investors up until recently.
Betting which way the market might go on a short-term basis has never seemed
to us like a particularly fruitful endeavor. So our intention is, as always,
to stay invested over the coming months, and years, and to stay invested in
the solid kinds of companies we always aim to own in your Portfolio. Thank
you for your support.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
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Shares Value
COMMON STOCKS - 96.5%
Energy - 7.9%
Integrated Oil & Gas - 5.9%
16,643 BP Amoco Plc (A.D.R.) $ 891,566
57,921 ChevronTexaco Corp. 5,450,945
24,727 ConocoPhillips 1,886,423
119,280 Exxon Mobil Corp. 5,297,224
36,993 Occidental Petroleum Corp. 1,790,831
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$ 15,316,989
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Oil & Gas Drilling - 0.9%
42,044 Smith International, Inc.* $ 2,344,373
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Oil & Gas Exploration & Production - 1.1%
18,971 Apache Corp. $ 826,187
57,988 Pioneer Natural Resources Co. 2,034,219
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$ 2,860,406
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Total Energy $ 20,521,768
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Materials - 5.5%
Aluminum - 0.6%
46,252 Alcoa, Inc. $ 1,527,704
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Commodity Chemicals - 1.1%
23,113 Air Products & Chemicals, Inc. $ 1,212,277
38,676 E.I. du Pont de Nemours and Co. 1,717,988
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$ 2,930,265
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Diversified Chemical - 0.4%
18,467 PPG Industries, Inc. $ 1,154,003
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Diversified Metals & Mining - 2.5%
32,924 Phelps Dodge Corp.* $ 2,551,939
164,111 Rio Tinto Plc 3,949,666
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$ 6,501,605
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Paper Products - 0.5%
43,199 Meadwestvaco Corp. $ 1,269,619
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Specialty Chemicals - 0.4%
32,149 Ecolab, Inc. $ 1,019,123
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Total Materials $ 14,402,319
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Capital Goods - 7.4%
Aerospace & Defense - 1.5%
38,908 General Dynamics Corp. $ 3,863,564
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Electrical Components & Equipment - 0.7%
18,467 Emerson Electric Co. $ 1,173,578
26,633 General Electric Co. 862,909
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$ 2,036,487
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Shares Value
Industrial Conglomerates - 2.8%
20,674 Illinois Tool Works, Inc. $ 1,982,430
45,528 Johnson Controls, Inc. 2,430,285
31,359 United Technologies Corp. 2,868,721
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$ 7,281,436
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Industrial Machinery - 2.4%
33,682 Caterpillar, Inc. $ 2,675,698
50,290 Deere & Co. 3,527,341
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$ 6,203,039
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Total Capital Goods $ 19,384,526
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Commercial Services & Supplies - 1.0%
Office Services & Supplies - 1.0%
47,154 Canon, Inc. (A.D.R.) $ 2,518,023
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Total Commercial Services &
Supplies $ 2,518,024
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Transportation - 3.4%
Airlines - 0.9%
137,864 Southwest Airlines Co. $ 2,311,979
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Railroads - 2.0%
40,302 Burlington Northern, Inc. $ 1,413,391
146,340 Norfolk Southern Corp. 3,880,937
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$ 5,294,328
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Trucking - 0.5%
16,958 United Parcel Service $ 1,274,733
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Total Transportation $ 8,881,040
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Automobiles & Components - 2.3%
Automobile Manufacturers - 2.3%
208,966 Ford Motor Corp. $ 3,270,318
46,602 PACCAR, Inc. 2,702,450
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$ 5,972,768
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Total Automobiles & Components $ 5,972,768
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Media - 6.2%
Advertising - 1.0%
35,541 Omnicom Group $ 2,697,206
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Movies & Entertainment - 0.4%
34,933 The Walt Disney Co. $ 890,442
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Publishing - 4.8%
46,390 Elsevier NV $ 652,795
40,418 Gannett Co. 3,429,467
113,495 John Wiley & Sons, Inc. 3,631,840
63,415 McGraw-Hill Co., Inc. 4,855,687
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$ 12,569,789
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Total Media $ 16,157,437
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4 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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Shares Value
Retailing - 4.1%
Apparel Retail - 0.3%
19,973 Liz Claiborne, Inc. $ 718,629
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Department Stores - 0.6%
53,341 May Department Stores Co. $ 1,466,344
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General Merchandise Stores - 2.1%
29,152 Family Dollar Stores, Inc. $ 886,804
109,408 Target Corp. 4,646,558
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$ 5,533,362
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Home Improvement Retail - 0.8%
39,604 Lowe's Companies, Inc. $ 2,081,190
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Specialty Stores - 0.3%
25,229 Barnes & Noble, Inc.* $ 857,281
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Total Retailing $ 10,656,806
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Food & Drug Retailing - 3.5%
Drug Retail - 1.6%
112,775 Walgreen Co. $ 4,083,583
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Food Distributors - 1.3%
12,492 Cardinal Health, Inc. $ 875,065
68,293 Sysco Corp. 2,449,670
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$ 3,324,735
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Hypermarkets & Supercenters - 0.6%
30,854 Wal-Mart Stores, Inc. $ 1,627,857
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Total Food & Drug Retailing $ 9,036,175
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Food, Beverage & Tobacco - 4.7%
Packaged Foods & Meats - 3.6%
70,267 Campbell Soup Co. $ 1,888,777
36,702 General Mills, Inc. 1,744,446
45,065 Hershey Foods Corp. 2,085,158
59,465 H.J. Heinz Co., Inc. 2,331,028
61,629 Sara Lee Corp. 1,416,851
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$ 9,466,260
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Soft Drinks - 1.1%
53,078 PepsiCo, Inc. $ 2,859,843
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Total Food, Beverage & Tobacco $ 12,326,103
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Household & Personal Products - 3.3%
Household Products - 3.3%
12,405 Clorox Co. $ 667,141
53,543 Colgate-Palmolive Co. 3,129,588
19,005 Estee Lauder Co. 927,064
70,848 Procter & Gamble Co. 3,856,965
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$ 8,580,758
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Total Household & Personal
Products $ 8,580,758
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Shares Value
Health Care Equipment & Services - 5.9%
Health Care Distributors - 2.4%
47,967 Abbott Laboratories $ 1,955,135
75,610 Johnson & Johnson 4,211,477
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$ 6,166,612
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Health Care Equipment - 2.7%
58,653 Becton, Dickinson & Co. $ 3,038,225
35,076 Biomet, Inc. 1,558,777
26,639 Guidant Corp. 1,488,587
13,291 St. Jude Medical, Inc.* 1,005,464
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$ 7,091,053
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Managed Health Care - 0.8%
20,042 United Healthcare Group, Inc. $ 1,247,615
7,549 Wellpoint Health Networks, Inc.* 845,563
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$ 2,093,178
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Total Health Care Equipment &
Services $ 15,350,843
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Pharmaceuticals & Biotechnology - 6.1%
Pharmaceuticals - 6.1%
33,785 Barr Laboratorie, Inc.* $ 1,138,555
35,772 Eli Lilly & Co. 2,500,821
55,400 Merck & Co., Inc. 2,631,500
67,544 Mylan Laboratories, Inc. 1,367,766
45,761 Novartis AG (A.D.R.) 2,036,364
62,253 Pfizer, Inc. 2,134,033
15,214 Roche Holdings AG (A.D.R.)* 1,508,088
145,764 Schering-Plough Corp. 2,693,719
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$ 16,010,846
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Total Pharmaceuticals &
Biotechnology $ 16,010,846
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Banks - 7.4%
Diversified Banks - 2.2%
32,784 Charter One Financial, Inc. $ 1,448,725
85,656 U.S. Bancorp 2,360,679
35,519 Wells Fargo & Co. 2,032,752
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$ 5,842,156
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Regional Banks - 4.2%
28,340 First Horizon National Corp. $ 1,288,620
114,053 National City Corp. 3,992,996
38,351 SouthTrust Corp. 1,488,402
47,329 SunTrust Banks, Inc. 3,075,912
19,396 Zions Bancorporation 1,191,884
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$ 11,037,814
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Thrifts & Mortgage Finance - 1.0%
64,028 Washington Mutual, Inc. $ 2,474,042
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Total Banks $ 19,354,012
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The accompanying notes are an integral part of these financial statements. 5
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
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Shares Value
Diversified Financials - 5.6%
Asset Management & Custody Banks - 3.8%
52,067 The Bank of New York Co., Inc. $ 1,534,935
37,051 Federated Investors Inc. 1,124,127
62,368 State Street Corp. 3,058,527
81,766 T. Rowe Price Associates, Inc. 4,121,006
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$ 9,838,595
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Consumer Finance - 0.8%
38,211 American Express Co. $ 1,963,281
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Investment Banking & Brokerage - 1.0%
49,593 Merrill Lynch & Co., Inc. $ 2,677,030
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Total Diversified Financials $ 14,478,906
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Insurance - 3.5%
Multi - Line Insurance - 1.0%
37,283 American International Group, Inc. $ 2,657,532
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Property & Casualty Insurance - 2.5%
46,109 Chubb Corp. $ 3,143,712
26,583 Safeco Corp. 1,169,652
52,652 St. Paul Travelers Companies, Inc. 2,134,512
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$ 6,447,876
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Total Insurance $ 9,105,408
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Software & Services - 4.7%
Application Software - 2.4%
35,888 Adobe Systems, Inc. $ 1,668,792
119,628 Microsoft Corp. 3,416,576
26,017 Symantec Corp.* 1,139,024
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$ 6,224,392
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Data Processing & Outsourced Services - 2.3%
39,373 Automatic Data Processing, Inc. $ 1,648,941
32,311 Computer Sciences Corp.* 1,500,200
21,836 DST Systems, Inc.* 1,050,093
25,494 Fiserv, Inc.* 991,462
32,184 SunGard Data Systems, Inc.* 836,784
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$ 6,027,480
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Total Software & Services $ 12,251,872
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Technology Hardware & Equipment - 5.4%
Communications Equipment - 2.0%
182,952 Motorola, Inc. $ 3,338,874
128,455 Nokia Corp (A.D.R.) 1,867,736
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$ 5,206,610
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Shares Value
Computer Hardware - 3.4%
17,403 Apple Computer, Inc.* $ 566,294
60,976 Dell, Inc.* 2,184,160
22,881 Diebold, Inc. 1,209,718
72,740 Hewlett-Packard Co. 1,534,814
24,634 IBM Corp.* 2,171,487
252,670 Sun Microsystems, Inc.* 1,096,588
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$ 8,763,061
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Total Technology Hardware &
Equipment $ 13,969,671
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Semiconductors - 3.4%
Semiconductor Equipment - 0.9%
120,790 Applied Materials, Inc.* $ 2,369,900
------------
Semiconductors - 2.5%
126,597 Intel Corp. $ 3,494,077
118,406 Texas Instruments, Inc. 2,863,057
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$ 6,357,134
------------
Total Semiconductors $ 8,727,034
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Telecommunication Services - 3.2%
Integrated Telecommunication Services - 3.2%
18,815 Alltel Corp. $ 952,415
116,841 BellSouth Corp. 3,063,571
176,887 SBC Communications, Inc. 4,289,510
------------
$ 8,305,496
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Total Telecommunication Services $ 8,305,496
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Utilities - 2.0%
Electric Utilities - 1.3%
26,945 American Electric Power Co., Inc. $ 862,240
29,268 Consolidated Edison, Inc. 1,163,696
46,790 Southern Co. 1,363,929
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$ 3,389,865
------------
Gas Utilities - 0.6%
22,532 KeySpan Energy Corp. (a) $ 826,924
31,011 Vectren Corp. 778,065
------------
$ 1,604,989
------------
Water Utilities - 0.1%
14,953 Aqua America, Inc. $ 299,808
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Total Utilities $ 5,294,662
------------
TOTAL COMMON STOCKS
(Cost $224,336,202) $251,286,474
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6 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 3.7%
Repurchase Agreement - 3.4%
$ 8,800,000 UBS Warburg, Inc., 1.25%,
dated 6/30/04, repurchase price of
$8,800,000 plus accrued interest on
7/1/04 collateralized by $8,068,000
U.S. Treasury Bill, 7.0%, 7/15/06 $ 8,800,000
------------
Shares
Security Lending Collateral - 0.3%
766,159 Securities Lending
Investment Fund, 1.29% $ 766,159
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $9,566,159) $ 9,566,159
------------
TOTAL INVESTMENT IN
SECURITIES - 100.2%
(Cost $233,902,361) (a) $260,852,633
------------
OTHER ASSETS AND
LIABILITIES - (0.2)% $ (506,268)
------------
TOTAL NET ASSETS - 100.0% $260,346,365
============
* Non-income producing security.
(A.D.R.) American Depositary Receipt
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
20,707 KeySpan Energy Corp. $751,043
The accompanying notes are an integral part of these financial statements. 7
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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FINANCIAL HIGHLIGHTS
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Six Months Year Year Year 5/1/00 (a)
Ended Ended Ended Ended to
Class II 6/30/04 12/31/03 12/31/02 12/31/01 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 $ 0.07 $ 0.14 $ 0.13 $ 0.14 $ 0.12
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.29 3.42 (3.78) (2.59) (0.45)
-------- ------- ------- ------- ------
Net increase (decrease) from investment operations $ 0.36 $ 3.56 $ (3.65) $ (2.45) $(0.33)
Distributions to shareowners:
Net investment income (0.08) (0.15) (0.15) (0.13) (0.17)
Net realized gain -- -- -- (1.02) (0.13)
-------- ------- ------- ------- ------
Net increase (decrease) in net asset value $ 0.28 $ 3.41 $ (3.80) $ (3.60) $(0.63)
-------- ------- ------- ------- ------
Net asset value, end of period $ 18.94 $ 18.66 $ 15.25 $ 19.05 $22.65
======== ======= ======= ======= ======
Total return* 1.93% 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 (loss) to average net assets+ 0.78%** 0.87% 0.84% 0.49% 0.47%**
Portfolio turnover rate 25%** 11% 11% 7% 19%**
Net assets, end of period (in thousands) $110,781 $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 (loss) 0.78%** 0.87% 0.84% 0.49% 0.47%**
(a) Class 2 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.
8 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Fund
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $751,043)
(Cost $233,902,361) $260,852,633
Cash 63,820
Foreign currencies, at value --
Receivables --
Investment securities sold --
Fund shares sold 150,340
Dividends, interest and foreign taxes withheld 264,315
Other 622
------------
Total assets $261,331,730
------------
LIABILITIES:
Payables --
Investment securities purchased $ --
Fund shares repurchased 14,838
Dividends --
Upon return for securities loaned 766,159
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 184,570
Accrued expenses 19,798
Other --
------------
Total liabilities $ 985,365
------------
NET ASSETS:
Paid-in capital $268,906,525
Accumulated net investment income (loss) (75,908)
Accumulated undistributed net realized gain (loss) (35,434,524)
Net unrealized gain (loss) on:
Investments 26,950,272
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $260,346,365
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $149,564,869
Shares outstanding 7,879,911
------------
Net asset value per share $ 18.98
Class II:
No par value (unlimited number of shares authorized)
Net assets $110,781,496
Shares outstanding 5,850,266
------------
Net asset value per share $ 18.94
The accompanying notes are an integral part of these financial statements. 9
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Fund
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $19,683) $ 2,102,920
Interest 57,470
Income on securities loaned, net 7,876
Other --
-----------
Total investment income $ 2,168,266
EXPENSES:
Management fees $ 811,005
Transfer agent fees 1,223
Distribution fees (Class II) 123,119
Administrative fees 15,324
Custodian fees 20,922
Professional fees 26,346
Printing 3,962
Fees and expenses of nonaffiliated trustees --
Miscellaneous 3,740
-----------
Total expenses $ 1,005,641
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
-----------
Net expenses $ 1,005,641
Net investment income (loss) $ 1,162,625
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $(1,304,040)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (3,646)
-----------
$(1,307,686)
-----------
Change in net unrealized gain or loss from:
Investments $ 5,111,020
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$ 5,111,020
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ 3,803,334
===========
Net increase (decrease) in net assets resulting
from operations $ 4,965,959
===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Fund
VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 1,162,625 $ 2,086,873
Net realized gain (loss) on investments (1,307,686) (8,525,302)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 5,111,020 49,662,141
------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 4,965,959 $ 43,223,712
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (793,149) $ (1,580,150)
Class II (445,384) (520,900)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
------------ ------------
Total distributions to shareowners $ (1,238,533) $ (2,101,050)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 33,243,901 $ 58,651,489
Reinvestment of distributions 1,238,553 2,101,050
Cost of shares repurchased (20,190,548) (37,658,369)
------------ ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 14,291,886 $ 23,940,170
------------ ------------
Net increase (decrease) in net assets $ 18,019,312 $ 64,216,832
------------ ------------
NET ASSETS:
Beginning of period $242,327,053 $178,110,221
------------ ------------
End of period $260,346,365 $242,327,053
============ ============
Accumulated/(distributions in excess of)
net investment income (loss) $ (75,908) $ --
============ ============
The accompanying notes are an integral part of these financial statements. 11
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
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 nineteen seperarate 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)
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 Fund Portfolio is to seek capital appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolio are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. 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. As of June 30, 2004 there were no
securities fair valued.
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. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total
12
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
return. Upon entering into a futures contract, the Portfolio is required to
deposit with a broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value
of the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees,
elements of market risk which may exceed the amounts recognized by the
Portfolio. Changes in the value of the contracts may not directly correlate
to the changes in the value of the underlying securities. These risks may
decrease the effectiveness of the Portfolio's hedging and trading
strategies and potentially result in a loss. As of June 30, 2004, Fund
Portfolio had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Fund VCT Portfolio had a capital loss
carryforward of $33,944,745, of which the following amounts will expire
between 2009 and 2011 if not utilized: $6,699,261 in 2009, $14,227,957 in
2010 and $13,017,527 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
13
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
- ------------------------------------------------
Pioneer
Fund
VCT Portfolio
2003
--------------
Distributions paid from:
Ordinary Income $ 2,101,050
Long- Term capital gain --
------------
$ 2,101,050
Return of Capital --
------------
Total distributions $ 2,101,050
============
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/
(Capital loss carryforward) (33,944,745)
Unrealized appreciation
(depreciation) 21,657,159
------------
Total $(12,287,586)
============
- ------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on wash
sales, returns of capital on REITs, and the recognition of unrealized gains or
losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Portfolio level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day. Distributions paid by the Portfolio with
respect to each class of shares are calculated in the same manner, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees. Income, expenses
(excluding 12b-1 fees) and gains and losses are calculated at the Portfolio
level and are allocated daily based on the respective percentage of
adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets. In addition,
under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $159,258 was payable to PIM related to
management fees, administrative fees and certain other services, and is
included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito
14
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Italiano provides substantially all transfer agent and shareowner services to
the Trust at negotiated rates. Included in due to affiliates is $257 in
transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$25,055 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------
Net
Gross Gross Appreication/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------
Fund Portfolio $234,084,454 $39,850,461 $ (13,082,282) $26,768,179
------------ ----------- ------------- -----------
- ----------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $50,667,140 and $30,168,567, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- ----------------------------------------------------------------------------------------------
Fund Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ----------------------------------------------------------------------------------------------
CLASS II:
Shares sold 184,697 $ 3,484,043 519,126 $ 8,479,870
Reinvestment of distributions 42,211 793,149 94,945 1,580,150
Shares repurchased (628,636) (11,825,399) (1,616,113) (25,664,887)
----------------------------------------------------------
Net increase (401,728) $ (7,548,207) (1,156,042) $(15,504,867)
==========================================================
CLASS II:
Shares sold 1,580,694 $ 29,759,858 3,031,681 $ 50,171,619
Reinvestment of distributions 23,726 445,384 30,685 520,900
Shares repurchased (443,565) (8,365,149) (747,392) (12,093,482)
----------------------------------------------------------
Net increase 1,160,855 $ 21,840,093 2,314,974 $ 38,599,037
==========================================================
- -------------------------------------------------------------------------------------------------
15
[PIONEER LOGO]
PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our web site www.pioneerfunds.com.
16068-00-0804
[logo] Pioneer
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Value VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 7
Notes to Financial Statements 11
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 92.3%
Depository Receipts for International Stocks 6.0%
International Common Stocks 1.7%
Sector Distribution Portfolio
(As a percentage of equity holdings)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Financials 31.3%
Energy 12.4%
Industrials 10.6%
Consumer Discretionary 9.6%
Health Care 9.1%
Information Technology 7.7%
Consumer Staples 6.1%
Telecommunication Services 6.1%
Materials 5.9%
Utilities 1.2%
Five Largest Holdings
(As a percentage of equity holdings)
1. Bank of America Corp. 4.90%
2. Citigroup, Inc. 4.73
3. Freddie Mac 3.43
4. HCA, Inc. 2.50
5. Time Warner, Inc. 2.35
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 5/1/03
Net Asset Value per Share $ 12.41 $ 10.00
Distributions per Share Short-Term Long-Term
(5/1/03 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.010 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Value VCT Portfolio at net asset value, compared to that of the Russell 1000
Value Index. Portfolio returns are based on net asset value and do not reflect
any applicable insurance fees or surrender charges.
[THE FOLLOWING WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Russell 1000 Pioneer Value
Value Index VCT Portfolio
5/03 $10,000 $10,000
6/04 11,800 11,633
The Russell 1000 Value Index measures the performance of the value-oriented
stocks in the Russell 1000 Index. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Portfolio returns, do not reflect any
fees, expenses or sales charges. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 20.40%
(5/1/03)
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
2
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In this semiannual report to shareowners, Portfolio Manager J. Rodman Wright
describes the economic background and investment strategies that affected
results for Pioneer Value VCT Portfolio over the first half of 2004.
Q. What was the investment background and how did the Portfolio perform during
the period?
A. The market rode the momentum of economic recovery until the expansion's
strength brought fears of inflation and higher interest rates, driving
equity prices down. Stocks later rebounded on the basis of strong corporate
earnings, but many companies remained cautious about future profits. That
caution, coming atop high energy prices and fears of geopolitical
disruptions, caused stocks to decline in May only to rebound in June. The
net effect of the swings was to leave broad market indicators little
changed from year-end levels.
For the six months ending June 30, 2004, Class II shares of Pioneer Value
VCT Portfolio returned 3.17% at net asset value. That result trailed the
3.94% return on the Russell 1000 Value Index, the Portfolio's benchmark, for
the same period.
Q. Which sectors or stocks had a favorable impact on results?
A. Buyouts of two holdings boosted results in the first half of the year:
Cingular's acquisition of AT&T Wireless was our biggest success story; and
the merger of Charter One into Citizen's Bank was another. Good stock
selection also aided results among other financial services companies.
Mortgage lender Countrywide Financial enjoyed good business volume, both
before interest rates began to rise and later, when eager homebuyers rushed
to secure financing before borrowing costs moved even higher. Credit-card
issuer Providian also contributed, as efforts by new management to correct
the company's course began to pay off with a stronger balance sheet and
increasing revenues. Strong earnings pushed shares of Bank of America
higher, but Citigroup stock declined.
Technology holdings were modest contributors overall. Shares of Motorola
rose as the company returned to profitability. First Data, which processes
credit card transactions, saw volumes increase with the recovering economy.
Avoiding the weak semiconductor industry also aided returns. The Portfolio
outperformed its benchmark in energy, with high oil prices aiding offshore
driller Transocean as well as Conoco Phillips, an integrated energy company.
Elsewhere, a rise in Pepsico's shares reflected continued growth in earnings
and sales.
Tyco International, an industrial conglomerate, continues to execute a
successful turnaround strategy. Cost-cutting moves have proved effective and
added to the bottom line. Tyco has also cut its debt load sharply and
resolved outstanding regulatory concerns.
Q. What were some areas of disappointment?
A. Media stocks, including Clear Channel and Viacom, were weak. Advertising
commitments, especially for radio, have failed to meet expectations despite
the expanding economy, political campaigns and upcoming Olympics. We took
advantage of the market's indifference to add to these positions.
Freeport-McMoRan, which mines copper and gold, saw shares fall when gold
prices retreated. Demand for copper, the larger part of Freeport's business,
remained strong. HCA suffered with the rest of the hospital industry when
the slow economy brought large numbers of uninsured patients to its
emergency rooms, adding to uncollectable accounts. We bought additional
shares when the price fell because the valuation was attractive and we
expect revenues to stabilize in the economic recovery.
Q. What is your outlook for the months ahead?
A. We believe corporate earnings will continue to grow, a circumstance that
normally favors stocks. But how much of that growth is already reflected in
stock prices remains to be seen. In addition, the market seems likely to
remain directionless as external variables such as Iraq, threats of
terrorism and the presidential election play out. An up-and-down, uncertain
market environment like this one tends to favor our value-focused,
opportunistic style of stock picking.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 98.5%
Energy - 12.2%
Integrated Oil & Gas - 5.8%
1,005 BP Amoco Plc (A.D.R.) $ 53,838
783 ChevronTexaco Corp. 73,688
1,352 ConocoPhillips 103,144
1,389 Occidental Petroleum Corp. 67,241
------------
$ 297,911
------------
Oil & Gas Drilling - 2.9%
2,070 ENSCO International, Inc. $ 60,237
714 Nabors Industries, Inc. * 32,287
2,035 Transocean Offshore, Inc. * 58,893
------------
$ 151,417
------------
Oil & Gas Exploration & Production - 3.5%
917 Anadarko Petroleum Corp. $ 53,736
1,091 Devon Energy Corp. 72,006
2,027 Suncor Energy, Inc. 51,911
------------
$ 177,653
------------
Total Energy $ 626,981
------------
Materials - 5.9%
Commodity Chemicals - 1.0%
1,348 Praxair, Inc. $ 53,799
------------
Diversified Chemical - 0.9%
772 PPG Industries, Inc. $ 48,242
------------
Diversified Metals & Mining - 1.7%
1,275 Freeport-McMoRan Copper & Gold, Inc.
(Class B) $ 42,266
552 Phelps Dodge Corp. * 42,786
------------
$ 85,052
------------
Metal & Glass Containers - 0.9%
646 Ball Corp. $ 46,544
------------
Paper Products - 1.4%
1,015 Weyerhaeuser Co. $ 64,067
------------
Total Materials $ 297,704
------------
Capital Goods - 5.6%
Aerospace & Defense - 1.2%
1,117 Northrop Grumman Corp. $ 59,983
------------
Industrial Conglomerates - 4.4%
566 Donaldson Co., Inc. $ 16,584
3,169 Tyco International Ltd. 105,021
1,167 United Technologies Corp. 106,757
------------
$ 228,362
------------
Total Capital Goods $ 288,345
------------
Shares Value
Commercial Services & Supplies - 2.0%
Environmental Services - 2.0%
3,333 Waste Management, Inc. $ 102,156
------------
Total Commercial Services &
Supplies $ 102,156
------------
Transportation - 2.8%
Airlines - 1.1%
3,215 Southwest Airlines Co. $ 53,916
------------
Railroads - 0.8%
977 Canadian National Railway Co. $ 42,587
------------
Trucking - 0.9%
646 United Parcel Service $ 48,560
------------
Total Transportation $ 145,063
------------
Hotels, Restaurants & Leisure - 1.6%
Restaurants - 1.6%
3,159 McDonald's Corp. $ 82,134
------------
Total Hotels, Restaurants & Leisure $ 82,134
------------
Media - 6.9%
Broadcasting & Cable TV - 2.3%
1,512 Clear Channel Communications, Inc. $ 55,868
2,253 Comcast Corp. * 63,152
------------
$ 119,020
------------
Movies & Entertainment - 3.6%
6,745 Time Warner, Inc. * $ 118,577
1,884 Viacom, Inc. (Class B) 67,296
------------
$ 185,873
------------
Publishing - 1.0%
588 Gannett Co. $ 49,892
------------
Total Media $ 354,785
------------
Retailing - 1.0%
Department Stores - 1.0%
1,186 Kohl's Corp. * $ 50,144
------------
Total Retailing $ 50,144
------------
Food & Drug Retailing - 2.1%
Food Retail - 2.1%
2,776 Kroger Co. * $ 50,523
223 Nestle SA (Registered Shares) 59,586
------------
$ 110,109
------------
Total Food & Drug Retailing $ 110,109
------------
Food, Beverage & Tobacco - 2.9%
Packaged Foods & Meats - 1.2%
2,661 Sara Lee Corp. $ 61,176
------------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Soft Drinks - 1.7%
1,617 PepsiCo, Inc. $ 87,124
------------
Total Food, Beverage & Tobacco $ 148,300
------------
Household & Personal Products - 1.0%
Personal Products - 1.0%
779 Kimberly-Clark Corp. $ 51,321
------------
Total Household & Personal
Products $ 51,321
------------
Health Care Equipment & Services - 5.2%
Health Care Distributors - 0.7%
956 Wyeth, Inc. $ 34,569
------------
Health Care Facilities - 3.2%
3,038 HCA, Inc. $ 126,350
2,586 Tenet Healthcare Corp. * 34,678
------------
$ 161,028
------------
Managed Health Care - 1.3%
614 Wellpoint Health Networks, Inc. * $ 68,774
------------
Total Health Care Equipment &
Services $ 264,371
------------
Pharmaceuticals & Biotechnology - 3.8%
Pharmaceuticals - 3.8%
2,009 Merck & Co., Inc. $ 95,428
2,911 Pfizer, Inc. 99,789
------------
$ 195,217
------------
Total Pharmaceuticals &
Biotechnology $ 195,217
------------
Banks - 11.9%
Diversified Banks - 7.3%
2,925 Bank of America Corp. $ 247,514
2,141 U.S. Bancorp 59,006
1,182 Wells Fargo & Co. 67,646
------------
$ 374,166
------------
Regional Banks - 0.4%
576 North Fork Bancorporation, Inc. $ 21,917
------------
Thrifts & Mortgage Finance - 4.2%
590 Countrywide Financial Corp $ 41,448
2,740 Freddie Mac 173,442
------------
$ 214,890
------------
Total Banks $ 610,973
------------
Diversified Financials - 11.6%
Asset Management & Custody Banks - 1.4%
2,398 The Bank of New York Co., Inc. $ 70,693
------------
Consumer Finance - 1.7%
6,123 Providian Financial Corp. * $ 89,824
------------
Shares Value
Investment Banking & Brokerage - 3.9%
690 Goldman Sachs Group, Inc. $ 64,970
917 Lehman Brothers Holdings, Inc. 69,004
1,176 Merrill Lynch & Co., Inc. 63,480
------------
$ 197,454
------------
Diversified Financial Services - 4.7%
5,140 Citigroup, Inc. $ 239,010
------------
Total Diversified Financials $ 596,981
------------
Insurance - 7.3%
Insurance Brokers - 1.0%
1,145 Marsh & McLennan Co., Inc. $ 51,960
------------
Multi-Line Insurance - 1.5%
1,036 American International Group, Inc. $ 73,846
------------
Property & Casualty Insurance - 4.8%
1,674 Allstate Corp. $ 77,925
811 Ambac Financial Group, Inc. 59,560
37 Berkshire Hathaway, Inc. (Class B) * 109,335
------------
$ 246,820
------------
Total Insurance $ 372,626
------------
Software & Services - 2.7%
Data Processing & Outsourced Services - 2.7%
658 Automatic Data Processing, Inc. $ 27,557
2,452 First Data Corp. 109,163
------------
$ 136,720
------------
Total Software & Services $ 136,720
------------
Technology Hardware & Equipment - 4.9%
Communications Equipment - 1.6%
2,519 Motorola, Inc. $ 45,972
2,532 Nokia Corp. (A.D.R.) 36,815
------------
$ 82,787
------------
Computer Hardware - 2.3%
5,552 Hewlett-Packard Co. $ 117,147
------------
Electronic Equipment & Instruments - 1.0%
1,868 Koninklijke Philips Electronics $ 50,810
------------
Total Technology Hardware &
Equipment $ 250,744
------------
Telecommunication Services - 6.0%
Integrated Telecommunication Services - 2.8%
969 Alltel Corp. $ 49,051
1,659 AT&T Corp. 24,271
2,671 BellSouth Corp. 70,034
------------
$ 143,356
------------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Wireless Telecommunication Services - 3.2%
4,741 AT&T Wireless Services, Inc. * $ 67,892
12,999 Vodafone Group Plc 28,591
3,070 Vodafone Group Plc (A.D.R.) 67,847
------------
$ 164,330
------------
Total Telecommunication Services $ 307,686
------------
Utilities - 1.1%
Electric Utilities - 1.1%
904 Dominion Resources, Inc. $ 57,024
------------
Total Utilities $ 57,024
------------
TOTAL COMMON STOCKS
(Cost $4,836,038) $ 5,049,384
------------
TOTAL INVESTMENT
IN SECURITIES - 98.5%
(Cost $4,836,038) $ 5,049,384
------------
OTHER ASSETS AND
LIABILITIES - 1.5% $ 75,091
------------
TOTAL NET ASSETS - 100.0% $ 5,124,475
============
* Non-income producing security.
(A.D.R.) American Depository Receipt
6 The accompanying notes are an integral part of these financial statements.
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 5/1/03
6/30/04 to
Class II (a) (unaudited) 12/31/03
Net asset value, beginning of period $ 12.04 $ 10.00
------- -------
Increase from investment operations:
Net investment income $ -- $ 0.01
Net realized and unrealized gain on investments and foreign currency transactions 0.39 2.03
-------- -------
Net increase from investment operations $ 02.39 $ 2.04
Distributions to shareowners:
Net investment income ( 0.01) --
-------- -------
Net realized gain ( 0.01) --
-------- -------
Net increase in net asset value $ 0.37 $ 2.04
-------- -------
Net asset value, end of period $ 12.41 $ 12.04
======== =======
Total return* 3.17% 20.40%
Ratio of net expenses to average net assets+ 1.50%** 1.50%**
Ratio of net investment income to average net assets+ 0.24%** 0.27%**
Portfolio turnover rate 46%** 24%
Net assets, end of period (in thousands) $ 5,124 $ 1,695
Ratios with no waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 5.42%** 10.93%**
Net investment loss ( 3.68)%** (9.16)%**
(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.
The accompanying notes are an integral part of these financial statements. 7
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Value
VCT Portfolio
ASSETS:
Investment in securities, at value (cost $4,836,038) $ 5,049,384
Cash 170,099
Receivables --
Investment securities sold 11,686
Fund shares sold 2,667
Dividends, interest and foreign taxes withheld 4,901
Due from Pioneer Investment Management, Inc. 19,985
Other 47
-----------
Total assets $ 5,258,769
-----------
LIABILITIES:
Payables -
Investment securities purchased $ 124,789
Fund shares repurchased 4
Due to affiliates 2,743
Accrued expenses 6,758
-----------
Total liabilities $ 134,294
-----------
NET ASSETS:
Paid-in capital $ 4,894,898
Accumulated net investment income 2,285
Accumulated undistributed net realized gain 13,933
Net unrealized gain on:
Investments 213,346
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 13
-----------
Total net assets $ 5,124,475
-----------
NET ASSET VALUE PER SHARE:
Class II:
No par value (Unlimited number of shares authorized)
Net assets $ 5,124,475
Shares outstanding 413,048
-----------
Net asset value per share $ 12.41
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Value
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $243) $ 27,215
Interest 175
---------
Total investment income $ 27,390
---------
EXPENSES:
Management fees $ 11,787
Transfer agent fees 628
Distribution fees (Class II) 3,929
Administrative fees 9,250
Custodian fees 16,088
Professional fees 32,017
Printing 9,808
Miscellaneous 1,726
---------
Total expenses $ 85,233
Less management fees waived and expenses assumed by Pioneer Investment
Management, Inc. (61,660)
---------
Net expenses $ 23,573
---------
Net investment income (loss) $ 3,817
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 18,227
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies $ (384)
---------
$ 17,843
---------
Change in net unrealized gain from:
Investments $ 74,546
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies $ 11
---------
$ 74,557
---------
Net gain on investments and foreign currency transactions $ 92,400
=========
Net increase in net assets resulting from operations $ 96,217
=========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Value
VCT Portfolio
(Commencement
Six Months of Operations)
Ended 5/1/03
6/30/04 to
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income $ 3,817 $ 1,095
Net realized gain (loss) on investments 17,843 (2,039)
Change in net unrealized gain on
investments and foreign currency transactions 74,557 138,802
---------- ----------
Net increase in net assets
resulting from operations $ 96,217 $ 137,858
---------- ----------
DISTRIBUTIONS TO SHAREOWNERS
Net investment income:
Class II $ (2,607) $ --
Net realized gain
Class II (2,046) --
---------- ----------
Total distributions to shareholders $ (4,653) $ --
---------- ----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $3,427,301 $1,646,040
Reinvestment of distributions 4,364 --
Cost of shares repurchased (94,213) (88,440)
---------- ----------
Net increase in net assets
resulting from fund share transactions $3,337,453 $1,557,600
---------- ----------
Net increase in net assets $3,429,017 $1,695,458
NET ASSETS:
Beginning of period 1,695,458 --
---------- ----------
End of period $5,124,475 $1,695,458
========== ==========
Accumulated net investment income, end of period $ 2,285 $ 1,075
========== ==========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Value VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable
Contracts Trust (the Trust) which is a Delaware statutory trust registered
under the Investment Company Act of 1940 as an open-end management investment
company. The Trust consists of nineteen 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)
The Value VCT Portfolio commenced operations on May 1, 2003.
Portfolio shares may only be purchased by insurance companies for the purpose
of funding variable annuity or variable life insurance contracts, and may also
be purchased by qualified pension and retirement plans.
The investment objective of Value Portfolio is to seek capital appreciation.
The financial statements and financial highlights of all other portfolios are
presented in separate books.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolio are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. 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. As of June 30, 2004 there were no
securities fair valued.
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. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
11
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. Upon entering into a futures contract, the Portfolio
is required to deposit with a broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the associated futures
exchange. Subsequent payments for futures contracts ("variation margin")
are paid or received by the Portfolio, depending on the daily fluctuation
in the value of the contracts, and are recorded by the Portfolio as
unrealized gains or losses. When the contract is closed, the Portfolio
realize a gain or loss equal to the difference between the opening and
closing value of the contract. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio.
Changes in the value of the contracts may not directly correlate to the
changes in the value of the underlying securities. These risks may decrease
the effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, Value Portfolio had no
open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. There were no distributions paid during
the period ended December 31, 2003.
The following shows the components of distributable earnings on a federal
income tax basis at December 31, 2003.
- -------------------------------------------------------------------------------
Pioneer
Value
VCT Portfolio
2003
--------------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 2,543
Undistributed long-term gain/
(Capital loss carryforward) --
Unrealized appreciation (depreciation) 135,470
--------
Total $138,013
========
- -------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD),
12
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Portfolio level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day. Distributions paid by the Portfolio with
respect to each class of shares are calculated in the same manner, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees. Income, expenses
(excluding 12b-1 fees) and gains and losses are calculated at the Portfolio
level and are allocated daily based on the respective percentage of
adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.75% of the Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $1,542 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
Through June 30, 2004, PIM has agreed not to impose all or a portion of its
management fee and, if necessary, to limit other ordinary operating expenses to
the extent required to reduce Class II expenses to 1.50% of the average daily
net assets attributable to class II shares. As of June 30, 2004, there were no
Class I shares outstanding.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $128 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$1,073 payable to PFD at June 30, 2004.
13
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
------------- -------------- -------------- ---------------
Value Portfolio $4,839,910 $266,164 $ (56,690) $209,474
---------- -------- --------- --------
- --------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $4,024,831 and $713,810, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- -----------------------------------------------------------------------------------------
Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -----------------------------------------------------------------------------------------
CLASS II:
Shares sold 279,595 $3,427,401 148,910 $ 1,646,041
Reinvestment of distributions 353 4,364 -- --
Shares repurchased (7,743) (94,213) (8,066) (88,440)
--------------------------------------------------------
Net increase 272,204 $3,337,453 140,844 $ 1,557,601
========================================================
- -----------------------------------------------------------------------------------------
14
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This page for your notes.
15
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This page for your notes.
16
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This page for your notes.
17
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our web site www.pioneerfunds.com.
16081-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Small Cap Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Small Cap Value VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 8
Notes to Financial Statements 12
Trustees, Officers and Service Providers 18
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Common Stocks 87.0%
Temporary Cash Investment 6.3%
Depositary Receipts for International Stocks 4.0%
Closed End Mutual Funds 1.3%
Exchange Traded Fund 0.8%
International Common Stocks 0.6%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Financials 23.7%
Industrials 21.3%
Consumer Discretionary 13.1%
Materials 8.8%
Information Technology 8.5%
Health Care 7.9%
Energy 7.0%
Utilities 5.2%
Consumer Staples 3.4%
Telecommunication Services 1.1%
Five Largest Holdings
(As a percentage of equity holdings)
1. Nu Skin Enterprises, Inc. 2.17%
2. Massey Energy Co. 1.79
3. Pediatrix Medical
Group, Inc. 1.74
4. Insight Enterprises, Inc. 1.70
5. Wabtec Corp. 1.63
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $13.45 $12.47
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Small Cap Value VCT Portfolio at net asset value, compared to that of the
Russell 2000 Value Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Small Cap Value VCT Portfolio Russell 2000 Value Index
------------------------------------- ------------------------
11/01 $10,000 $10,000
6/01 $10,572 $10,612
6/02 $ 8,980 $ 9,400
6/03 $12,132 $13,727
6/04 $13,086 $14,802
Index comparison begins 11/30/01. The Russell 2000 Value Index is a measure of
the performance of the value-oriented stocks in the Russell 2000 Index. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
Net Asset Value
Life-of-Class 11.88%
(11/9/01)
1 Year 29.95%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
2
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In the following discussion, portfolio manager David Adams and assistant
portfolio manager Jack McPherson review their investment strategies and the
performance of Pioneer Small Cap Value VCT Portfolio.
Q: How did the Portfolio perform over this period?
A. For the six months ended June 30, 2004, Class II shares of Pioneer Small Cap
Value VCT Portfolio returned 7.86% at net asset value. These results were
in line with the 7.83% return on the Russell 2000 Value Index, the
Portfolio's benchmark, for the same period.
Q: What were conditions like over the first half of the year, and how did you
respond?
A. The U.S. economic recovery continued to take hold over the early months of
the year. But as global demand drove up prices for key commodities,
inflationary pressures led the Federal Reserve Board to raise short-term
interest rates at its June meeting. Anticipation of higher rates had been a
damper on the markets for several weeks prior to the Fed's move.
The Portfolio's positive results over the period reflected our commitment to
our established discipline. In contrast to last year when speculative issues
were market leaders, the kind of companies we invest in - better-quality
issues with strong financial characteristics and good earnings prospects -
have been in favor for much of 2004.
Q: Which sectors or stocks helped performance the most?
A. Our overweight position in energy-related companies compared to our
benchmark was the biggest positive over this period. Massey Energy
benefited as global demand pushed up the price of Appalachian coal. The
weak U.S. dollar also made domestic coal more competitive in foreign
markets. In energy services, Maverick Tube saw orders for its oil well
casings increase as drilling activity grew in response to higher energy
prices. Unit Corporation benefited from higher prices at its own wells, as
well as from increased activity in its equipment leasing business. Stelmar
Shipping is experiencing firm pricing for its fleet of double-hulled
tankers as existing tanker capacity is unable to meet the demands of an
expanding world economy.
Q: Which of your other decisions had a positive impact?
A. In the financial sector, we found good value among commercial banks whose
business customers tend to increase borrowings as business conditions
improve. Shares of Texas Capital Bancshares and Cardinal Financial both
rose; those regional banks are well positioned to capture market share if
customers seek local alternatives in the wake of the J.P. Morgan-BankOne
merger. Advanta, which supplies credit cards for small businesses, was a
strong contributor, and Selective Insurance gained, thanks to favorable
claims experience and higher premiums.
Among industrial firms, we bought Wabtac, a maker of parts for rail cars, at
a low point in its business cycle. Shares have moved higher as the expanding
economy absorbs excess freight capacity and new cars are being built.
In health care, Pediatrix Medical Group saw continued good results from its
hospital-based neonatology services. Shares of Cross Country Healthcare
gained as investors anticipated renewed demand for temporary nursing staff at
hospitals seeking to fill vacancies following a period of cutbacks. Software
makers Borland and SPSS were sluggish performers. Investors also grew
cautious toward Rewards Network as it worked to implement a new business
plan. Lower gold prices hurt results at Iamgold, which is also attempting to
acquire another firm while being targeted as a merger partner.
Q: What is your outlook for the upcoming months?
A. Most businesses sectors are doing well in the economic recovery, but an
apparent slowdown in job creation and a wave of cautious earnings forecasts
may hint at a slower pace of expansion. Inflation, higher interest rates
and world tensions may also give investors reasons to defer commitments, at
least until the presidential election is decided. Against that background,
good, attractively valued companies continue to emerge, creating
opportunities for our value-oriented investment style.
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.
Small-capitalization stocks, while offering the potential for higher returns,
may be subject to greater short-term price fluctuations than securities of
larger companies.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 86.1%
Energy - 6.1%
Oil & Gas Drilling - 1.6%
1,100 Atwood Oceanics, Inc.* $ 45,925
19,511 Key Energy Services, Inc.* 184,184
6,550 Todco* 101,329
-----------
$ 331,438
-----------
Oil & Gas Equipment & Services - 1.8%
10,125 Gulfmark Offshore, Inc.* $ 159,770
7,890 Maverick Tube Corp.* 207,191
-----------
$ 366,961
-----------
Oil & Gas Exploration & Production - 2.7%
4,550 Penn Virginia Corp. $ 164,301
9,370 Swift Energy Co.* 206,702
5,994 Unit Corp.* 188,511
-----------
$ 559,514
-----------
Total Energy $ 1,257,913
-----------
Materials - 7.6%
Diversified Metals & Mining - 1.6%
11,314 Massey Energy Co. $ 319,168
-----------
Gold - 1.5%
9,150 Glamis Gold, Ltd.* $ 160,400
27,875 IAMGOLD Corp. (a) 155,543
-----------
$ 315,943
-----------
Metal & Glass Containers - 0.7%
3,962 Jarden Corp.* $ 142,592
-----------
Paper Products - 1.9%
12,093 Domtar, Inc. (a) $ 156,483
7,550 Flowserve Corp.* 188,297
3,425 Longview Fibre Co. 50,450
-----------
$ 395,230
-----------
Specialty Chemicals - 0.4%
2,900 Great Lakes Chemical Corp. $ 78,474
-----------
Steel - 1.5%
2,675 Carpenter Technology $ 91,084
21,693 Graftech International, Ltd.* 226,909
-----------
$ 317,993
-----------
Total Materials $ 1,569,400
-----------
Capital Goods - 7.7%
Aerospace & Defense - 0.3%
3,450 Intrado, Inc.* $ 55,511
-----------
Construction, Farm Machinery &
Heavy Trucks - 1.4%
16,150 Wabtec Corp. $ 291,346
-----------
Shares Value
Construction & Engineering - 0.8%
3,795 Granite Construction, Inc. $ 69,183
5,800 Insituform Technologies, Inc.* 94,366
-----------
$ 163,549
-----------
Electrical Components & Equipment - 0.9%
16,004 Power-One, Inc.* $ 175,724
-----------
Industrial Conglomerates - 1.3%
14,760 Cornell Companies, Inc.* $ 200,736
6,021 NN, Inc. 76,527
-----------
$ 277,263
-----------
Industrial Machinery - 2.2%
8,062 Joy Global, Inc. $ 241,376
2,350 Kaydon Corp. 72,686
1,469 Nacco Industries, Inc. 139,555
-----------
$ 453,617
-----------
Trading Companies & Distributors - 0.8%
5,803 Applied Industrial Technologies, Inc. $ 174,786
-----------
Total Capital Goods $ 1,591,796
-----------
Commercial Services & Supplies - 7.1%
Data Processing Services - 0.5%
7,725 Gartner Group, Inc.* $ 102,125
-----------
Commercial Printing - 0.8%
3,793 John H. Harland Co. $ 111,325
1,600 Valassis Communications, Inc.* 48,752
-----------
$ 160,077
-----------
Diversified Commercial Services - 4.9%
2,600 Arbitron, Inc.* $ 94,952
13,700 Central Parking Corp. 256,053
4,378 Chemed Corp. 212,333
2,570 FTI Consulting, Inc.* 42,405
10,685 Profit Recovery Group International* 58,447
20,105 Rent-Way, Inc.* 180,945
6,025 Watson Wyatt & Co. Holdings 160,566
-----------
$ 1,005,701
-----------
Employment Services - 0.9%
6,095 Korn/Ferry International* $ 118,060
11,575 On Assignment, Inc.* 68,293
-----------
$ 186,353
-----------
Total Commercial Services &
Supplies $ 1,454,256
-----------
Transportation - 3.7%
Marine - 0.8%
5,277 Stelmar Shipping Ltd. $ 174,933
-----------
Railroads - 1.2%
9,543 Genesee & Wyoming, Inc.* $ 226,169
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Trucking - 1.7%
12,950 Central Freight Lines, Inc.* $ 103,600
2,968 Dollar Thrifty Automotive Group* 81,442
4,375 Forward Air Corp.* 163,620
-----------
$ 348,662
-----------
Total Transportation $ 749,764
-----------
Automobiles & Components - 0.7%
Auto Parts & Equipment - 0.7%
7,995 Federal Signal Corp. $ 148,787
-----------
Total Automobiles & Components $ 148,787
-----------
Consumer Durables & Apparel - 2.0%
Apparel, Accessories & Luxury Goods - 1.3%
14,593 Charming Shoppes, Inc.* $ 130,315
2,950 Kellwood Co. 128,473
-----------
$ 258,788
-----------
Footwear - 0.7%
6,641 Maxwell Shoe Co., Inc.* $ 154,337
-----------
Total Consumer Durables & Apparel $ 413,125
-----------
Hotels, Restaurants & Leisure - 0.6%
Restaurants - 0.6%
7,169 O'Charley's, Inc.* $ 123,235
-----------
Total Hotels, Restaurants & Leisure $ 123,235
-----------
Media - 2.0%
Advertising - 1.6%
4,841 EMAK Worldwide, Inc.* $ 60,270
6,344 R.H. Donnelley Corp.+* 277,487
-----------
$ 337,757
-----------
Publishing - 0.4%
5,465 Advanced Marketing Services, Inc. $ 70,553
-----------
Total Media $ 408,310
-----------
Retailing - 6.1%
Apparel Retail - 0.7%
3,695 Stage Stores, Inc.* $ 139,154
-----------
Catalog Retail - 1.5%
17,075 Insight Enterprises, Inc.* $ 303,252
-----------
General Merchandise Stores - 0.3%
1,615 Blyth Industries, Inc. $ 55,701
-----------
Specialty Stores - 3.6%
5,275 Claire's Stores, Inc. $ 114,468
5,502 Guitar Center, Inc.* 244,674
16,057 Hancock Fabrics, Inc. 204,727
4,923 School Specialty, Inc.* 178,754
-----------
$ 742,623
-----------
Total Retailing $ 1,240,730
-----------
Shares Value
Food & Drug Retailing - 1.1%
Food Retail - 1.1%
6,183 Fresh Del Monte Produce, Inc. (a) $ 156,244
4,875 Wild Oats Markets, Inc.* 68,591
-----------
$ 224,835
-----------
Total Food & Drug Retailing $ 224,835
-----------
Household & Personal Products - 1.9%
Household Products - 1.9%
15,304 Nu Skin Enterprises, Inc. $ 387,497
-----------
Total Household & Personal
Products $ 387,497
-----------
Health Care Equipment & Services - 6.3%
Health Care Distributors - 2.3%
3,235 Amerigroup Corp.* $ 159,162
5,525 Chattem, Inc.* 159,507
8,375 Cross Country Healthcares, Inc.* (a) 152,003
-----------
$ 470,672
-----------
Health Care Equipment - 0.1%
600 Analogic Corp. $ 25,458
-----------
Health Care Facilities - 0.7%
1,675 Sunrise Senior Living, Inc. (a)* $ 65,560
2,133 Triad Hospitals, Inc.* 79,412
-----------
$ 144,972
-----------
Health Care Services - 1.9%
4,452 Pediatrix Medical Group, Inc.+* $ 310,972
4,550 Providence Service Corp.* 85,495
-----------
$ 396,467
-----------
Managed Health Care - 1.3%
6,830 PacifiCare Health Systems* $ 264,048
-----------
Total Health Care Equipment &
Services $ 1,301,617
-----------
Pharmaceuticals & Biotechnology - 0.5%
Biotechnology - 0.5%
14,105 Kendle International, Inc.* $ 109,314
-----------
Total Pharmaceuticals &
Biotechnology $ 109,314
-----------
Banks - 6.6%
Diversified Banks - 3.0%
9,655 BankAtlantic Bancorp, Inc. $ 178,135
3,231 Banner Corp. 93,893
55 International Bancshares Corp.* 2,230
6,600 Provident Financial Services, Inc. 115,830
13,875 Texas Capital Bancshares, Inc.* 230,325
-----------
$ 620,413
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Regional Banks - 3.2%
5,000 Alliance Bankshares Corp.* $ 75,250
19,325 Cardinal Financial Corp.* 174,891
2,400 City National Corp. 157,680
930 Irwin Financial Corp. 24,552
11,275 Sterling Bancshares, Inc. 159,992
1,280 Whitney Holding Corp. 57,178
-----------
$ 649,543
-----------
Thrifts & Mortgage Finance - 0.4%
7,075 First Niagara Financial Group, Inc. $ 84,900
-----------
Total Banks $ 1,354,856
-----------
Diversified Financials - 5.9%
Consumer Finance - 2.8%
6,025 Advanta Corp. $ 132,128
5,778 Advanta Corp. (Class B) 132,432
20,406 Medallion Financial Corp. 162,228
15,100 Rewards Network, Inc. (a)* 135,900
-----------
$ 562,688
-----------
Investment Banking & Brokerage - 2.4%
4,150 A.G. Edwards, Inc. $ 141,225
17,975 Apollo Investment Corp.* 247,516
2,300 Piper Jaffray Co.* 104,029
-----------
$ 492,770
-----------
Specialized Finance - 0.7%
4,068 Financial Federal Corp. (a)* $ 143,438
-----------
Total Diversified Financials $ 1,198,896
-----------
Insurance - 3.5%
Life & Health Insurance - 0.4%
3,231 FBL Financial Group, Inc. $ 91,308
-----------
Property & Casualty Insurance - 2.5%
3,175 American Safety Insurance Group, Ltd.* $ 47,657
5,251 IPC Holdings, Ltd. 193,919
11,400 Quanta Capital Holdings (144A)* 122,436
2,375 RLI Corp. 86,688
1,525 Selective Insurance Group, Inc. (a) 60,817
-----------
$ 511,517
-----------
Reinsurance - 0.6%
4,775 Odyssey Re Holdings Corp. (a) $ 114,600
-----------
Total Insurance $ 717,425
-----------
Real Estate - 3.9%
Real Estate Management & Development - 0.8%
2,875 Corrections Corp. of America* $ 113,534
1,951 Levitt Corp.* 50,258
-----------
$ 163,792
-----------
Shares Value
Real Estate Investment Trusts - 3.1%
3,610 Bedford Property Investors, Inc. $ 105,556
1,528 Entertainment Properties Trust 54,611
3,850 Reckson Associates Realty Corp. 105,721
8,215 Trizec Properties, Inc. 133,576
3,396 Universal Health Realty, Inc. 97,465
6,237 Ventas, Inc. 145,634
-----------
$ 642,563
-----------
Total Real Estate $ 806,355
-----------
Software & Services - 3.6%
Application Software - 0.8%
8,779 SPSS, Inc.* $ 157,759
-----------
Data Processing & Outsourced Services - 0.9%
5,078 Lightbridge, Inc.* $ 28,437
11,967 Pegusus Systems, Inc.* 157,127
-----------
$ 185,564
-----------
Internet Software & Services - 0.8%
5,875 Internet Security Systems, Inc.* $ 90,123
6,800 PEC Solutions, Inc.* 81,124
-----------
$ 171,247
-----------
Systems Software - 1.1%
18,375 Borland Software Corp.* $ 156,004
5,275 Netiq Corp.* 69,630
-----------
$ 225,634
-----------
Total Software & Services $ 740,204
-----------
Technology Hardware & Equipment - 2.8%
Communications Equipment - 1.0%
31,500 Remec, Inc.* $ 199,080
-----------
Computer Storage & Peripherals - 0.8%
2,575 Applied Films Corp.* $ 74,727
3,400 Electronics For Imaging, Inc.* 96,084
-----------
$ 170,811
-----------
Electronic Equipment & Instruments - 0.6%
8,800 Planar Systems, Inc.* $ 117,832
-----------
Technology Distributors - 0.4%
2,300 Tech Data Corp.* $ 89,999
-----------
Total Technology Hardware &
Equipment $ 577,722
-----------
Semiconductors - 1.0%
Semiconductor Equipment - 0.7%
2,768 Advanced Energy Industries, Inc.* $ 43,513
2,187 Brooks Automation, Inc.* 44,068
2,745 Photronics, Inc.* 51,990
-----------
$ 139,571
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Semiconductors - 0.3%
5,670 HI/FN, Inc. (a)* $ 67,757
-----------
Total Semiconductors $ 207,328
-----------
Telecommunication Services - 0.9%
Wireless Telecommunication Services - 0.9%
18,803 Boston Communications Group, Inc.* $ 192,731
-----------
Total Telecommunication Services $ 192,731
-----------
Utilities - 4.5%
Gas Utilities - 3.7%
4,175 AGL Resources, Inc. $ 121,284
11,800 NUI Corp. (a) 172,280
4,680 People's Energy Corp. 197,262
9,549 Southwestern Energy Co.* 273,770
-----------
$ 764,596
-----------
Multi-Utilities & Unregulated Power - 0.4%
1,750 Energen Corp. $ 83,983
-----------
Utilities - 0.4%
2,325 UGI Corp. $ 74,633
-----------
Total Utilities $ 923,212
-----------
TOTAL COMMON STOCKS
(Cost $14,675,424) $17,699,308
-----------
EXCHANGE TRADED FUND - 0.7%
875 Russell 2000 Exchange Traded Fund $ 150,763
-----------
TOTAL EXCHANGE TRADED FUND
(Cost $113,541) $ 150,763
-----------
Shares Value
TEMPORARY CASH INVESTMENT - 5.9%
Security Lending Collateral - 5.9%
1,202,726 Securities Lending Investment Fund,
1.29% $ 1,202,726
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,202,726) $ 1,202,726
-----------
TOTAL INVESTMENT IN SECURITIES - 92.7%
(Cost $15,991,691) (a) $19,052,797
-----------
OTHER ASSETS AND
LIABILITIES - 7.3% $ 1,504,180
-----------
TOTAL NET ASSETS - 100.0% $20,556,977
===========
* Non-income producing security.
+ At May 31, 2004, the following securities have pledged to cover margin
requirements for open futures contracts:
Shares Description Market Value
2,385 Pediatrix Medical Group, Inc.* $166,592
400 R.H. Donnelley Corp.* 17,496
144A Security is exempt from registration under Rule 144A of the Securities Act
of 1933. Such securities may be resold normally to qualified institutional
buyers in a transaction exempt from registration. At June 30, 2004, the
value of these securities amounted to $122,436 or 0.6% of net assets.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
3,735 Cross Country Healthcares, Inc.* $ 68,238
10,960 Domtar, Inc. 141,713
2,915 Financial Federal Corp.* 102,258
5,565 Fresh Del Monte Produce, Inc. 139,292
4,720 HI/FN, Inc.* 56,262
26,481 IAMGOLD Corp. 141,938
11,540 NUI Corp. 163,176
3,860 Odyssey Re Holdings Corp. 92,640
12,635 Rewards Network, Inc.* 116,874
1,425 Selective Insurance Group, Inc. 55,889
1,496 Sunrise Senior Living, Inc.* 58,254
----------
Total $1,136,534
==========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 5/1/03
6/30/04 to
Class II (a) (unaudited) 12/31/03
Net asset value, beginning of period $12.47 $ 9.11
------ ------
Increase (decrease) from investment operations:
Net investment income (loss) $(0.03) $(0.00)
Net realized and unrealized gain on investments and foreign currency transactions 1.01 3.37
------ ------
Net increase from investment operations $ 0.98 $ 3.36
Distributions to shareowners:
Net investment income -- --
Net realized gain -- --
------ ------
Net increase in net asset value $ 0.98 $ 3.36
------ ------
Net asset value, end of period $13.45 $12.47
====== ======
Total return* 7.86% 36.88%
Ratio of net expenses to average net assets+ 1.58%** 1.58%**
Ratio of net investment income to average net assets+ (0.62)%** (0.15)%**
Portfolio turnover rate 43%** 74%
Net assets, end of period (in thousands) $6,014 $2,760
Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for
fees paid indirectly:
Net expenses 1.64%** 2.65%**
Net investment income (loss) (0.68)%** (1.22)%**
Ratios with waiver of management fees and assumption of expenses by PIM and no reduction for
fees paid indirectly:
Net expenses 1.58%** 1.58%**
Net investment income (loss) (0.62)%** (0.15)%**
(a) Class II shares were first publicly offered May 1, 2003.
* Assumes initial investment at net asset value at the beginning of each
period,reinvestment of all distriibutions and the complete redemption of the
investment at the net asset value at the end of each period.
** Annualized
+ Ratios with no reduction for fees paid indirectly
8 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Small Cap
Value
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $1,136,534)
(Cost $15,991,691) $19,052,797
Cash 2,718,102
Foreign currencies, at value --
Receivables --
Investment securities sold 23,852
Fund shares sold 21,160
Variation margin 7,700
Dividends, interest and foreign taxes withheld 15,498
Forward foreign currency settlement contracts, net --
Due from Pioneer Investment Management, Inc. --
Other 584
-----------
Total assets $21,839,693
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 10,897
Fund shares repurchased 20,907
Dividends --
Upon return of securities loaned 1,202,726
Forward foreign currency settlement contracts, net --
Reserve for repatriation taxes --
Due to bank --
Due to affiliates 6,556
Accrued expenses 41,630
-----------
Total liabilities $ 1,282,716
-----------
NET ASSETS:
Paid-in capital $17,643,559
Accumulated net investment income (loss) (32,380)
Accumulated undistributed net realized gain (loss) (170,680)
Net unrealized gain (loss) on:
Investments 3,061,106
Futures contracts 55,372
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
Total net assets $20,556,977
-----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $14,543,028
Shares outstanding 1,077,380
-----------
Net asset value per share $ 13.50
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 6,013,949
Shares outstanding 447,131
-----------
Net asset value per share $ 13.45
The accompanying notes are an integral part of these financial statements. 9
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Small Cap Value
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $61) $ 74,837
Interest 4,917
Income on securities loaned, net 1,081
Other --
----------
Total investment income $ 80,835
----------
EXPENSES:
Management fees $ 65,883
Transfer agent fees (1,877)
Distribution fees (Class II) 5,351
Administrative fees 9,250
Custodian fees 18,376
Professional fees 22,386
Printing 2,274
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,004
----------
Total expenses $ 122,647
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (5,786)
----------
Net expenses $ 116,879
----------
Net investment income (loss) $ (36,044)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 839,832
Futures contracts 26,278
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ 866,110
----------
Change in net unrealized gain or loss from:
Investments $ 481,469
Futures contracts 32,938
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ 514,407
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $1,380,517
==========
Net increase (decrease) in net assets resulting
from operations $1,344,473
==========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Small Cap Value
VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ (36,044) $ 2,125
Net realized gain (loss) on investments 866,110 (334,168)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 514,407 3,353,942
----------- ------------
Net increase (decrease) in net assets
resulting from operations $ 1,344,473 $ 3,021,899
----------- ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ -- $ --
Class II -- --
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
----------- ------------
Total distributions to shareowners $ -- $ --
----------- ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 6,450,844 $ 15,752,093
Reinvestment of distributions -- --
Cost of shares repurchased (2,046,639) (10,568,904)
----------- ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 4,404,205 $ 5,183,189
----------- ------------
Net increase (decrease) in net assets $ 5,748,678 $ 8,205,088
----------- ------------
NET ASSETS:
Beginning of period $14,808,299 $ 6,603,211
----------- ------------
End of period $20,556,977 $ 14,808,299
=========== ============
Accumulated/(distributions in excess of)
net investment income (loss) $ (32,380) $ 3,664
=========== ============
The accompanying notes are an integral part of these financial statements. 11
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Small Cap Value 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 nineteen 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)
The Portfolio commenced operations on May 1, 2003. Portfolio shares may only be
purchased by insurance companies for the purpose of funding variable annuity or
variable life insurance contracts, and may also be purchased by qualified
pension and retirement plans.
The investment objective of Small Cap Value Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolio are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. 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. As of June 30, 2004 there were no
securities fair valued.
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. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total
12
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
return. Upon entering into a futures contract, the Portfolio is required to
deposit with a broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value
of the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees,
elements of market risk which may exceed the amounts recognized by the
Portfolio. Changes in the value of the contracts may not directly correlate
to the changes in the value of the underlying securities. These risks may
decrease the effectiveness of the Portfolio's hedging and trading
strategies and potentially result in a loss. As of June 30, 2004, Small
Company Portfolio had the following open contracts:
- ----------------------------------------------------------------------------------------------------------------
Number of
Contracts Settlement Market Unrealized
Type Long/(Short) Month Value Gain/(Loss)
- ----------------------------------------------------------------------------------------------------------------
Small Cap Value Portfolio Russell 2000 4 September 2004 $1,184,700 $55,372
- ----------------------------------------------------------------------------------------------------------------
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Small Cap Value VCT Portfolio had a capital
loss carryforward of $513,628, of which the following amounts will expire
between 2010 and 2011 if not utilized: $508,141 in 2010 and $5,487 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
13
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer
Small Cap Value
VCT Portfolio
2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ --
Long-Term capital gain --
----------
--
Return of Capital --
----------
Total distributions $ --
==========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 3,397
Undistributed long-term gain/
(Capital loss carryforward) (513,628)
Unrealized appreciation (depreciation) 2,079,176
----------
Total $1,568,945
==========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Portfolio level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day. Distributions paid by the Portfolio with
respect to each class of shares are calculated in the same manner, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees. Income, expenses
(excluding 12b-1 fees) and gains and losses are calculated at the Portfolio
level and are allocated daily based on the respective percentage of
adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.75% of the Portfolio's average daily net assets. In addition,
under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $5,022 was payable to PIM related to
management fees, administrative fees and certain other services, and is
included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito
14
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Italiano provides substantially all transfer agent and shareowner services to
the Trust at negotiated rates. Included in due to affiliates is $255 in
transfer agent fees payable to PIMSS at June 30, 2004
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$1,279 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -------------------------------------------------------------------------------------------------
Small Cap Value Portfolio $16,492,152 $2,915,941 $(355,296) $2,560,645
----------- ---------- --------- ----------
- -------------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $7,241,266 and $3,313,196, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- -----------------------------------------------------------------------------------------------------
Small Cap Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -----------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 239,892 $ 3,132,677 1,276,588 $ 13,058,675
Reinvestment of distributions -- -- -- --
Shares repurchased (126,447) (1,650,422) (1,028,432) (10,409,382)
-----------------------------------------------------------------------
Net increase 113,445 $ 1,482,255 248,156 $ 2,649,293
=======================================================================
CLASS II:
Shares sold 255,800 $ 3,318,167 235,328 $ 2,693,418
Reinvestment of distributions -- -- -- --
Shares repurchased (29,908) (396,217) (14,089) (159,522)
-----------------------------------------------------------------------
Net increase 255,892 $ 2,921,950 221,239 $ 2,533,896
=======================================================================
- ------------------------------------------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16067-00-0804
[PIONEER Logo]
PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
T a b l e o f C o n t e n t s
- --------------------------------------------------------------------------------
Pioneer Balanced VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 5
Financial Statements 12
Notes to Financial Statements 16
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Portfolio Diversification
(As a percentage of total investment portfolio)
U.S. Common Stocks 65.0%
Asset Backed Securities 0.4%
U.S. Corporate Bonds 13.0%
U.S. Government Securities 21.6%
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Sector Distribution
(As a percentage of long-term holdings)
Utilities 0.5%
Telecommunication Services 1.1%
Materials 3.5%
Energy 6.0%
Industrials 7.3%
Health Care 9.3%
Consumer Discretionary 10.3%
Information Technology 11.8%
Financials 12.2%
Consumer Staples 17.1%
Government 20.9%
Five Largest Holdings
(As a percentage of equity holdings)
1. Berkshire Hathaway, Inc.
(Class B) 3.50%
2. First Data Corp. 3.35
3. Microsoft Corp. 3.29
4. Pfizer, Inc. 3.21
5. Northrop Grumman Corp. 3.21
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $14.15 $14.02
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.120 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in
Pioneer Balanced VCT Portfolio at net asset value, compared to that of the
Standard & Poor's (S&P) 500 Index and the Lehman Brothers Aggregate Bond
Index. Portfolio returns are based on net asset value and do not reflect
any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Lehman Aggregate Bond Index+ S&P 500 Pioneer Balanced VCT Portfolio
3/95 10000 10000 10000
11279 12533 11825
6/96 11686 15406 13412
12817 20543 15535
6/98 13929 26417 15474
13812 31974 15825
6/00 15418 29068 16647
16720 25623 16230
6/02 18435 19961 14527
19192 25684 17258
6/04 19221 26567 18434
+ Index comparison begins 2/28/95. The S&P 500 Index is an unmanaged measure
of 500 widely held common stocks listed on the New York Stock Exchange,
American Stock Exchange and the over-the-counter market. The Lehman
Brothers Aggregate Bond Index is a widely recognized market value-weighted
measure of government and corporate securities, agency mortgage
pass-through securities, asset-backed securities and commercial
mortgage-based securities. Index returns assume reinvestment of dividends
and, unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. Portfolio returns are based on net asset value and do not reflect
any annuity-related costs. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 6.44%
(3/1/95)
5 Years 2.03%
1 Year 8.77%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does
not guarantee future results. Assumes reinvestment of all distributions at
net asset value. Investment return and principal value fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance shown. For
performance data that is current to the most recent month-end, please call
1-800-225-6292 or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses
or sales charges. If they had been included, performance would have been
lower.
2
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
While the economy grew and corporate profits rose during the first half of
2004, stock market returns were muted by worries about rising interest
rates as well as geopolitical issues around the world. In the fixed income
markets, the jump in market interest rates midway through the six months
sent many bond prices lower, resulting in weak returns in most sectors. In
the following interview, Timothy Mulrenan, who is responsible for the
equity portfolio of Pioneer Balanced VCT Portfolio, and Richard Schlanger,
who is responsible for the Portfolio's fixed income investments, discuss
the markets and their investment strategies during the six months ended
June 30, 2004.
Q: How did the Portfolio perform during the first six months of 2004?
A: Class II shares of Pioneer Balanced VCT Portfolio had a total return of
1.79% at net asset value during the six months ended June 30, 2004. In
comparison, the Portfolio's benchmarks, the S&P 500 and the Lehman
Brothers Aggregate Bond Index returned 3.44% and 0.15%, respectively.
Q: What were the factors that affected performance?
A: The domestic equity market produced generally positive returns for the
six months, but those returns masked the underlying volatility and
tensions between conflicting influences. Supporting equity valuations
were an expanding economy and robust corporate profits. Reported
earnings tended to be 25% higher than in the comparable period of 2003.
The competing negative factors included the spike in market interest
rates midway through the six months, as well as uncertainty brought on
by concerns over issues such as energy prices, stability in Iraq and
presidential election-year politics.
In the fixed income markets, interest rates rose, with shorter-maturity
rates rising more than longer-term rates. The price losses brought on by
higher rates as well as the flattening of the yield curve - or
difference between short-term and long-term yields - resulted in
volatility in the bond market. The key factor was the widely anticipated
announcement by the Federal Reserve Board on the final day of the period
to begin tightening monetary policy by starting to raise the influential
overnight lending rate - the Fed Funds rate. The initial hike was from
1.00% to 1.25%, but the expectation was that the Fed would raise rates
further in the months to come in an effort to guard against inflationary
pressures.
Q: What were your principal equity strategies during the period?
A: We kept the allocation between equities and bonds consistent during the
six months. On June 30, about 64% of assets were invested in stocks -
about the same percentage as at the start of the period. The remaining
assets were invested in fixed income assets, including corporate bonds,
government securities, and mortgage-backed securities, with a small
allocation in foreign bonds and less than 2% in cash.
There also were no major tactical changes in the equity allocation,
although we did trim our energy position to take profits and to reduce
our vulnerability to the area during a time when we expected increased
price volatility. We remained overweighted in energy stocks, however,
and are positive about the sector's longer-term fundamentals. We
modestly increased the Fund's health care holdings, adding medical
device company Guidant and pharmaceutical company Eli Lilly. We thought
Guidant's stock price had become compellingly attractive after it fell
because of an announcement about a delay in a new product introduction.
We like Eli Lilly because it has well-developed research and development
activities that should produce a flow of new products. In addition, we
initiated a position in Liz Claiborne, the apparel company. We think it
is attractive because of its strong distribution during a time when the
industry was beginning to gain greater control over pricing.
We substantially reduced our holdings in two stocks that had performed
very well - software company Symantec and auto insurance company
Progressive. We also eliminated our position in Devon Energy, an
exploration and production company, because of our concerns about its
internal cost structure.
Q: How did you manage the fixed income portion of the Portfolio?
A: In the fixed income allocation, we raised overall quality, with
average credit quality moving from A+ to AA-. Interest-rate
sensitivity - as measured by duration - was
3
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 (continued)
about even with that of the benchmark Lehman Brothers Aggregate Bond
Index, although it declined slightly during the six months to about 4.3
years.
We increased our exposure to mortgage-backed securities - the
best-performing part of the investment-grade market - from 40.3% of
fixed income assets to 48.0%. Mortgages tend to be less vulnerable to
declining prices than Treasuries and other government securities in a
rising interest-rate environment. We reduced our exposure to corporates,
taking profits when their yield advantage over Treasuries began to
narrow. At the end of the period, 26.3% of the fixed income portfolio
was invested in industrial and utility bonds, compared to 31.4% at the
start of the period. At the same time, we also reduced our banking and
financial services bond holdings from 10.7% to 9.3% of fixed income
assets. When we invest in corporates, we tend to favor new issues, which
had a greater yield advantage over Treasuries than existing issues
available on the secondary market. When we invested in Treasury bonds,
we tended to hold TIPS, or inflation-protected Treasuries, although we
sold them near the end of the period when the Federal Reserve made it
clear it intended to control inflationary pressures.
Q: What types of investments had the greatest influence on performance?
A: Among our equity investments, our emphasis on consumer staples companies
helped considerably as stock investors began to recognize the value of
higher-quality, stable growth companies that had been overlooked in the
rally of 2003. Holdings such as Gillette, PepsiCo and Wrigley performed
very well. Our technology positions also contributed to performance, led
by Symantec, whose share price went up 27% during the six months.
Detracting from performance, however, was security selection in the
consumer discretionary sector. Family Dollar Stores had disappointing
earnings, which may have been related to higher gasoline prices and the
adverse effect on their largely lower-income customers, but we still
favored the company and continued to hold it at the end of the period.
Newmont Mining, which had been a strong contributor to Fund performance
prior to the period, fell 20% during the period in response to slumping
gold prices. However, we still believe the company is attractive and
continue to hold a position in it.
In the fixed income portfolio, our overweight position in mortgages
helped substantially, as did our exposure to corporate bonds - both high
yield and investment-grade. Performance was held back, however, by our
concentration in intermediate-term securities, as short- and
intermediate-term interest rates rose more than the rates on long-term
bonds during the six months.
Q: What is your investment outlook?
A: We believe the June 30 announcement by the U.S. Federal Reserve that it
was starting to raise short-term rates is the start of a long process of
interest-rate hikes that is likely to continue at least through the end
of 2005. We anticipate moving to a barbell strategy over time with
respect to maturity allocations, concentrating on both short-term
securities and long-term bonds while de-emphasizing intermediate-term
bonds that we think are most vulnerable in the present environment.
We believe the equity market will continue to be choppy, with no major
trends either up or down in stock price averages. The outlooks for gross
domestic product (GDP) and for corporate earnings both are favorable,
although the rate of corporate profit growth may slow somewhat. The big
question that will be on investors' minds will be what happens to
interest rates. In addition, uncertainty about geopolitical events and
the outcome of the presidential election will influence investor
psychology. We think the most likely scenario is that the major stock
averages will show moderate growth over the next several months.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns
would have been lower.
4
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 63.8%
Energy - 5.5%
Integrated Oil & Gas - 0.3%
3,900 Exxon Mobil Corp. $ 173,199
-----------
Oil & Gas Drilling - 4.2%
8,700 Encana Corp. $ 375,492
35,200 ENSCO International, Inc. 1,024,320
22,000 Varco International, Inc.* 481,580
-----------
$ 1,881,392
-----------
Oil & Gas Exploration &
Production - 0.9%
11,400 Pioneer Natural Resources Co. $ 399,912
-----------
Total Energy $ 2,454,503
-----------
Materials - 2.4%
Precious Metals & Minerals - 2.4%
27,000 Newmont Mining Corp. $ 1,046,520
-----------
Total Materials $ 1,046,520
-----------
Capital Goods - 3.7%
Aerospace & Defense - 3.1%
26,000 Northrop Grumman Corp. $ 1,396,200
-----------
Electrical Component & Equipment - 0.5%
8,500 Molex, Inc. $ 231,880
-----------
Total Capital Goods $ 1,628,080
-----------
Commercial Services & Supplies - 0.5%
Diversified Commercial Services - 0.5%
5,100 Cintas Corp. $ 243,117
-----------
Total Commercial Services &
Supplies $ 243,117
-----------
Transportation - 2.2%
Trucking - 2.2%
12,900 United Parcel Service $ 969,693
-----------
Total Transportation $ 969,693
-----------
Shares Value
Media - 2.9%
Broadcasting & Cable TV - 1.1%
5,800 Clear Channel Communications, Inc. $ 214,310
10,200 Comcast Corp. (Special)* 281,622
-----------
$ 495,932
-----------
Movies & Entertainment - 1.8%
21,840 Viacom, Inc. (Class B) $ 780,125
-----------
Total Media $ 1,276,057
-----------
Retailing - 3.1%
Apparel Retail - 0.5%
6,400 Liz Claiborne, Inc. $ 230,272
-----------
General Merchandise Stores - 2.6%
37,800 Family Dollar Stores, Inc. $ 1,149,876
-----------
Total Retailing $ 1,380,148
-----------
Food & Drug Retailing - 6.7%
Drug Retail - 0.8%
8,200 CVS Corp. $ 344,564
-----------
Food Distributors - 1.9%
12,300 Cardinal Health, Inc. $ 861,615
-----------
Food Retail - 2.9%
20,600 Wm. Wrigley Jr. Co. $ 1,298,830
-----------
Hypermarkets & Supercenters - 1.1%
8,900 Wal-Mart Stores, Inc. $ 469,564
-----------
Total Food & Drug Retailing $ 2,974,573
-----------
Food Beverage & Tobacco - 6.3%
Distillers & Vintners - 2.7%
22,400 Anheuser-Busch Companies, Inc. $ 1,209,600
-----------
Soft Drinks - 3.6%
12,600 The Coca-Cola Co. $ 636,048
17,900 PepsiCo, Inc. 964,452
-----------
$ 1,600,500
-----------
Total Food Beverage & Tobacco $ 2,810,100
-----------
The accompanying notes are an integral part of these financial statements.
5
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Household & Personal Products - 4.1%
Household Products - 1.0%
9,300 Estee Lauder Co. $ 453,654
-----------
Personal Products - 3.1%
32,400 Gillette Co. $ 1,373,760
-----------
Total Household & Personal
Products $ 1,827,414
-----------
Health Care Equipment & Services - 3.5%
Health Care Distributors - 1.4%
17,800 Wyeth, Inc. $ 643,648
-----------
Health Care Equipment - 2.1%
17,300 Biomet, Inc. $ 768,812
2,900 Guidant Corp. 162,052
-----------
$ 930,864
-----------
Total Health Care Equipment &
Services $ 1,574,512
-----------
Pharmaceuticals & Biotechnology - 5.0%
Biotechnology - 0.5%
4,316 Amgen, Inc.* $ 235,524
-----------
Pharmaceuticals - 4.4%
4,000 Eli Lilly & Co. $ 279,640
6,500 Merck & Co., Inc. 308,750
40,788 Pfizer, Inc. 1,398,213
-----------
$ 1,986,603
-----------
Total Pharmaceuticals &
Biotechnology $ 2,222,127
-----------
Diversified Financials - 2.4%
Asset Management & Custody Banks - 1.0%
14,100 The Bank of New York Co., Inc. $ 415,668
-----------
Consumer Finance - 1.4%
12,300 American Express Co. $ 631,974
-----------
Total Diversified Financials $ 1,047,642
-----------
Shares Value
Insurance - 5.2%
Property & Casualty Insurance - 5.2%
515 Berkshire Hathaway, Inc. (Class B)* $ 1,521,825
9,000 Progressive Corp.* 767,700
-----------
$ 2,289,525
-----------
Total Insurance $ 2,289,525
-----------
Software & Services - 8.4%
Application Software - 5.1%
50,100 Microsoft Corp. $ 1,430,856
19,200 Symantec Corp.* 840,576
-----------
$ 2,271,432
-----------
Data Processing & Outsourced Services - 3.3%
32,700 First Data Corp. $ 1,455,804
-----------
Total Software & Services $ 3,727,236
-----------
Technology Hardware & Equipment - 1.5%
Computer Hardware - 1.5%
32,022 Hewlett-Packard Co. $ 675,664
-----------
Total Technology Hardware &
Equipment $ 675,664
-----------
Semiconductors - 0.4%
5,800 Intel Corp. $ 160,080
-----------
Total Semiconductors $ 160,080
-----------
TOTAL COMMON STOCKS
(Cost $24,340,428) $28,306,991
-----------
6
The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
ASSET BACKED SECURITIES - 0.4%
Diversified Financials - 0.2%
Diversified Financial Services - 0.2%
$ 89,819 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 88,571
-----------
$ 88,571
-----------
Real Estate - 0.2%
Real Estate Investment Trusts - 0.2%
100,000 BBB-/Baa3 Global Signal Trust, 5.395%, 1/15/34 (144A) $ 96,087
-----------
Total Real Estate $ 96,087
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $189,819) $ 184,658
-----------
CORPORATE BONDS - 12.7%
Energy - 0.3%
Integrated Oil & Gas - 0.1%
30,000 BBB+/Baa1 Occidental Petroleum, 7.65%, 2/15/06 $ 32,169
40,000 BBB+/Baa1 Occidental Petroleum, 6.75%, 1/15/12 44,054
-----------
$ 76,223
-----------
Oil & Gas Refining Marketing & Transportation - 0.1%
65,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%, 6/1/14 $ 65,292
-----------
Total Energy $ 141,515
-----------
Materials - 1.3%
Commodity Chemicals - 0.2%
100,000 BB+/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ 98,500
-----------
Diversified Metals & Mining - 0.3%
125,000 BBB-/Baa3 Inco, Ltd., 7.2%, 9/15/32 $ 131,707
-----------
Metal & Glass Containers - 0.1%
40,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 47,508
-----------
Paper Products - 0.2%
100,000 BB/Ba2 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 101,300
-----------
Specialty Chemicals - 0.3%
100,000 BBB-/Baa3 Ferro Corp., 9.125%, 1/1/09 $ 114,836
-----------
Steel - 0.2%
75,000 BB/Ba3 International Steel Group, 6.5%, 4/15/14 (144A) $ 70,313
-----------
Total Materials $ 564,164
-----------
Capital Goods - 0.8%
Aerospace & Defense - 0.1%
25,000 B/B3 K&F Industries, 9.625%, 12/15/10 $ 27,406
-----------
Electrical Components & Equipment - 0.2%
75,000 BBB-/Ba1 Thomas & Betts Corp., 7.25%, 6/1/13 $ 79,441
-----------
Industrial Conglomerates - 0.2%
55,000 AAA/Aaa General Electric Capital Corp., 6.125%, 2/22/11 $ 58,902
30,000 AAA/Aaa General Electric Capital Corp., 6.75%, 3/15/32 32,250
-----------
$ 91,152
-----------
The accompanying notes are an integral part of these financial statements.
7
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Industrial Machinery - 0.3%
$150,000 BBB-/Ba1 Timken Co., 5.75%, 2/15/10 $ 150,314
-----------
Total Capital Goods $ 348,313
-----------
Automobiles & Components - 0.8%
Automobile Manufacturers - 0.8%
200,000 BBB/Baa1 General Motors, 7.2%, 1/15/11 $ 209,559
50,000 BBB-/A3 Ford Motor Credit Co., 9.14%, 12/30/14 51,464
100,000 BB+/Ba1 Hyundai Motor Co., Ltd., 5.3%, 12/19/08 98,409
-----------
$ 359,432
-----------
Total Automobiles & Components $ 359,432
-----------
Hotels, Restaurants & Leisure - 0.5%
Casinos & Gaming - 0.0%
25,000 B+/B1 Turning Stone, 9.125%, 12/15/10 (144A) $ 26,125
-----------
Hotels, Resorts & Cruise Lines - 0.5%
200,000 BBB-/Ba1 Hilton Hotels, 7.625%, 12/1/12 $ 215,000
-----------
Total Hotels, Restaurants & Leisure $ 241,125
-----------
Media - 2.2%
Broadcasting & Cable TV - 1.5%
250,000 BBB/Baa3 Comcast Cable Corp., 7.125%, 6/15/13 $ 273,265
240,000 BBB/Baa2 Cox Communications, 7.125%, 10/1/12 263,028
160,000 BB-/Ba3 Echostar DBS Corp., 6.375%, 10/1/11 (144A) 157,600
-----------
$ 693,893
-----------
Movies & Entertainment - 0.2%
100,000 BBB+/Baa1 AOL Time Warner, Inc., 6.875%, 5/1/12 $ 108,059
-----------
Publishing - 0.4%
170,000 BBB-/Baa3 News America Inc., 7.3%, 4/30/28 $ 184,346
-----------
Total Media $ 986,298
-----------
Retailing - 0.2%
Specialty Stores - 0.2%
100,000 BB/Ba2 Toys "R" Us, 7.875%, 4/15/13 $ 100,375
-----------
Total Retailing $ 100,375
-----------
Food, Beverage & Tobacco - 0.3%
Tobacco - 0.3%
150,000 BBB/Baa2 Altria Group, Inc., 7.0%, 11/4/13 $ 152,748
-----------
Total Food, Beverage & Tobacco $ 152,748
-----------
Health Care Equipment & Services - 0.7%
Health Care Facilities - 0.5%
100,000 BBB-/Ba1 HCA, Inc., 6.3%, 10/1/12 $ 200,103
-----------
Health Care Supplies - 0.2%
100,000 BBB-/Ba1 Bausch & Lomb, 7.125%, 8/1/28 $ 100,118
-----------
Total Health Care Equipment & Services $ 300,221
-----------
8
The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.0%
$ 40,000 AAA/Aaa Pharmacia Corp., 6.6%, 12/1/28 $ 43,322
-----------
Total Pharmaceuticals & Biotechnology $ 43,322
-----------
Banks - 0.5%
Diversified Banks - 0.3%
50,000 NR/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 $ 48,936
75,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 84,955
-----------
$ 133,891
-----------
Thrifts & Mortgage Finance - 0.2%
100,000 BBB-/Baa3 Sovereign Bank, 5.125%, 3/15/13 $ 95,060
-----------
Total Banks $ 228,951
-----------
Diversified Financials - 0.9%
Investment Banking & Brokerage - 0.1%
75,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11 (144A) $ 74,625
-----------
Diversified Financial Services - 0.4%
100,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 102,848
100,000 BBB/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) 92,754
-----------
$ 195,602
-----------
Specialized Finance - 0.2%
100,000 B/B2 MDP Acquistions, 9.625%, 10/1/12 $ 109,500
-----------
Total Diversified Financials $ 379,727
-----------
Insurance - 1.3%
Life & Health Insurance - 0.2%
100,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 $ 95,231
-----------
Multi - Line Insurance - 0.1%
50,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 46,598
-----------
Property & Casualty Insurance - 0.8%
150,000 BBB+/Baa2 Berkley (WR), 5.875%, 2/15/13 $ 153,089
85,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 83,538
100,000 BBB-/Baa3 Arch Capital Group, Ltd., 7.35%, 5/1/34 100,662
-----------
$ 337,289
-----------
Reinsurance - 0.2%
100,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 107,497
-----------
Total Insurance $ 586,615
-----------
Real Estate - 0.6%
Real Estate Investment Trusts - 0.5%
150,000 BBB-/Baa3 Hospitality Properties Trust, 6.75%, 2/15/13 $ 155,727
100,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 101,603
-----------
$ 257,330
-----------
Total Real Estate $ 257,330
-----------
Technology Hardware & Equipment - 1.3%
Computer Hardware - 0.8%
250,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 273,454
100,000 BB+/Ba1 UNISYS Corp., 6.875%, 3/15/10 103,000
-----------
$ 376,454
-----------
The accompanying notes are an integral part of these financial statements.
9
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Electronic Manufacturing Services - 0.2%
$ 75,000 BB+/Baa3 Jabil Circuit, Inc., 5.875%, 7/15/10 $ 77,475
-----------
Technology Distributors - 0.2%
100,000 BBB-/Baa3 Arrow Electronic Inc., 6.875%, 7/1/13 $ 104,456
-----------
Total Technology Hardware & Equipment $ 558,385
-----------
Telecommunication Services - 0.4%
Integrated Telecommunication Services - 0.4%
100,000 BBB+/Baa3 Intelsat, Ltd. 6.5%, 11/1/13 $ 88,343
100,000 BBB+/Baa2 Telecom Italia S.p.A., 5.25%, 11/15/13 (144A) 96,785
-----------
$ 185,128
-----------
Total Telecommunication Services $ 185,128
-----------
Utilities - 0.5%
Electric Utilities - 0.2%
95,000 BBB-/Baa3 FLP Energy American Wind Llc, 6.639%, 6/20/23 (144A) $ 96,999
-----------
Multi-Utilities & Unregulated Power - 0.3%
100,000 B/B1 Reliant Energy Inc., 9.5%, 7/15/13 $ 107,750
-----------
Total Utilities $ 204,749
-----------
TOTAL CORPORATE BONDS
(Cost $5,493,563) $ 5,638,398
-----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.2%
Government - 21.2%
396,360 AAA/Aaa Federal Home Loan Mortgage Corp., 5.0%, 4/1/34 $ 383,027
475,466 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 1/1/34 474,100
216,149 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 9/1/17 221,401
173,487 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 177,830
123,088 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 1/1/32 126,103
273,687 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 11/1/33 279,878
50,005 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 6/1/34 51,135
1,329,244 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 1,360,078
45,587 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 48,248
30,235 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 31,537
91,645 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 95,957
63,104 AAA/Aaa Federal National Mortgage Association, 6.5%, 10/1/32 65,753
150,000 AAA/Aaa Federal National Mortgage Association, 5.0%, 6/1/34 145,071
237,310 AAA/Aaa Federal National Mortgage Association, 5.5%, 11/1/33 236,860
221,223 AAA/Aaa Federal National Mortgage Association, 5.5%, 2/1/17 227,041
137,933 AAA/Aaa Federal National Mortgage Association, 5.5%, 3/1/34 137,452
249,122 AAA/Aaa Federal National Mortgage Association, 5.5%, 4/1/34 248,253
144,591 AAA/Aaa Federal National Mortgage Association, 6.%, 12/1/33 147,784
110,000 AAA/Aaa Federal National Mortgage Association, 6.125%, 3/15/12 118,615
20,007 AAA/Aaa Federal National Mortgage Association, 6.5%, 10/1/32 20,847
83,029 AAA/Aaa Federal National Mortgage Association, 6.5%, 4/1/29 87,034
180,906 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/32 188,502
120,726 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/32 125,900
25,302 AAA/Aaa Federal National Mortgage Association, 6.5%, 8/1/13 26,784
74,676 AAA/Aaa Federal National Mortgage Association, 6.5%, 9/1/32 78,006
82,862 AAA/Aaa Federal National Mortgage Association, 6.5%, 12/1/21 86,794
24,907 AAA/Aaa Federal National Mortgage Association, 6.5%, 8/1/14 26,343
10,000 AAA/Aaa Federal National Mortgage Association, 7.125%, 6/15/10 11,353
10
The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
(U.S. Government And Agency Obligations Cont.)
$ 40,082 AAA/Aaa Federal National Mortgage Association, 9.0%, 4/1/33 $ 44,559
300,000 AAA/Aaa Freddie Mac, 3.25%, 2/25/08 293,859
150,000 AAA/Aaa Freddie Mac, 5.75%, 1/15/12 158,248
545,023 AAA/Aaa Government National Mortgage Association, 6.0%, 9/15/33 559,458
195,356 AAA/Aaa Government National Mortgage Association II, 5.5%, 2/20/34 195,193
34,489 AAA/Aaa Government National Mortgage Association II, 7.5%, 9/20/29 37,185
66,055 AAA/Aaa Government National Mortgage Association, 5.5%, 9/15/33 66,197
311,211 AAA/Aaa Government National Mortgage Association, 5.5%, 6/15/33 311,511
242,819 AAA/Aaa Government National Mortgage Association, 5.5%, 7/15/33 243,053
167,714 AAA/Aaa Government National Mortgage Association, 5.5%, 8/15/33 167,875
169,178 AAA/Aaa Government National Mortgage Association, 6.0%, 9/15/32 173,715
347,177 AAA/Aaa Government National Mortgage Association, 6.0%, 10/20/33 357,148
166,809 AAA/Aaa Government National Mortgage Association, 6.5%, 5/15/33 174,599
68,834 AAA/Aaa Government National Mortgage Association, 6.5%, 10/15/28 72,111
470,000 AAA/Aaa U.S. Treasury Notes, 4.0%, 11/15/12 455,037
500,000 AAA/Aaa U.S. Treasury Notes, 5.625%, 5/15/08 538,203
300,000 AAA/Aaa U.S. Treasury Notes, 4.75%, 11/15/08 313,314
-----------
$ 9,388,951
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $9,433,069) $ 9,388,951
-----------
TOTAL INVESTMENT IN SECURITIES - 98.1%
(Cost $39,456,879) $43,518,998
-----------
OTHER NET ASSETS - 1.9% $ 835,231
-----------
TOTAL NET ASSETS - 100.0% $44,354,229
===========
N/R Not rated by either S&P or Moddy's
(144A) Security is exempt from registration under Rule 144A of the
Securities Act of 1933. Such securities may be resold normally to
qualified institutional buyers in a transaction exempt from
registration. At June 30, 2004, the value of these securities
amounted to $799,859 or 1.8% of total net assets. The accompanying
notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
11
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 5/1/03
Class II (a) 6/30/04 to
(unaudited) 12/31/03
Net asset value, beginning of period $ 14.02 $ 12.67
------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.10 $ 0.14
Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.15 1.40
------- ------
Net increase (decrease) from investment operations $ 0.25 $ 1.54
Distributions to shareowners:
Net investment income ( 0.12) ( 0.19)
Net realized gain -- --
------- -------
Net increase (decrease) in net asset value $ 0.13 $ 1.35
------- -------
Net asset value, end of period $ 14.15 $ 14.02
======= =======
Total return* 1.79% 12.17%
Ratio of net expenses to average net assets+ 1.19%** 1.11%**
Ratio of net investment income (loss) to average net assets+ 1.50%** 1.12%**
Portfolio turnover rate 35%** 37%
Net assets, end of period (in thousands) $ 6,713 $ 3,390
Ratios with no waiver of management fees and assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 1.19%** 1.11%**
Net investment income (loss) 1.50%** 1.12%**
(a) Class II shares were first publicly offered on May 1, 2003.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption
of the investment at net asset value at the end of each period.)
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
12
The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Balanced
VCT Portfolio
ASSETS:
Investment in securities, at value
(Cost $39,456,879) $ 43,518,998
Cash 935,566
Foreign currencies, at value --
Receivables --
Investment securities sold 242,436
Fund shares sold 1,060
Dividends, interest and foreign taxes withheld 160,986
Other 427
------------
Total assets $ 44,859,473
------------
LIABILITIES:
Payables --
Investment securities purchased $ 452,482
Fund shares repurchased 1,345
Dividends --
Upon return for securities loaned --
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 29,685
Accrued expenses 21,732
Other --
------------
Total liabilities $ 505,244
------------
NET ASSETS:
Paid-in capital $ 45,716,039
Accumulated net investment income (loss) (5,493)
Accumulated undistributed net realized gain (loss) (5,418,436)
Net unrealized gain (loss) on:
Investments 4,062,119
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $ 44,354,229
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 37,640,853
Shares outstanding 2,654,818
------------
Net asset value per share $ 14.18
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 6,713,376
Shares outstanding 474,365
------------
Net asset value per share $ 14.15
The accompanying notes are an integral part of these financial statements.
13
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Balanced
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $341) $ 135,243
Interest 451,405
Income on securities loaned, net --
Other --
----------
Total investment income $ 586,648
----------
EXPENSES:
Management fees $ 144,037
Transfer agent fees 1,475
Distribution fees (Class II) 6,237
Administrative fees 9,250
Custodian fees 8,120
Professional fees 26,333
Printing 5,838
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,694
----------
Total expenses $ 202,984
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
----------
Net expenses $ 202,984
----------
Net investment income (loss) $ 383,664
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 934,310
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ 934,310
----------
Change in net unrealized gain or loss from:
Investments $ (500,826)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ (500,826)
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ 433,484
==========
Net increase (decrease) in net assets resulting
from operations $ 817,148
==========
14
The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Balanced VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 383,664 $ 718,572
Net realized gain (loss) on investments 934,310 336,352
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (500,826) 5,309,842
------------ ------------
Net increase (decrease) in net assets
resulting from operations $ -- $ 6,364,766
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (353,982) $ (800,491)
Class II (47,983) (20,067)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
------------ ------------
Total distributions to shareowners $ (401,965) $ (820,558)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 4,614,728 $ 4,068,440
Reinvestment of distributions 401,960 820,551
Cost of shares repurchased (5,240,015) (9,119,455)
------------ ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ (223,327) $ (4,230,464)
------------ ------------
Net increase (decrease) in net assets $ 191,856 $ 1,313,744
------------ ------------
NET ASSETS:
Beginning of period $ 44,162,373 $ 42,848,629
------------ ------------
End of period $ 44,354,229 $ 44,162,373
------------ ------------
Accumulated/(distributions in excess of)
net investment income (loss) $ (5,493) $ 12,808
============ ============
The accompanying notes are an integral part of these financial statements.
15
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Balanced 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 nineteen 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)
The Portfolio commenced operations on May 1, 2003. Portfolio shares may
only be purchased by insurance companies for the purpose of funding
variable annuity or variable life insurance contracts, and may also be
purchased by qualified pension and retirement plans.
The financial highlights for the Portfolio's Class I shares are presented
in a separate book.
The investment objectives of Balanced Portfolio are capital growth and
current income.
Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America
that require the management of the Trust to, among other things, make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of income,
expenses, gains and losses during the reporting years. Actual results could
differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Trust, which are in
conformity with those generally accepted in the investment company
industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset value for
the portfolio is computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that
have not traded on the date of valuation, or securities for which sale
prices are not generally reported, are valued at the mean between the
last bid and asked prices. Trading in foreign equity securities is
substantially completed each day at various times prior to the close of
the New York Stock Exchange. The value of such securities used in
computing the net asset value of the Portfolio's shares, based on the
last sale price on the principal exchange where they traded, are
determined as of such times. As of June 30, 2004, there were no
securities fair valued.
Fixed income securities are valued at prices supplied by independent
pricing services, which consider such factors as Treasury spreads,
yields, maturities and ratings. Valuations may be supplemented by
dealers and other sources, as required. Securities for which market
quotations are not readily available are valued at their fair values as
determined by, or under the direction of, the Board of Trustees.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable diligence. Interest
income, including interest on income
16
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
bearing cash accounts, is recorded on the accrual basis, net of
unrecoverable foreign taxes withheld at the applicable country rates.
All discounts/premiums are accreted/amortized for financial reporting
purposes. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the
identified cost method for both financial reporting and federal income
tax purposes, and, if applicable, are reported net of foreign taxes on
capital gains at the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against
changes in interest rates, securities prices, and currency rates or to
seek to increase total return. Upon entering into a futures contract,
the Portfolio is required to deposit with a broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Portfolio, depending on
the daily fluctuation in the value of the contracts, and are recorded by
the Portfolio as unrealized gains or losses. When the contract is
closed, the Portfolio realizes a gain or loss equal to the difference
between the opening and closing value of the contract. The use of
futures contracts involves, to varying degrees, elements of market risk
which may exceed the amounts recognized by the Portfolio. Changes in the
value of the contracts may not directly correlate to the changes in the
value of the underlying securities. These risks may decrease the
effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, the portfolio had no
open futures contracts.
C. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's
distributions may be shown in the accompanying financial statements as
either from or in excess of net investment income or net realized gain
on investment transactions, or from paid-in capital, depending on the
type of book/tax differences that may exist.
Capital loss carryforwards are available to offset future realized
capital gains. At December 31, 2003, Balanced VCT Portfolio had a
capital loss carryforward of $6,275,373, of which will the following
amounts expire between 2006 and 2011 if not utilized: $985,646 in 2006,
$2,699,582 in 2010, and $2,590,145, in 2011.
The tax character of current year distributions paid will be determined
at the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31,
2003 on a tax basis as of December 31, 2003.
- -------------------------------------------------------------------------------
Pioneer
Balanced
VCT Portfolio
2003
- -------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 820,558
Long-Term capital gain --
-----------
$ 820,558
Return of Capital --
-----------
Total distributions $ 820,558
===========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 400
Undistributed long-term gain/
(capital loss carryforward) (6,275,373)
Unrealized appreciation/(depreciation) 4,497,980
-----------
Total $(1,776,993)
===========
- -------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses
on wash sales, returns of capital on REITs, and the recognition of
unrealized gains or losses on certain futures contracts.
D. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as
of trade date. Certain insurance companies paid Pioneer Funds
Distributor, Inc. (PFD), the principal underwriter for the Trust and a
wholly owned indirect subsidiary of UniCredito Italiano S.p.A.
(UniCredito Italiano), $612,526 in commissions on the sale of Trust
shares for the six months ended June 30, 2004. Distribution fees are
calculated based on the average daily net asset values attributable to
Class I and Class II shares of the Portfolio, respectively. Shareowners
of each class share all expenses and fees paid to the transfer agent,
Pioneer Investment
17
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Management Shareholder Services, Inc. (PIMSS), for its services, which
are allocated based on the number of accounts in each class and the
ratable allocation of related out-of-pocket expenses (see Note 3).
Income, common expenses and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of
shares based on the respective percentage of adjusted net assets at the
beginning of the day. Dividends and distributions to shareowners are
recorded on the ex-dividend date. Distributions paid by the Portfolio
with respect to each class of shares are calculated in the same manner,
at the same time, and in the same amount, except that Class I and Class
II shares can bear different transfer agent and distribution fees.
Income, expenses (excluding 12b-1 fees) and gains and losses are
calculated at the Portfolio level and are allocated daily based on the
respective percentage of adjusted net assets at the beginning of the
day.
E. Securities Lending
The Portfolio lends securities in its portfolio to certain
broker-dealers or other institutional investors, with the Portfolio's
custodian acting as the lending agent. When entering into a loan, the
Portfolio receives collateral which is maintained by the custodian and
earns income in the form of negotiated lenders' fees. The Portfolio also
continues to receive interest or dividends on the securities loaned, and
gain or loss in the fair value of the securities loaned that may occur
during the term of the loan, will be for account of the Trust. The loans
are secured by collateral of at least 102%, at all times, of the fair
value of the securities loaned. The fair value of the collateral will be
adjusted daily to reflect any price fluctuation in the value of the
loaned securities. The Trust has the right under the lending agreement
to recover the securities on loan from the borrower on demand. The Trust
invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio,
the value of the underlying securities (collateral), including accrued
interest received from counterparties, is required to be at least
equal to or in excess of the value of the repurchase agreement at the
time of purchase. The collateral for all repurchase agreements is held
in safekeeping in the customer-only account of the Portfolio's
custodian, or subcustodian. The Trust's investment adviser, Pioneer
Investment Management, Inc. (PIM), is responsible for determining that
the value of the collateral remains at least equal to the repurchase
price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets. In
addition, under the management and administration agreement, certain other
services and costs, including accounting, regulatory reporting and
insurance premiums, are paid by the Portfolio. At June 30, 2004, $27,997
was payable to PIM related to management fees, administrative fees and
certain other services, and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $259 in transfer agent fees payable to
PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under
the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average
daily net assets attributable to Class II shares. Included in due to
affiliates is $1,429 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
[LOGO] PIONEER
Investments (R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer High Yield VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- ---------------------------------------------------
Pioneer High Yield VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 10
Notes to Financial Statements 14
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment in securities)
[THE FOLLOWING DATA WAS PRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Corporate Bonds 57.7%
Convertible Corporate Bonds 35.4%
Temporary Cash Investment 4.1%
Convertible Preferred Stocks 2.8%
Maturity Distribution
(As a percentage of total investment in securities)
[THE FOLLOWING DATA WAS PRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
0-1 years 2.5%
1-3 years 16.6%
3-4 years 18.6%
4-6 years 44.9%
6-8 years 10.4%
8+ years 7.0%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Bowater, Inc., 6.5%, 6/15/13 3.71%
2. CMS Energy Corp., 7.75%, 8/1/10 2.97
3. Freeport-Mc Corp., 5.5% (144A) 2.87
4. Forest City Enterprises, 7.625%, 6/1/15 2.83
5. Meristar Hospitality Corp., 9.125%, 1/15/11 2.69
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $11.12 $11.46
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.2994 $ - $0.047
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch
(ML) High Yield Master II Index and of the ML Index of Convertible Bonds
(Speculative Quality). Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS PRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.]
ML Convertible
Pioneer ML Bonds
High Yield High Yield Speculative
VCT Portfolio+ Master II Quality
5/00 $10,000 $10,000 $10,000
$10,608 $9,770 $8,424
$12,390 $10,207 $7,882
6/02 $12,090 $10,013 $7,744
$16,022 $12,830 $10,529
6/04 $16,042 $13,006 $11,090
+ Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a
broad-based measure of the performance of the non-investment grade U.S.
domestic bond market. The ML Index of Convertible Bonds (Speculative Quality)
is a market-capitalization weighted index including mandatory and
non-mandatory domestic corporate convertible securities. Index returns assume
reinvestment of dividends and, unlike Portfolio returns, do not reflect any
fees, expenses or sales charges. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
Net Asset Value
Life-of-Class 11.46%
(5/1/00)
1 Year 9.43%
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
2
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
High-yield bonds offered slightly positive returns during the first half of
2004. In the following report, portfolio manager Margaret Patel describes the
market backdrop and why the Portfolio slightly underperformed its benchmark
index.
Q: How did the Portfolio perform?
A: During the six months ended June 30, 2004, the Portfolio's Class II shares
had a total return based on net asset value of 0.12%. By comparison, the
Merrill Lynch High Yield Master II Index returned 1.36%. The 30-day SEC
yield on June 30, 2004, was 3.64%.
Q: What was the environment like for the high-yield market during the first six
months of 2004?
A: Rising interest rates significantly dampened returns for all segments of the
fixed-income market. Signs of a strengthening economy and the increased
possibility of sustained inflationary pressures caused market yields to
rise in anticipation of an increase in short-term interest rates by the
Federal Reserve Board. That hike came to pass on the last day of the
period. Bond prices move in the opposite direction of interest rates and
within such an environment Treasury bonds suffered the worst relative price
declines. Steady economic growth helped high-yield bonds perform better
than Treasuries, but high-yield bonds still suffered price declines due to
rising market yields. Lower-quality securities outperformed higher-quality
issues during the period, as investors became more comfortable taking on
riskier investments within a strengthening economy.
Q. Why did the Portfolio's performance slightly lag that of the Merrill Lynch
High Yield Master II Index?
A. The Portfolio had a higher overall credit quality than the index during a
period when lower-rated bonds led the market. We favored higher-quality
securities because we felt that they offered better value and risk
profiles. We also increased the Portfolio's economic sensitivity during the
period, including adding investments in the basic materials sector.
Companies in this sector had performed well due to torrid demand from
China. However, during the period the Chinese government took steps to slow
economic growth to reduce inflationary pressures from building. Investors,
in turn, became concerned that the moves would soften demand for basic
materials, and so these investments suffered. Finally, the Portfolio's
allocation to convertible securities - about 40% at the end of the period -
also dampened performance somewhat. Convertibles underperformed generic
high-yield bonds because of declines in the underlying stock prices,
particularly in two of our areas of focus - basic materials and technology.
Q: Which investments proved to be some of the top performers during the fiscal
year? Which disappointed?
A: Two energy holdings, Tom Brown and Nuevo Energy, offered significant price
appreciation when they were each acquired by investment-grade companies.
Convertible bonds issued by Kaydon - which manufactures ball bearings,
hydraulic gear and filters for the aerospace, electronics and heavy
construction industries - rose in concert with the underlying stock price
due to an improving business outlook. Real estate firm LNR Properties
continued to perform well despite the risk that higher interest rates might
hurt its business. On the down side, three commodity-based companies -
Freeport Mac MoRan, Coeur d'Alene Mining and Graftech, underperformed
because of fears that slower growth in the U.S. and China would reduce
demand for basic materials.
Q: What is your outlook?
A: The Fed's rate hike at the end of the period was widely expected, and the
Board indicated its willingness to implement any further rate increases in
a slow, measured manner. The U.S. economy remains relatively healthy, so we
believe that the overall outlook for corporate earnings should be positive.
It is possible that Treasury yields could continue to rise during the rest
of 2004, but we feel that the extent of any such increases should be
relatively muted. Within such an environment, high-yield bonds could
continue to attract investors who are more comfortable taking on more risk
within a healthy economy and who are looking for more attractive yields
than either those offered in the Treasury or other lower-yielding segments
of the fixed-income markets.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Portfolio invests in below investment-grade securities, which may be more
volatile and subject to greater price fluctuations than investment-grade
securities.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
S&P/Moody's
Shares Ratings Value
CONVERTIBLE PREFERRED STOCKS - 2.8%
Materials - 2.8%
Construction Materials - 0.0%
1,750 B-/B3 TXI Capital Trust I, 5.5%, 6/30/28 $ 80,325
-----------
Diversified Metals & Mining - 2.8%
3,000 CCC/NR Freeport-McCorp., 5.5% (144A) $ 2,688,750
-----------
Total Materials
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $3,077,338) $ 2,769,075
-----------
Principal
Amount
CONVERTIBLE CORPORATE BONDS - 35.4%
Materials - 5.4%
Commodity Chemicals - 0.3%
$ 200,000 BB-/B1 Millenium Chemicals, Inc., 4.0%, 11/15/23 (144A) $ 311,000
-----------
Diversified Metals & Mining - 1.6%
500,000 B+/B1 Massey Energy Co., 4.75% 5/15/23 $ 850,625
500,000 B-/NR Freeport McMoran Copper & Gold, Inc., 7.0%, 2/11/11 697,500
-----------
$ 1,548,125
-----------
Gold - 1.1%
1,000,000 NR/NR Coeur D'Alene Mines Corp. 1.25%, 1/15/24 $ 827,500
250,000 BBB+/Baa2 Placer Dome, Inc., 2.75%, 10/15/23 (144A) 282,500
-----------
$ 1,110,000
-----------
Specialty Chemicals - 0.5%
1,000,000 BBB/Baa3 RPM International, Inc., 1.389%, 5/13/33 $ 521,250
-----------
Steel - 1.9%
2,000,000 B-/NR Graftech International, 1.625%, 1/15/24 (144A) (a) $ 1,800,000
-----------
Total Materials $ 5,290,375
-----------
Capital Goods - 5.1%
Aerospace & Defense - 2.2%
400,000 NR/NR EDO Corp., 5.25%, 4/15/07 $ 418,500
1,725,000 B/B2 Alliant Technology Systems, 2.75%, 2/15/24 (144A) 1,785,375
-----------
$ 2,203,875
-----------
Constuction & Engineering - 1.3%
875,000 NR/NR Quanta Services, Inc., 4.0%, 7/1/07 $ 796,250
500,000 B/NR Quanta Services, 4.5%, 10/1/23 493,125
-----------
$ 1,289,375
-----------
Electrical Component & Equipment - 1.2%
2,595,000 NR/B1 Roper Industries, Inc., 1.4813%, 1/15/34 (a) $ 1,164,506
-----------
Industrial Machinery - 0.4%
300,000 BB-/Ba3 Kaydon Corp., 4.0%, 5/23/23 (144A) $ 361,125
-----------
Total Capital Goods $ 5,018,881
-----------
Media - 1.4%
Advertising - 1.4%
1,000,000 BB+/Baa3 Interpublic Group Companies, 4.5%, 3/15/23 $ 1,360,000
-----------
Total Media $ 1,360,000
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Retailing - 0.5%
Specialty Stores - 0.5%
$ 500,000 B+/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 (a) $ 484,375
-----------
Total Retailing $ 484,375
-----------
Health Care Equipment & Services - 2.1%
Health Care Equipment - 0.6%
300,000 NR/NR Wilson Greatbatch Technology, 2.25%, 6/15/13 $ 284,625
375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) 358,125
-----------
$ 642,750
-----------
Health Care Facilities - 1.5%
1,400,000 B-/B3 Community Health Systems, 4.25%, 10/15/08 $ 1,457,750
-----------
Total Health Care Equipment & Services $ 2,100,500
-----------
Pharmaceuticals & Biotechnology - 6.8%
Biotechnology - 1.9%
800,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 750,000
850,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 860,625
300,000 NR/NR Cubist Pharmaceuticals, 5.5%, 11/1/08 279,750
-----------
$ 1,890,375
-----------
Pharmaceuticals - 4.9%
400,000 NR/NR Vertex Pharmaceuticals, Inc., 5.75%, 2/15/11 (144A) $ 402,000
2,000,000 NR/NR Ivax Corp., 4.5%, 5/15/08 1,980,000
2,500,000 BB-/B1 Valeant Pharmaceuticals, 3.0%, 8/16/10 (144A) 2,381,250
-----------
$ 4,763,250
-----------
Total Pharmaceuticals & Biotechnology $ 6,653,625
-----------
Real Estate - 0.7%
Real Estate Management & Development - 0.7%
500,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 $ 698,750
-----------
Total Real Estate $ 698,750
-----------
Software & Services - 1.1%
Application Software - 0.8%
200,000 NR/NR Mentor Graphics, 6.875%, 6/15/07 $ 211,500
500,000 NR/NR Serena Software, 1.5%, 12/15/23 (144A) 537,500
-----------
$ 749,000
-----------
IT Consulting & Other Services - 0.3%
400,000 NR/NR Safeguard Scientifics, 2.625%, 3/15/24 (144A) $ 296,500
-----------
Total Software & Services $ 1,045,500
-----------
Technology Hardware & Equipment - 6.0%
Communications Equipment - 3.0%
1,500,000 B-/NR Adaptec, Inc., 0.75%, 12/22/23 $ 1,481,250
1,020,000 BB+/Ba2 Corning, Inc., 3.5%, 11/1/08 1,435,650
-----------
$ 2,916,900
-----------
Computer Storage & Peripherals - 0.8%
700,000 NR/B2 Maxtor Corp., 6.8%, 4/30/10 $ 738,500
-----------
Electronic Equipment & Instruments - 0.4%
300,000 B+/NR Flir Systems, Inc., 3.0%, 6/1/23 (a) $ 427,125
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Electronic Manufacturing Services - 1.4%
$ 1,500,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 1,402,500
-----------
Technology Distributors - 0.4%
400,000 NR/NR Bell Microproducts, Inc., 3.75%, 3/5/24 (144A) $ 397,500
-----------
Total Technology Hardware & Equipment $ 5,882,525
-----------
Semiconductors - 6.3%
Semiconductor Equipment - 3.5%
700,000 B-/NR Advanced Energy Industries, Inc., 5.25%, 11/15/06 $ 693,000
1,700,000 B-/NR FEI Co., 5.5%, 8/15/08 1,731,875
700,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 682,500
200,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 198,250
-----------
$ 3,305,625
-----------
Semiconductors - 2.8%
1,825,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 1,747,438
1,000,000 NR/NR Triquint Semiconductor, 4.0%, 3/1/07 (a) 957,500
-----------
$ 2,704,938
-----------
Total Semiconductors $ 6,010,563
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $33,516,548) $34,545,094
-----------
CORPORATE BONDS - 57.7%
Energy - 3.9%
Oil & Gas Equipment And Services - 0.3%
100,000 B+/B3 Transmontaigne, Inc., 9.125%, 6/1/10 $ 103,000
200,000 BB-/Ba3 Grant Prideco Escrow, 9.0%, 12/15/09 217,500
-----------
$ 320,500
-----------
Oil & Gas Refining Marketing & Transportation - 3.6%
1,255,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 1,374,225
1,900,000 B/B3 Tesoro Petroleum Corp., 9.625%, 4/1/12 2,132,750
-----------
$ 3,506,975
-----------
Total Energy $ 3,827,475
-----------
Materials - 13.9%
Commodity Chemicals - 4.6%
1,100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 1,078,000
2,500,000 BB+/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,375,000
1,000,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,045,000
-----------
$ 4,498,000
-----------
Diversified Metals & Mining - 1.3%
1,375,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 (a) $ 1,258,125
-----------
Metal & Glass Containers - 1.5%
1,000,000 B+/B1 Crown Holdings, 9.5%, 3/1/11 $ 1,090,000
500,000 B/B3 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 415,000
-----------
$ 1,505,000
-----------
Paper Products - 4.3%
685,000 BB/Ba2 Bowater Canada Finance, 7.95%, 11/15/11 $ 707,589
3,700,000 BB/Ba2 Bowater, Inc., 6.5%, 6/15/13 3,480,849
-----------
$ 4,188,438
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Specialty Chemicals - 2.2%
$ 1,200,000 BB-/B1 Millenium America, Inc., 7.625%, 11/15/26 $ 1,026,000
1,000,000 BB-/B1 Millennium America, Inc., 9.25%, 6/15/08 1,075,000
-----------
$ 2,101,000
-----------
Total Materials $13,550,563
-----------
Capital Goods - 7.3%
Aerospace & Defense - 5.1%
1,000,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 1/15/14 $ 955,000
2,500,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 2,437,500
1,525,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 1,570,750
-----------
$ 4,963,250
-----------
Industrial Machinery - 2.2%
800,000 B+/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 (a) $ 800,000
517,000 BBB+/Ba3 SPX Corp., 7.5%, 1/1/13 529,925
800,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 814,000
-----------
$ 2,143,925
-----------
Total Capital Goods $ 7,107,175
-----------
Transportation - 0.5%
Air Freight & Couriers - 0.5%
500,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 525,000
-----------
Total Transportation $ 525,000
-----------
Automobiles & Components - 0.4%
Auto Parts & Equipment - 0.4%
400,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 360,000
-----------
Total Automobiles & Components $ 360,000
-----------
Consumer Durables & Apparel - 1.4%
Homebuilding - 1.4%
400,000 BB/Ba2 Beazer Homes USA, 8.375%, 4/15/12 $ 422,000
1,000,000 BB/Ba2 Beazer Homes USA, 6.5%, 11/15/13 945,000
-----------
$ 1,367,000
-----------
Total Consumer Durables & Apparel $ 1,367,000
-----------
Media - 2.2%
Advertising - 2.2%
2,000,000 BB+/Baa3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,139,558
-----------
Total Media $ 2,139,558
-----------
Retailing - 1.0%
Department Stores - 1.0%
1,000,000 BB+/Ba3 J.C. Penney Co., Inc., 7.625%, 3/1/97 $ 1,025,000
-----------
Total Retailing $ 1,025,000
-----------
Health Care Equipment & Services - 0.8%
Health Care Facilities - 0.5%
500,000 BBB-/Ba1 HCA, Inc., 6.25%, 2/15/13 $ 497,008
-----------
Health Care Supplies - 0.3%
350,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 357,875
-----------
Total Health Care Equipment & Services $ 854,883
-----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Pharmaceuticals & Biotechnology - 1.4%
Pharmaceuticals - 1.3%
$ 1,375,000 B/NR Valeant Pharmaceuticals, 7.0%, 12/15/11 (144A) $ 1,340,625
-----------
Total Pharmaceuticals & Biotechnology $ 1,340,625
-----------
Real Estate - 11.9%
Real Estate Management & Development - 6.4%
510,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 (144A) $ 712,725
800,000 B+/Ba3 LNR Property Corp., 7.625%, 7/15/13 796,000
2,115,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 2,062,125
2,635,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 2,648,175
-----------
$ 6,219,025
-----------
Real Estate Investment Trusts - 5.5%
500,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 495,000
2,300,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 2,403,500
2,500,000 CCC+/B2 Meristar Hospitality Corp., 9.125%, 1/15/11 2,525,000
-----------
$ 5,423,500
-----------
Total Real Estate $11,642,525
-----------
Technology Hardware & Equipment - 5.5%
Communications Equipment - 0.6%
700,000 BB+/Ba2 Corning, Inc., 6.2%, 3/15/16 $ 649,250
-----------
Electronic Equipment & Instruments - 2.0%
1,835,000 B/B2 General Cable Corp, 9.5%, 11/15/10 $ 1,972,625
-----------
Technology Distributors - 2.9%
1,550,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 $ 1,550,547
1,200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 1,253,473
-----------
$ 2,804,020
-----------
Total Technology Hardware & Equipment $ 5,425,895
-----------
Utilities - 7.4%
Electric Utilities - 7.5%
1,000,000 B+/B3 CMS Energy Corp., 7.5%, 1/15/09 $ 995,000
2,800,000 B+/B3 CMS Energy Corp., 7.75%, 8/1/10 2,786,000
2,000,000 CCC+/B3 Allegheny Energy Supply, 7.8%, 3/15/11 1,955,000
1,500,000 CCC+/B3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,483,125
-----------
$ 7,219,125
-----------
Total Utilities $ 7,219,125
-----------
TOTAL CORPORATE BONDS
(Cost $56,297,175) $56,384,824
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
TEMPORARY CASH INVESTMENT - 4.1%
Security Lending Collateral - 4.1%
$ 3,990,710 Securities Lending Investment Fund, 1.29% $ 3,990,710
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $3,990,710) $ 3,990,710
-----------
TOTAL INVESTMENT IN SECURITIES - 101.7%
(Cost $96,881,771) (a) $97,689,703
-----------
OTHER ASSETS AND LIABILITIES - (1.7)% $(1,635,148)
-----------
TOTAL NET ASSETS - 100% $96,054,555
===========
144A Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $15,138,100 or 15.8%
of net assets.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
285,000 Flir Systems Inc., 3.0%, 6/1/23 $ 403,251
1,306,250 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 1,225,358
329,000 Graftech International, 1.625%, 1/15/24 (144A) 295,568
760,000 Manitowoc Co. Inc., 7.125%, 11/1/13 768,875
404,000 Roper Industries Inc., 1.4813%, 1/15/34 184,681
100,000 Sonic Automotive Inc., 5.25%, 5/7/09 97,648
950,000 Triquint Semiconductor, 4.0%, 3/1/07 920,998
----------
Total $3,896,379
==========
The accompanying notes are an integral part of these financial statements. 9
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/04 Year Ended Year Ended 5/1/01 to
Class II (unaudited) 12/31/03 12/31/02 12/31/01(a)
Net asset value, beginning of period $ 11.46 $ 9.28 $10.33 $10.51
------- ------- ------ ------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.30 $ 0.76 $ 0.80 $ 0.60
Net realized and unrealized gain (loss) on investments and foreign
currency transactions (0.29) 2.17 (1.05) (0.07)
------- ------- ------ ------
Net increase (decrease) from investment operations $ 0.01 $ 2.93 $(0.25) $ 0.53
Distributions to sharowners:
Net investment income (0.30) (0.75) (0.80) (0.60)
Net realized gain (0.05) -- -- (0.11)
------- ------- ------ ------
Net increase (decrease) in net asset value $ (0.34) $ 2.18 $(1.05) $(0.18)
------- ------- ------ ------
Net asset value, end of period $ 11.12 $ 11.46 $ 9.28 $10.33
======= ======= ====== ======
Total return* 0.12% 32.64% (2.42)% 5.39%
Ratio of net expenses to average net assets+ 1.02%** 1.09% 1.82% 1.39%**
Ratio of net investment income (loss) to average net assets+ 5.26%** 6.33% 8.67% 8.94%**
Portfolio turnover rate 67%** 48% 42% 36%**
Net assets, end of period (in thousands) $32,680 $17,601 $ 228 $ 28
Ratios with no waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 1.02%** 1.09% 1.82% 1.50%**
Net investment income (loss) 5.26%** 6.33% 8.67% 8.83%**
Ratios with waiver of management fees and assumption of expenses by
PIM and reduction for fees paid indirectly:
Net expenses 1.02%** 1.09% 0.97% 0.85%**
Net investment income (loss) 5.26%** 6.33% 0.01% 0.07%**
(a) Class II shares were first publicly offered on May 1, 2001.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
10 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
High-Yield
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $3,896,379)
(Cost $96,881,771) $ 97,689,703
Cash 4,966,498
Foreign currencies, at value --
Receivables --
Investment securities sold 1,251,309
Fund shares sold 129,186
Dividends, interest and foreign taxes withheld 1,389,274
Other 240
------------
Total assets $105,426,210
------------
LIABILITIES:
Payables --
Investment securities purchased $ 5,290,138
Fund shares repurchased 22
Dividends --
Upon return for securities loaned 3,990,710
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 62,907
Accrued expenses 27,878
Other --
------------
Total liabilities $ 9,371,655
------------
NET ASSETS:
Paid-in capital $ 92,183,318
Accumulated net investment income (loss) 42,466
Accumulated undistributed net realized gain (loss) 3,020,839
Net unrealized gain (loss) on:
Investments 807,932
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $ 96,054,555
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 63,375,020
Shares outstanding 5,697,234
------------
Net asset value per share $ 11.12
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 32,679,535
Shares outstanding 2,937,735
------------
Net asset value per share $ 11.12
The accompanying notes are an integral part of these financial statements. 11
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
High Yield
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends $ 25,646
Interest (net of foreign taxes withheld of $2,145) 2,986,213
Income on securities loaned, net 2,414
Other --
-----------
Total investment income $ 3,014,273
EXPENSES:
Management fees $ 311,486
Transfer agent fees 293
Distribution fees (Class II) 34,430
Administrative fees 9,604
Custodian fees 9,660
Professional fees 26,244
Printing 8,162
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,996
-----------
Total expenses $ 401,875
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
-----------
Net expenses $ 401,875
-----------
Net investment income (loss) $ 2,612,398
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 3,020,965
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$ 3,020,965
-----------
Change in net unrealized gain or loss from:
Investments $(6,002,478)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$(6,002,478)
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $(2,981,513)
-----------
Net increase (decrease) in net assets resulting
from operations $ (369,115)
-----------
12 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer High Yield
VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 2,612,398 $ 4,106,902
Net realized gain (loss) on investments 3,020,965 1,124,588
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (6,002,478) 10,301,474
------------ ------------
Net increase (decrease) in net assets
resulting from operations $ (369,115) $ 15,532,964
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (1,887,530) $ (3,817,405)
Class II (724,685) (279,944)
Net realized gain
Class I (265,040) --
Class II (135,300) --
Tax return of capital
Class I -- --
Class II -- --
------------ ------------
Total distributions to shareowners $ (3,012,555) $ (4,097,349)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 40,007,704 $ 45,609,360
Reinvestment of distributions 2,994,517 4,059,022
Cost of shares repurchased (27,753,753) (18,254,761)
------------ ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 15,248,468 $ 31,413,621
------------ ------------
Net increase (decrease) in net assets $ 11,866,798 $ 42,849,236
------------ ------------
NET ASSETS:
Beginning of period $ 84,187,757 $ 41,338,521
------------ ------------
End of period $ 96,054,555 $ 84,187,757
------------ ------------
Accumulated/(distributions in excess of)
net investment income (loss) $ 42,466 $ 42,283
------------ ------------
The accompanying notes are an integral part of these financial statements. 13
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer High Yield VCT Portfolio (The Portfolio) is a portfolio of Pioneer
Variable Contracts Trust (the Trust) 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 nineteen 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)
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 High Yield Portfolio is to maximize total return
through a combination of income and capital appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting years. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolios are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Trading in foreign equity securities is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The value of such securities used in computing the net
asset value of the Portfolio's shares, based on the last sale price on the
principal exchange where they traded, are determined as of such times. As
of June 30, 2004 there were no securities fair valued.
Fixed income securities are valued at prices supplied by independent
pricing services, which consider such factors as Treasury spreads, yields,
maturities and ratings. Valuations may be supplemented by dealers and other
sources, as required. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the Board of Trustees.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable
14
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
diligence. Interest income, including interest on income bearing cash
accounts, is recorded on the accrual basis, net of unrecoverable foreign
taxes withheld at the applicable country rates. All discounts/premiums are
accreted/amortized for financial reporting purposes.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
The High Yield Portfolio invests in below investment grade (high yield)
debt securities and preferred stocks. These high yield securities may be
convertible into equity securities of the issuer. Debt securities rated
below investment grade are commonly referred to as "junk bonds" and are
considered speculative. These securities involve greater risk of loss, are
subject to greater price volatility, and are less liquid, especially during
years of economic uncertainty or change, than higher rated debt securities.
The Portfolio is not diversified, which means that it can invest a higher
percentage of its asset in any one issuer than a diversified fund. Being
non-diversified may magnify the fund's losses from adverse events affecting
a particular issuer.
In addition, the non-diversified Portfolios have concentrations in certain
asset types, which may subject the Portfolios to additional risks. Further
description of these risks is included in the Trust's Prospectus.
B. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
D. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
In addition to the requirements of the Internal Revenue Code, the Portfolio
may also be required to pay local taxes on the recognition of capital gains
and/or the repatriation of foreign currencies in certain countries. During
the six months ended June 30, 2004, the no such taxes were paid.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
15
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Pioneer
High-Yield
VCT Portfolio
2003
- ---------------------------------------------------------
Distributions paid from:
Ordinary Income $4,097,349
Long-Term capital gain --
----------
$4,097,349
Return of Capital --
----------
Total distributions $4,097,349
----------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 42,283
Undistributed long-term gain/
(Capital loss carryforward) 400,214
Unrealized appreciation (depreciation) 6,810,410
----------
Total $7,252,907
----------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively. Shareowners of each class share all expenses and
fees paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3). Income, common expenses and realized
and unrealized gains and losses are calculated at the Portfolio level and
allocated daily to each class of shares based on the respective percentage
of adjusted net assets at the beginning of the day. Distributions paid by
the Portfolio with respect to each class of shares are calculated in the
same manner, at the same time, and in the same amount, except that Class I
and Class II shares can bear different transfer agent and distribution
fees. Dividends and distributions to shareowners are recorded on the
ex-dividend date. Income, expenses (excluding 12b-1 fees) and gains and
losses are calculated at the Portfolio level and are allocated daily based
on the respective percentage of adjusted net assets at the beginning of the
day.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets.
The portion of the Portfolios' expenses attributable to Class II (or Class I
for shares in the case of High Yield Portfolios) will be reduced only to the
extent such expenses are reduced for Class I shares (or Class II shares).
Pioneer may subsequently recover reimbursed expenses (within three years of
being incurred) from certain Portfolios if the expense ratio of the Class I (or
Class II) shares would otherwise be less than the expense limitation of the
class. $7,270 was reimbursed by High Yield Portfolio under this
16
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
arrangement and is included in miscellaneous expense. Each class will reimburse
PIM no more than the amount by which that class' expenses were reduced.
In addition, under the management and administration agreement, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $56,197 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $255 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$6,455 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------
High Yield Portfolio $96,881,771 $3,691,838 $(2,883,906) $807,932
----------- ---------- ----------- --------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $47,769,685 and $31,032,220, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
High Yield Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 1,201,971 $ 13,743,588 2,515,726 $ 26,817,319
Reinvestment of distributions 187,908 2,134,532 357,809 3,779,086
Shares repurchased (1,508,494) (17,051,802) (1,491,103) (15,895,254)
------------------------------------------------------------
Net increase (decrease) (118,615) $ (1,173,682) 1,382,432 $ 14,701,151
============================================================
CLASS II:
Shares sold 2,297,852 $ 26,264,116 1,708,526 $ 18,792,041
Reinvestment of distributions 75,932 859,985 25,089 279,836
Shares repurchased (972,496) (10,701,951) (221,726) (2,359,726)
------------------------------------------------------------
Net increase 1,401,288 $ 16,422,150 1,511,889 $ 16,712,470
============================================================
17
[LOGO] PIONEER
Investments (R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16069-00-0804
[logo] Pioneer
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Papp Small and Mid Cap Growth VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Papp Small and Mid Cap Growth VCT
Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 5
Financial Statements 7
Notes to Financial Statements 11
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 97.1%
Depositary Receipts for International Stocks 2.9%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Health Care 28.8%
Industrials 21.7%
Consumer Discretionary 16.6%
Information Technology 15.5%
Financials 10.8%
Consumer Staples 6.6%
Five Largest Holdings
(As a percentage of equity holdings)
1. ResMed, Inc. 4.07%
2. Patterson Dental Co. 4.07
3. UCBH Holdings, Inc. 3.79
4. C.R. Bard, Inc. 3.56
5. Tiffany & Co. 3.53
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 3/15/04
Net Asset Value per Share $ 10.86 $ 10.00
Distributions per Share Short-Term Long-Term
(3/15/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Papp Small and Mid Cap Growth VCT Portfolio at net asset value, compared to
that of the Russell 2500 Growth Index. Portfolio returns are based on net asset
value and do not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Papp
Russell 2500 Small and Mid Cap
Growth Growth VCT Portfolio
------------ ---------------------
3/04 $10,000 $10,000
6/04 10,014 10,742
The Russell 2500 Growth Index measures the performance of the 2,500 smallest
companies with higher price-to-book ratios and higher forecasted earnings values
in the Russell 3000 Index, which represents approximately 17% of the total
market capitalization of the Russell 3000 Index. Index returns are calculated
monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in any
Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 8.60%
(3/15/04)
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
2
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
Domestic equity values experienced great volatility during the six-month period
ending June 30, 2004, as market sentiment changed rapidly because of a
succession of concerns about factors such as rising interest rates, higher oil
prices and violence in Iraq. Small- and mid-cap stocks tended to turn in better
performance during the period. In the following interview, Rose Papp, Fund
co-manager since inception, and Harry Papp, Partner, of L. Roy Papp &
Associates, which is responsible for the Fund's management, discuss the factors
that influenced the performance of Pioneer Papp Small and Mid Cap Growth VCT
Portfolio during the first six months of 2004.
Q: How did the Portfolio perform during the period?
A: Class II shares of Pioneer Papp Small and Mid Cap Growth Fund had a total
return of 8.60%, at net asset value, during abbreviated period from March
15, 2004 through June 30, 2004. During the period from March 31, 2004
through June 30, 2004, the Russell 2500 Growth Index, a benchmark for
small- and mid-sized companies, returned 0.13% and the Russell Midcap
Growth Index had a return of 5.94%.
Q: What were some of the factors that influenced performance?
A: This was a period during which small- and mid-cap stocks outperformed
large-company stocks. However, our emphasis on technology companies, hurt
performance when many technology companies gave back some of the gains they
achieved during 2003. Nevertheless, we believe we experienced a normal,
short-term correction. As a result, we stayed with our commitment to
technology because of the sector's long-term potential. While corporate
earnings trends were positive, concerns about rising interest rates, higher
oil prices and the situation in Iraq often took attention away from
favorable news about economic growth and corporate profitability.
Q: How would you describe the overall investment style of the Portfolio's
management team?
A: We take a long-term focus and emphasize quality companies with strong
balance sheets, consistent earnings over long periods, healthy earnings
growth and relatively little debt in relation to cash. Most of our holdings
are mid-cap companies, although we do invest in small-cap companies that
meet our quality criteria and have good, long-term operating histories,
ideally at least 15 to 20 years. By emphasizing quality companies, we are
able to invest in stocks that we can hold for long periods of time. Because
we focus on companies with consistent earnings, we also tend to avoid
cyclical companies, whose fortunes rise and fall with movements in the
business cycle, including financial services companies such as commercial
banks that are exposed to credit risk. We also avoid companies in
fundamentally unhealthy industries, such as the automobile and airline
areas, which are weakened either by intense competition, regulatory issues
or high debt and capital costs. We try to take advantage of three,
long-term themes that have major influences on the economy and stock
performance: the aging of the baby boomer generation, which has created new
demands for products and services, including those in the health care and
financial services industries; technological development, which spurs
innovation and increases incentives for corporations to invest in new
technologies to control their cost structures to become more productive and
competitive; and globalization, which creates opportunities in markets that
transcend national borders.
Q: What are some of the investments that particularly influenced performance
during the period?
A: Healthy earnings gains translated into strong performance by several
holdings, led by Expeditors International, a specialist in logistics and
shipping which has taken advantage of increased global trade. Health care,
the Portfolio's second largest area of emphasis after technology, was a
sector that had several top performers, including Stryker, a producer of
medical equipment, Patterson Dental, which manufactures dental supplies
including products used in cosmetic dentistry, and C.R. Bard, manufacturer
of medical supplies used in the vascular, urology and oncology markets.
Another health care holding that performed well was ResMed, which
specializes in respiratory system therapies, such as treatments for sleep
disorders.
The Portfolios's investments in consumer staples also helped, with Alberto
Culver performing particularly well as the result of the market's favorable
response to corporate governance reforms. Choice Point, which provides risk
management assessment services to the insurance industry, also had strong
performance as the insurance business improved.
Small- and mid-cap stocks, while offering the potential for higher returns, may
be subject to greater short-term price fluctuations than securities of larger
companies.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 (continued)
- --------------------------------------------------------------------------------
While many interest-rate sensitive financial companies performed poorly
during the period, one financial holding that was a standout was UCBH, a
small California bank with a strong presence in the fast-growing
Asian-American market.
The general correction in the technology sector affected the Fund
adversely, however. Among the technology holdings that detracted from
performance were semiconductor equipment companies KLA-Tencor and Novellus
Systems.
Other disappointments included Entercom, an owner and operator of radio
stations nationwide, which was held back by the slow recovery of
advertising revenues, and American Italian Pasta Company, which was hurt by
the popularity of low-carb diets.
Q: What is your investment outlook for small- and mid-cap stocks?
A: Performance improved substantially in the second quarter of 2004, and we
believe we are seeing a turnaround in market trends that should continue to
favor the established small- and mid-cap growth stocks that we emphasize.
Many of these companies had excellent earnings growth in early 2004, and we
believe those earnings trends should begin to translate into improved stock
price performance. While value stocks have outperformed growth stocks for
the past four years, we believe the conditions are present for growth
stocks again to do well. With the onset of rising interest rates, we expect
growth-oriented stocks to outperform for the next several years.
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.
4
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 93.1%
Capital Goods - 5.2%
Electrical Components & Equipment - 5.2%
642 Mettler-Toledo International, Inc.* $ 31,548
1,414 Molex, Inc. 38,574
----------
Total Capital Goods $ 70,122
----------
Commercial Services & Supplies - 12.0%
Data Processing Services - 2.4%
1,760 Forrester Research, Inc.* $ 32,824
----------
Diversified Commercial Services - 9.6%
322 Apollo Group, Inc.* $ 28,429
714 ChoicePoint, Inc.* 32,601
798 Cintas Corp. 38,041
1,076 DeVry, Inc.* 29,504
----------
$ 128,575
----------
Total Commercial Services &
Supplies $ 161,399
----------
Transportation - 3.0%
Air Freight & Couriers - 3.0%
820 Expeditors International of
Washington, Inc. $ 40,516
----------
Total Transportation $ 40,516
----------
Hotels, Restaurants & Leisure - 2.3%
Restaurants - 2.3%
912 Brinker International, Inc.* $ 31,117
----------
Total Hotels, Restaurants & Leisure $ 31,117
----------
Media - 7.9%
Advertising - 4.2%
858 Harte-Hanks, Inc. $ 20,944
700 WPP Group Plc (A.D.R.)* 35,861
----------
$ 56,805
----------
Broadcasting & Cable TV - 3.7%
500 Entercom Communications Corp.* $ 18,650
1,708 Saga Communications, Inc.* 31,171
----------
$ 49,821
----------
Total Media $ 106,626
----------
Retailing - 5.2%
General Merchandise Stores - 1.9%
830 Family Dollar Stores, Inc. $ 25,249
----------
Specialty Stores - 3.3%
1,200 Tiffany & Co. $ 44,220
----------
Total Retailing $ 69,469
----------
Food, Beverage & Tobacco - 0.5%
Packaged Foods & Meats - 0.5%
200 American Italian Pasta Co. $ 6,096
----------
Total Food, Beverage & Tobacco $ 6,096
----------
Shares Value
Household & Personal Products - 5.7%
Household Products - 2.4%
600 Clorox Co. $ 32,268
----------
Personal Products - 3.3%
880 Alberto-Culver Co. (Class B) $ 44,123
----------
Total Household & Personal
Products $ 76,391
----------
Health Care Equipment & Services - 26.8%
Health Care Distributors - 3.8%
666 Patterson Dental Co.* $ 50,942
----------
Health Care Equipment - 17.2%
786 C. R. Bard, Inc. $ 44,527
682 Dentsply International, Inc. 35,532
2,000 Molecular Devices Corp.* 35,560
1,000 ResMed, Inc.* 50,960
384 Stryker Corp. 21,120
1,006 Techne Corp.* 43,711
----------
$ 231,410
----------
Health Care Services - 5.8%
460 Express Scripts, Inc.* $ 36,446
1,300 IMS Health, Inc. 30,472
300 Medco Health Solutions, Inc.* 11,250
----------
$ 78,168
----------
Total Health Care Equipment &
Services $ 360,520
----------
Banks - 3.5%
Regional Banks - 3.5%
1,200 UCBH Holdings, Inc. $ 47,424
----------
Total Banks $ 47,424
----------
Diversified Financials - 6.6%
Asset Management & Custody Banks - 6.6%
1,150 Federated Investors, Inc. $ 34,891
586 Investors Financial Services Corp. 25,538
552 T. Rowe Price Associates, Inc. 27,821
----------
$ 88,250
----------
Total Diversified Financials $ 88,250
----------
Software & Services - 4.3%
Data Processing & Outsourced Services - 4.3%
1,022 Fiserv, Inc.* $ 39,746
700 SunGard Data Systems, Inc.* 18,200
----------
$ 57,946
----------
Total Software & Services $ 57,946
----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Technology Hardware & Equipment - 1.4%
Electronic Equipment & Instruments - 1.4%
400 Waters Corp.* $ 19,112
----------
Total Technology Hardware &
Equipment $ 19,112
----------
Semiconductors - 8.7%
Semiconductor Equipment - 4.9%
500 KLA-Tencor Corp.* $ 24,690
1,300 Novellus Systems, Inc.* 40,871
----------
$ 65,561
----------
Semiconductors - 3.8%
514 Linear Technology Corp. $ 20,288
998 Microchip Technology 31,477
----------
$ 51,765
----------
Total Semiconductors $ 117,326
----------
TOTAL COMMON STOCKS
(Cost $1,222,072) $1,252,314
----------
TOTAL INVESTMENT IN
SECURITIES - 93.1%
(Cost $1,222,072) $1,252,314
----------
OTHER ASSETS AND
LIABILITIES - 6.9% $ 92,770
----------
TOTAL NET ASSETS - 100.0% $1,345,084
==========
* Non-income producing security.
(A.D.R.) American Depository Receipt
6 The accompanying notes are an integral part of these financial statements.
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
3/15/04
to
6/30/04
Class II (a) (unaudited)
Net asset value, beginning of period $ 10.00
-------
Increase from investment operations:
Net investment income $ (0.01)
Net realized and unrealized gain on investments 0.87
-------
Net increase from investment operations $ 0.86
Net increase in net asset value $ 0.86
-------
Net asset value, end of period $ 10.86
=======
Total return* 8.60%
Ratio of net expenses to average net assets+ 1.00%**
Ratio of net investment loss to average net assets+ (0.50)%**
Portfolio turnover rate 0%**
Net assets, end of period (in thousands) $ 1,345
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 11.27%**
Net investment loss (10.77)%**
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.00%**
Net investment loss (0.50)%**
(a) Class II shares were fist publicly offered on March 15, 2004.
* 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 each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 7
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value
(Cost $1,222,072) $1,252,314
Cash 63,102
Futures collateral
Foreign currencies, at value --
Receivables --
Investment securities sold --
Fund shares sold 71,725
Variation margin
Dividends, interest and foreign taxes withheld 608
Forward foreign currency settlement contracts, net
Forward foreign currency portfolio hedge contracts, open-net
Due from Pioneer Investment Management, Inc. 7,769
Other 5
----------
Total assets $1,395,523
----------
LIABILITIES:
Payables --
Investment securities purchased $ 32,026
Fund shares repurchased --
Dividends --
Upon return of securities loaned --
Forward foreign currency settlement contracts, net --
Forward foreign currency portfolio hedge contracts, open-net
Variation margin
Due to bank
Due to affiliates 1,938
Accrued expenses 16,475
----------
Total liabilities $ 50,439
----------
NET ASSETS:
Paid-in capital $1,316,059
Accumulated net investment income (loss) (1,217)
Accumulated undistributed net realized gain (loss) --
Net unrealized gain (loss) on:
Investments 30,242
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies
----------
Total net assets $1,345,084
----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (Unlimited number of shares authorized)
Net assets $ --
Shares outstanding --
----------
Net asset value per share $ --
Class II:
No par value (Unlimited number of shares authorized)
Net assets $1,345,084
Shares outstanding 123,829
----------
Net asset value per share $ 10.86
8 The accompanying notes are an integral part of these financial statements.
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Papp
Small and
Mid Cap Growth
VCT Portfolio
For the period
from 3/15/04
(Commencement
of Operations)
to 6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $28) $ 1,133
Interest 89
Income on securities loaned, net --
Other --
---------
Total investment income $ 1,222
---------
EXPENSES:
Management fees $ 1,829
Transfer agent fees 504
Distribution fees (Class II) 610
Administrative fees 4,625
Custodian fees 7,072
Professional fees 9,068
Printing 3,743
Fees and expenses of nonaffiliated trustees 36
Miscellaneous --
---------
Total expenses $ 27,487
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (25,048)
Less fees paid indirectly --
---------
Net expenses $ 2,439
---------
Net investment income (loss) $ (1,217)
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ --
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
---------
$ --
---------
Change in net unrealized gain or loss from:
Investments $ 30,242
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
---------
$ 30,242
---------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ 30,242
=========
Net increase (decrease) in net assets resulting
from operations $ 29,025
=========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
Pioneer Papp
Small and
Mid Cap Growth
VCT Portfolio
For the period
from 3/15/04
(Commencement
of Operations)
to 6/30/04
FROM OPERATIONS:
Net investment loss $ (1,217)
Net realized gain (loss) on investments --
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 30,242
----------
Net increase (decrease) in net assets
resulting from operations $ 29,025
----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ --
Class II --
Net realized gain
Class I --
Class II --
Tax return of Capital
Class I --
Class II --
----------
Total distributions to shareowners $ --
----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $1,422,011
Reinvestment of distributions --
Cost of shares repurchased (105,952)
----------
Net increase in net assets
resulting from fund share transactions $1,316,059
----------
Net increase in net assets $1,345,084
NET ASSETS:
Beginning of period $ --
----------
End of period $1,345,084
----------
Accumulated net investment income (loss), end of period $ (1,217)
==========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Papp Small and Mid Cap Growth VCT Portfolio (the Portfolio) a
Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware
statutory trust registered under the Investment Company Act of 1940 as an
open-end management investment company. The Trust consists of nineteen 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)
The Papp Small and Mid 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 Papp Small and Mid Cap Growth Portfolio is long
term capital growth.
The financial statements and financial highlights of all other portfolios are
presented in separate books.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolio are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. 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. As of June 30, 2004, there were no
securities fair valued.
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. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total
11
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
return. Upon entering into futures contract, the Portfolio is required to
deposit with a broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value
of the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees,
elements of market risk which may exceed the amounts recognized by the
Portfolio.
Changes in the value of the contracts may not directly correlate to the
changes in the value of the underlying securities. These risks may decrease
the effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, Papp Small and Mid Cap
Growth Portfolio had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with income tax
rules. Therefore, the source of each Portfolio's distributions may be shown
in the accompanying financial statements as either from, or in excess of,
net investment income or net realized gain on investment transactions, or
from paid-in capital, depending on the type of book/tax differences that
may exist.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Portfolio level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day. Distributions paid by the Portfolio with
respect to each class of shares are calculated in the same manner, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees. Income, expenses
(excluding 12b-1 fees) and gains and losses are calculated at the Portfolio
level and are allocated daily based on the respective percentage of
adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
12
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.75% of the Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $1,542 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $128 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$268 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
------------- -------------- -------------- ---------------
Papp Small and Mid Cap Growth Portfolio $1,222,072 $59,184 $ (28,942) $30,242
============= ============== ============== ===============
- --------------------------------------------------------------------------------------------------------------
13
Pioneer Papp Small and Mid Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the period ended
June 30, 2004, were $1,222,072 and $0, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------
Papp Small & Mid Cap Growth Portfolio '04 Shares '04 Amount
- --------------------------------------------------------------------------------
CLASS II:
Shares sold 134,291 $1,422,011
Reinvestment of distributions -- --
Shares repurchased (10,462) (105,952)
-------------------------
Net increase 123,829 $1,316,059
=========================
- --------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our web site www.pioneerfunds.com.
16083-00-0804
[PIONEER LOGO]
PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Papp America-Pacific Rim VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Papp America-Pacific Rim VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 5
Notes to Financial Statements 9
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[REPRESENTATION OF PIE CHART]
U.S. Common Stocks 94.0%
Depositary Receipts for International Stocks 6.0%
Sector Distribution
(As a percentage of equity holdings)
[REPRESENTATION OF PIE CHART]
Information Technology 30.5%
Health Care 19.9%
Industrials 14.3%
Consumer Staples 12.8%
Financials 11.8%
Consumer Discretionary 7.6%
Energy 3.1%
Five Largest Holdings
(As a percentage of equity holdings)
- ----------------------------------------
1. Wm. Wrigley Jr. Co. 4.80%
- ----------------------------------------
2. Colgate-Palmolive Co. 4.79
- ----------------------------------------
3. Expeditors International of
Washington, Inc. 4.66
- ----------------------------------------
4. Stryker Corp. 4.62
- ----------------------------------------
5. Johnson & Johnson 4.61
- ----------------------------------------
Holdings will vary for other periods.
This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 3/15/04
Net Asset Value per Share $ 10.23 $ 10.00
Distributions per Share Short-Term Long-Term
(3/15/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Papp America-Pacific Rim VCT Portfolio at net asset value, compared to that of
the Russell 1000 Growth Index. Portfolio returns are based on net asset value
and do not reflect any applicable insurance fees or surrender charges.
[REPRESENTATION OF LINE CHART]
Pioneer Papp
Russell America-Pacific Rim VCT
1000 Growth Portfolio
3/31/04 10000 10000
6/04 10194 10109
The Russell 1000 Growth Index contains those Russell 1000 securities with a
greater-than-average growth orientation. Index returns are calculated monthly,
assume reinvestment of dividends and, unlike Portfolio returns, do not reflect
any fees, expenses or sales charges. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Fund 2.30%
(3/15/04)
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
2
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
During the period from the Portfolio's inception on March 15, 2004 through June
30, 2004, investors were caught in a quandary balancing their concerns about
higher interest rates, rising oil prices and the turmoil in Iraq on the one
hand and positive earnings growth on the other. In the following interview,
Rosellen Papp, co-manager since inception, discusses the Portfolio's unique
global strategy and the team's research efforts to capture growth in today's
rather conflicted markets.
Q: Was the market and economic environment favorable for the Portfolio's
investment strategy?
A: Given the myriad factors and uncertainty influencing the financial markets
over the past six months, investors were presented with a complicated
investment environment no matter what their investment strategy. On June 30,
the Portfolio was composed of 28 large capitalization U.S. growth companies
that derive at least 15% of their earnings or revenues from the Pacific Rim.
We have such strong convictions about these high-caliber holdings that we buy
companies with the intention of holding them for the long term. This
approach, in turn, keeps the Portfolio's turnover rate well below the
industry average and minimizes the tax consequences for our shareowners.
The stock market swings in unpredictable cycles, favoring styles of investing
at different times. Your Portfolio follows a growth approach, which
identifies companies with earnings that are growing at a faster rate than the
market, as opposed to a value style of investing, which uncovers companies
with improving prospects but not necessarily high growth. Both styles are
concerned with valuation, but a value strategy places more emphasis on the
relative price of a stock while a growth strategy prizes higher growth and
consistent growth of earnings. Historically, growth and value styles have
tended to exert influence over the markets at different times. For the four
years from 1996 through 1999, growth stocks were in favor, outperforming
value stocks. The following four years from 2000 through 2003, value stocks
were in favor. We can't forecast precisely when the pendulum will swing back
again, but we think growth stocks are due once again for their day in the
sun.
Q: How did the Portfolio perform during the semiannual period?
A: From its inception on March 15, 2004 through June 30, 2004, the Portfolio
made modest gains. The Portfolio's Class II shares returned 2.3% at net asset
value. In comparison, the Standard & Poor's 500 Index increased 1.72% and the
Russell 1000 Growth Index climbed 1.94% from March 30, 2004, to June 30,
2004.
In response to our main investment themes, the Portfolio's assets are
concentrated in three broad business segments -- financial services, health
care, and technology. The Portfolio's underperformance relative to the
benchmarks is due to its emphasis on two of these major sectors of the
economy -- financial services and technology, which lagged the overall
market. The potential for higher interest rates, which overshadowed the stock
market for much of the reporting period, depressed the near-term outlook for
the financial services sector. After their strong appreciation in 2003,
technology stocks retreated during the first half of 2004. We believe many of
the technology and financial services holdings in the Portfolio were unfairly
tarnished in the rush to judgment and believe they will recover when
investors become more discerning. Incidentally, the third main area of
investment concentration for the Portfolio is the health care sector, which
did relatively well during the period under review.
It's important to note that the limited number of holdings in the Portfolio
makes it more susceptible to swings in the market. We minimize that risk by
investing in a diverse group of large, well established companies with a
history of profitability and financial strength.
Q: What investments hurt performance during the six months?
A: Given the correction in the technology sector, stock prices of Intel and
Applied Materials Technology fell in response to investors' perception that
the tech rally had gotten ahead of itself, and companies had become
overvalued. We remain confident about their prospects and expect their stock
prices to recover. Telecommunications equipment provider Nokia proved to be a
disappointment, however. Having misjudged the appeal of the clamshell
designed phone, Nokia has been losing market share to competitors, which are
producing more sophisticated, less expensive products. We are monitoring the
situation closely to see if they can remain competitive.
After months of speculation the Federal Reserve Board raised its key
short-term interest rate for the first time in more than four years at its
June meeting. Of course, the action was preceded by months of speculation,
which depressed stock prices of financial services companies. We think the
Portfolio's financial holdings were unjustly targeted, especially State
Street, which provides custodial services to mutual fund managers worldwide.
Since the Portfolio invests in companies that derive at least 15% of their
earnings from the Pacific Rim, we decided to sell Clorox, which is
de-emphasizing its foreign operations. Proceeds from the sale were invested
in Wrigley's, which is expanding its investment in Asia and derives 60% of
its business from overseas. We also sold the entire position in Royal Dutch
Petroleum Company when it became clear that it had been overstating its oil
reserves for some time -- something we found unethical and unacceptable.
Q: What investments helped performance during the six months?
A: Health care stocks, another area of considerable investment for your
Portfolio, represented one of the better performing sectors for the six
months, relatively speaking. Stryker, a developer and manufacturer of
orthopedic and surgical devices, was a notable contributor to performance and
is benefiting from effective pricing in its markets.
Given the market's anticipation of potential stock buy-back program,
Microsoft managed to avoid the fate of most technology companies during the
six months and performed very well. Like many well-managed technology
companies, Microsoft is carrying huge amounts of cash on its balance sheet.
The company, which was the Portfolio's largest holding on June 30, is
expected to announce in July whether they will implement the buyback, which
is already having a very favorable impact on its stock price.
Another strong performer, Expeditors International of Washington, is an
international airfreight forwarding company that is profiting from increased
trade volume between Asia and the United States. The company posted very
strong revenue growth in the first quarter of 2004.
Q: What is your outlook for the balance of the fiscal year?
A: We are upbeat about prospects for the companies in your Portfolio for the
balance of fiscal 2004 and beyond. We think higher-quality, growth-oriented
companies, such as those included in your portfolio, that exhibit good
earnings performance should be rewarded. In 2003, investors favored smaller
companies and lower priced, poorer-quality stocks. Their performance gains
were considerable, doubling in value in many cases. Many of these stocks have
become overvalued in our estimation, and it's hard to imagine that they will
repeat last year's performance for a second year in a row. We think that
high-quality growth companies, such as those in your Portfolio, are well
positioned to meet growing global demand for their premium, brand-name
products.
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.
International investing may involve special risks, including differences in
accounting and currency, as well as economic and political instability.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 96.5%
Energy - 3.0%
Integrated Oil & Gas - 3.0%
120 ChevronTexaco Corp. $ 11,293
--------
Total Energy $ 11,293
--------
Capital Goods - 9.3%
Electrical Components & Equipment - 9.3%
263 American Power Conversion Corp. $ 5,168
498 General Electric Co. 16,135
508 Molex, Inc. 13,858
--------
$ 35,161
--------
Total Capital Goods $ 35,161
--------
Transportation - 4.5%
Air Freight & Couriers - 4.5%
342 Expeditors International of Washington, Inc. $ 16,898
--------
Total Transportation $ 16,898
--------
Media - 3.7%
Advertising - 3.7%
269 WPP Group Plc (A.D.R.) * $ 13,781
--------
Total Media $ 13,781
--------
Retailing - 3.6%
Specialty Stores - 3.6%
370 Tiffany & Co. $ 13,635
--------
Total Retailing $ 13,635
--------
Food & Drug Retailing - 4.6%
Food Retail - 4.6%
276 Wm. Wrigley Jr. Co. $ 17,402
--------
Total Food & Drug Retailing $ 17,402
--------
Food, Beverage & Tobacco - 3.1%
Soft Drinks - 3.1%
230 The Coca-Cola Co. $ 11,610
--------
Total, Food Beverage & Tobacco $ 11,610
--------
Household & Personal Products - 4.6%
Household Products - 4.6%
297 Colgate-Palmolive Co. $ 17,360
--------
Total Household & Personal Products $ 17,360
--------
Health Care Equipment & Services - 16.0%
Health Care Distributors - 4.5%
300 Johnson & Johnson $ 16,710
--------
Health Care Equipment - 8.0%
276 Medtronic, Inc. * $ 13,447
305 Stryker Corp. 16,775
--------
$ 30,222
--------
Health Care Services - 3.5%
560 IMS Health, Inc. $ 13,126
--------
Total Health Care Equipment &
Services $ 60,058
--------
Pharmaceuticals & Biotechnology - 3.3%
Pharmaceuticals - 3.3%
357 Pfizer, Inc. $ 12,238
--------
Total Pharmaceuticals &
Biotechnology $ 12,238
--------
Shares Value
Diversified Financials - 7.1%
Asset Management & Custody Banks - 7.1%
270 State Street Corp. $ 13,241
270 T. Rowe Price Associates, Inc. 13,608
--------
$ 26,849
--------
Total Diversified Financials $ 26,849
--------
Insurance - 4.2%
Multi-Line Insurance - 4.2%
223 American International Group, Inc. $ 15,895
--------
Total Insurance $ 15,895
--------
Software & Services - 3.1%
Application Software - 3.1%
409 Microsoft Corp. $ 11,681
--------
Total Software & Services $ 11,681
--------
Technology Hardware & Equipment - 16.4%
Communications Equipment - 5.0%
467 Cisco Systems, Inc. * $ 11,068
547 Nokia Corp. (A.D.R.) 7,953
--------
$ 19,021
--------
Computer Hardware - 6.0%
442 Hewlett-Packard Co. $ 9,326
151 IBM Corp. * 13,312
--------
$ 22,638
--------
Computer Storage & Peripherals - 2.7%
878 EMC Corp. * $ 10,009
--------
Electronic Manufacturing Services - 2.7%
329 National Instruments Corp. $ 10,084
--------
Total Technology Hardware &
Equipment $ 61,752
--------
Semiconductors - 9.9%
Semiconductor Equipment - 3.5%
662 Applied Materials, Inc. * $ 12,988
--------
Semiconductors - 6.4%
486 Intel Corp. $ 13,414
273 Linear Technology Corp. 10,775
--------
$ 24,189
--------
Total Semiconductors $ 37,177
--------
TOTAL COMMON STOCKS
(Cost $357,664) $362,790
--------
TOTAL INVESTMENT
IN SECURITIES - 96.5%
(Cost $357,664) $362,790
--------
OTHER ASSETS AND
LIABILITIES - 3.5% $ 13,268
--------
TOTAL NET ASSETS - 100.0% $376,058
========
* Non-income producing security.
(A.D.R.) American Depositary Receipt
4 The accompanying notes are an integral part of these financial statements.
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
3/15/04
to
6/30/04
Class II (a) (unaudited)
Net asset value, beginning of period $ 10.00
-------
Increase from investment operations:
Net investment income $ 0.01
Net realized and unrealized gain on investments 0.22
-------
Net increase from investment operations $ 0.23
-------
Net increase in net asset value $ 0.23
-------
Net asset value, end of period $ 10.23
=======
Total return* 2.30%
Ratio of net expenses to average net assets + 0.95%**
Ratio of net investment income to average net assets + 0.42%**
Portfolio turnover rate 12%**
Net assets, end of period (in thousands) $ 376
Ratios with no waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 51.41%* *
Net investment loss (50.04)%**
(a) Class II shares were first publicly offered on March 15, 2004
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 5
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Papp
America-
Pacific Rim
VCT Portfolio
ASSETS:
Investment in securities, at value (cost $357,664) $ 362,790
Cash 12,343
Receivables --
Fund shares sold 10,745
Dividends, interest and foreign taxes withheld 316
Due from Pioneer Investment Management, Inc. 8,489
Other 16
---------
Total assets $ 394,699
---------
LIABILITIES:
Payables --
Due to affiliates $ 1,732
Accrued expenses 16,909
---------
Total liabilities $ 18,641
---------
NET ASSETS:
Paid-in capital $ 370,561
Accumulated net investment income 212
Accumulated undistributed net realized gain 159
Net unrealized gain on investments 5,126
---------
Total net assets $ 376,058
---------
NET ASSET VALUE PER SHARE:
Class II:
No Par Value (Unlimited number of shares authorized)
Net assets $ 376,058
Shares outstanding 36,767
---------
Net asset value per share $ 10.23
---------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Papp
America-
Pacific Rim
VCT Portfolio
For the period
from 3/15/04
(Commencement
of Operations)
to 6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $29) $ 647
Interest 40
Income on securities loaned, net --
Other --
---------
Total investment income $ 687
---------
EXPENSES:
Management fees $ 375
Transfer agent fees (Class II) 504
Distribution fees (Class II) 125
Administrative fees 4,625
Custodian fees 7,216
Professional fees 9,090
Printing 3,743
Fees and expenses of nonaffiliated trustees 36
Miscellaneous --
---------
Total expenses $ 25,714
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (25,239)
---------
Net expenses $ 475
---------
Net investment income (loss) $ 212
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 159
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
---------
$ 159
---------
Change in net unrealized gain or loss from:
Investments $ 5,126
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies
---------
$ 5,126
---------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ 5,285
---------
Net increase (decrease) in net assets resulting
from operations $ 5,497
=========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Papp
America-
Pacific Rim
VCT Portfolio
For the period
from 3/15/04
(Commencement
of Operations)
to 6/30/04
FROM OPERATIONS:
Net investment income $ 212
Net realized gain (loss) on investments 159
Change in net unrealized gain or loss on investments,
futures contracts and foreign currency transactions 5,126
--------
Net increase (decrease) in net assets
resulting from operations $ 5,497
--------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I $ --
Class II --
Net realized gain
Class I --
Class II --
Tax return of Capital
Class I --
Class II --
--------
Total distributions to shareholders $ --
--------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $371,268
Reinvestment of distributions --
Cost of shares repurchased (707)
--------
Net increase in net assets resulting
from fund share transactions $370,561
--------
Net increase in net assets $376,058
--------
NET ASSETS:
Beginning of period $ --
--------
End of period $376,058
========
Accumulated net investment income (loss),
end of period $ 212
========
8 The accompanying notes are an integral part of these financial statements.
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Papp America-Pacific Rim VCT Portfolio (the Portfolio) a Portfolio
of Pioneer Variable Contracts Trust (the Trust) which is a Delaware statutory
trust registered under the Investment Company Act of 1940 as an open-end
management investment company. The Trust consists of nineteen 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)
The Papp America-Pacific Rim 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 Papp America-Pacific Rim Portfolio is to seek
capital appreciation.
The financial statements and financial highlights of all other portfolios are
presented in separate books.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolio are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. 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. As of June 30, 2004, there were no
securities fair valued.
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. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
9
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. Upon entering into a futures contract, the Portfolio
is required to deposit with a broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the associated futures
exchange. Subsequent payments for futures contracts ("variation margin")
are paid or received by the Portfolio, depending on the daily fluctuation
in the value of the contracts, and are recorded by the Portfolio as
unrealized gains or losses. When the contract is closed, the Portfolio
realize a gain or loss equal to the difference between the opening and
closing value of the contract. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio.
Changes in the value of the contracts may not directly correlate to the
changes in the value of the underlying securities. These risks may decrease
the effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, Papp America-Pacific Rim
Portfolio had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Portfolio level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day. Distributions paid by the Portfolio with
respect to each class of shares are calculated in the same manner, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees.
10
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Income, expenses (excluding 12b-1 fees) and gains and losses are calculated
at the Portfolio level and are allocated daily based on the respective
percentage of adjusted net assets at the beginning of the day. Dividends
and distributions to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.75% of the Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $1,542 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $129 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$61 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Portfolio Tax Cost Appreciation Depreciation (Depreciation)
- ------------------------------------------------------------------------------------------------------
Papp America-Pacific Rim Portfolio $357,664 $9,085 $ (3,959) $5,126
- ------------------------------------------------------------------------------------------------------
11
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the period ended
June 30, 2004, were $364,161 and $6,657, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------
Papp America-Pacific Rim Portfolio '04 Shares '04 Amount
- --------------------------------------------------------------------------------
CLASS II:
Shares sold 36,837 $371,268
Reinvestment of distributions -- --
Shares repurchased (70) (707)
------ --------
Net increase 36,767 $370,561
====== ========
12
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
13
[PIONEER LOGO]
PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16084-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Europe VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
Pioneer Europe VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 7
Notes to Financial Statements 11
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO UPDATE 6/30/04
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Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
Financials 29.3%
Health Care 11.0%
Energy 10.7%
Telecommunication Services 10.1%
Consumer Staples 8.5%
Industrials 8.4%
Materials 7.4%
Consumer Discretionary 6.7%
Information Technology 4.9%
Utilities 3.0%
Geographical Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
United Kingdom 29.6%
France 23.6%
Switzerland 13.6%
Germany 9.4%
Italy 6.1%
Netherlands 5.8%
Spain 4.2%
Ireland 2.8%
Belgium 2.0%
Sweden 1.9%
Finland 1.0%
Five Largest Holdings
(As a percentage of equity holdings)
1. BP Amoco Plc 4.53%
2. Vodafone Group Plc 4.08
3. Total SA 3.28
4. Nestle SA (Registered Shares) 3.09
5. Eni S.p.A. 2.84
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
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PERFORMANCE UPDATE 6/30/04
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Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $8.94 $8.89
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.0583 $ - $ -
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Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Europe VCT Portfolio at net asset value, compared to that of the Morgan Stanley
Capital International (MSCI) Europe Index. Portfolio returns are based on net
asset value and do not reflect any applicable insurance fees or surrender
charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.]
Date Pioneer Europe MSCI Europe
VCT Portfolio Index
10/31/1998 $10,000 $10,000
$10,596 $10,992
$13,571 $12,741
12/31/2000 $11,030 $11,671
$8,445 $9,349
12/31/2002 $6,835 $7,629
$9,085 $10,570
6/30/2004 $9,196 $10,891
The MSCI Europe Index is an unmanaged, capitalization-weighted index of the 15
European country indices included in the MSCI EAFE (Europe, Australasia, Far
East) Index. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Portfolio returns, do not reflect any fees, expenses or
sales charges. You cannot invest directly in the Index.
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Average Annual Total Returns
(As of June 30, 2004)
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Net Asset Value
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Life-of-Class -1.47%
(10/30/98)
5 Years -2.44%
1 Year 23.26%
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
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European stocks posted modest gains during the six months ended June 30, 2004.
During this time, we saw signs of renewed interest in and a rotation back toward
higher-quality investments. However, the pace of economic recovery is being
tempered by higher oil prices and expectations of rising interest rates. In the
following interview, Stan Pearson, a member of the Portfolio's management team,
discusses the overarching factors facing investors during the reporting period
and his efforts to position the Portfolio for positive growth.
Q: Was the economic environment favorable for the Portfolio's investment
strategy?
A: The economic environment was generally favorable for European stocks. Stock
price valuations are fair and supported by strong dividend yields. Growth
across Europe is more moderate than outside the region, and this fact is
discounted in stock prices. The strength of the euro eased a bit during the
six months, but it continues to be a risk for European exporters.
For the six months ended June 30, 2004, the Portfolio's Class II shares rose
1.22% at net asset value. In comparison, the Morgan Stanley Capital
International (MSCI) Europe Index posted a return of 3.04% for the same
period.
Q: What investments hurt performance during the six months?
A: Several factors contributed to the Portfolio's underperformance. First,
mobile phone and network manufacturer Nokia (Finland) surprised the market
with two profit warnings and disappointing results. Secondly, unlike the
benchmark, the Portfolio didn't own pharmaceutical Aventis, which rose
sharply after a takeover bid from Sanofi. The Portfolio did hold Sanofi
(France), but investors penalized the company for its decision to bid for
Aventis. We think this situation is temporary and will hold on to Sanofi,
because we believe the merger will create appreciation potential.
Elsewhere in the pharmaceutical sector, investments in GlaxoSmithKline
(United Kingdom) underperformed when the company released disappointing first
quarter results. The company was recovering in the final months of the
reporting period. Finally, while our decision to overweight investments in
the capital goods sector proved successful, our stock selection was a bit
disappointing. Swedish engineering companies Sandvik, Atlas Copco and SKF had
absolute positive performance, but underperformed other companies in the
capital goods sector that rallied more strongly on optimism about
restructuring programs.
Q: What investments helped performance during the six months?
A: One of the more positive contributors to performance was Zurich Financial
(Switzerland), which we purchased during the reporting period. This company,
which is benefiting from an improving outlook for the insurance sector, had
an attractive valuation at the time of purchase and outperformed both the
sector and the broader equity market. In the energy sector, we sold
investments in Royal Dutch Petroleum (Holland) and Shell Transport & Trading
(United Kingdom) and reinvested the proceeds in BP Amoco (United Kingdom) - a
decision that proved successful. BP is benefiting from its substantial
production growth thanks to past investments. Furthermore, the company is
carrying a lot of cash, which it may use to increase returns to its
shareholders through dividends or share buy-back programs.
Food giant Nestle (Switzerland) appreciated strongly as a result of market
share growth and rising profit margins. European small-sized companies
outperformed during the six months. An overweight position in the capital
goods sector made a positive contribution. EADS (France), the maker of the
Airbus, was particularly strong in the second quarter. The company is
benefiting from signs of recovery in the commercial aerospace sector earlier
than expected. In the utilities sector, E.ON (Germany) benefited from higher
electricity prices and strong cash flow. We are optimistic that the company
may return some of its extra cash to investors through a special dividend or
share buy backs. In the pharmaceuticals sector, Schering (Germany) did well
in the second quarter, thanks to investors' positive reaction to its plans to
increase its profit margins and for a new cancer product it is developing
with Novartis (Switzerland).
Q: Given current market conditions in European markets, how are you positioning
the Portfolio?
A: We continue to emphasize investments in the capital goods sector, because we
think it will benefit from increasing levels of capital expenditure, as
global demand increases and companies become more confident. We're limiting
positions in the technology hardware and software sector, because we believe
stock prices of many of these companies are inflated and already reflecting
future growth. In the telecommunications sector, we've uncovered interesting
companies but prefer operators with a high level of exposure to the European
mobile market, which continues to generate attractive growth.
Q: What is your outlook?
A: We think European equities are poised to continue to perform well versus
other asset classes. The global economic recovery is well underway, led by
the strong U.S. economy. The European economy continues to demonstrate a less
robust pace of economic growth, but stock price valuations in Europe's equity
markets remain attractive and fully reflect the moderate pace of growth in
the region.
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.
International investing may involve special risks, including differences in
accounting and currency, as well as economic and political instability.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
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Shares Value
PREFERRED STOCK - 1.2% Automobiles & Components - 1.2%
Automobile Manufacturers - 1.2%
250 Porsche AG $ 168,171
-----------
Total Automobiles & Components $ 168,171
-----------
TOTAL PREFERRED STOCK
(Cost $83,104) $ 168,171
-----------
COMMON STOCKS - 96.7%
Energy - 10.4%
Integrated Oil & Gas - 7.2%
72,851 BP Amoco Plc $ 646,674
20,351 Eni S.p.A. 405,664
-----------
$ 1,052,338
-----------
Oil & Gas Refining Marketing &
Transportation - 3.2%
2,446 Total SA $ 468,764
-----------
Total Energy $ 1,521,102
-----------
Materials - 7.1%
Commodity Chemicals - 1.2%
3,611 BASF India, Ltd. $ 194,454
-----------
Construction Materials - 4.4%
9,648 CRH Plc $ 204,756
1,610 Italcementi S.p.A.* 21,639
3,384 Lafarge SA 303,469
1,070 Vinci SA 108,236
-----------
$ 638,100
-----------
Diversified Metals & Mining - 1.5%
5,596 Rio Tinto Plc $ 135,150
2,544 Sandvik AB 87,158
-----------
$ 222,308
-----------
Total Materials $ 1,054,862
-----------
Capital Goods - 6.9%
Aerospace & Defense - 1.7%
37,685 Bae Systems $ 150,674
3,195 European Aeronautic Defence 89,543
-----------
$ 240,217
-----------
Construction & Engineering - 2.6%
11,469 ACS, Actividades de Construccion y
Servicios, SA $ 193,903
3,804 Compagnie de Saint Gobain 190,868
-----------
$ 384,771
-----------
Electrical Components & Equipment - 1.4%
3,012 Schneider Electric SA $ 206,592
-----------
Shares Value
Industrial Machinery - 1.2%
1,976 Atlas Copco AB $ 73,630
2,843 AB SKF 104,848
-----------
$ 178,478
-----------
Total Capital Goods $ 1,010,058
-----------
Commercial Services & Supplies - 1.3%
Diversified Commercial Services - 1.3%
8,308 TNT Post Group NV $ 190,718
-----------
Total Commercial Services &
Supplies $ 190,718
-----------
Automobiles & Components - 1.0%
Auto Parts & Equipment - 1.0%
2,594 Compagnie Generale des
Etablissements Michelin $ 144,247
-----------
Total Automobiles & Components $ 144,247
-----------
Hotels, Restaurants & Leisure - 1.6%
Restaurants - 1.6%
17,111 Compass Group Plc $ 104,877
8,438 Gus Plc 130,372
-----------
$ 235,249
-----------
Total Hotels, Restaurants & Leisure $ 235,249
-----------
Media - 2.8%
Advertising - 0.6%
2,942 Publicis SA $ 87,652
-----------
Publishing - 2.2%
7,545 Elsevier NV $ 106,401
7,505 Vivendi Universal* 209,672
-----------
$ 316,073
-----------
Total Media $ 403,725
-----------
Food & Drug Retailing - 5.9%
Drug Retail - 0.6%
6,888 Boots Co., Plc* $ 86,141
-----------
Food Retail - 5.3%
13,588 Koninklijke Ahold NV* $ 107,363
1,649 Nestle SA (Registered Shares) 441,222
45,427 Tesco Plc 220,619
-----------
$ 769,204
-----------
Total Food & Drug Retailing $ 855,345
-----------
Food, Beverage & Tobacco - 2.5%
Tobacco - 2.5%
2,313 Altadis SA* $ 71,759
18,370 British American Tobacco Plc 285,962
-----------
$ 357,721
-----------
Total Food, Beverage & Tobacco $ 357,721
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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- --------------------------------------------------------------------------------
Shares Value
Health Care Equipment & Services - 0.9%
Health Care Distributors - 0.9%
2,279 Celesio AG $ 136,601
-----------
Total Health Care Equipment &
Services $ 136,601
-----------
Pharmaceuticals & Biotechnology - 9.9%
Pharmaceuticals - 9.9%
7,494 AstraZeneca Plc $ 337,721
13,196 GlaxoSmithKline Plc 269,229
3,103 Novartis 137,485
3,123 Roche Holdings AG 310,402
4,338 Sanofi-Synthelabo SA 275,980
1,796 Schering AG 106,369
-----------
$ 1,437,186
-----------
Total Pharmaceuticals &
Biotechnology $ 1,437,186
-----------
Banks - 14.6%
Diversified Banks - 14.6%
8,696 Allied Irish Banks Plc $ 134,767
10,567 Banco Bilbao Vizcaya Argentaria, SA 141,941
32,459 Barclays Plc 278,005
5,468 BNP Paribas SA 338,177
6,739 Credit Agricole SA 164,819
7,061 CS Group* 252,092
4,600 Depfa Bank Plc 67,090
4,223 Dexia 70,228
23,715 HSBC Holding Plc 355,583
11,268 Royal Bank of Scotland Group Plc 326,779
-----------
$ 2,129,481
-----------
Total Banks $ 2,129,481
-----------
Diversified Financials - 8.6%
Asset Management & Custody Banks - 0.5%
2,630 Man Group Plc* $ 68,365
-----------
Diversified Financial Services - 8.1%
3,406 Deutsche Boerse AG $ 173,841
6,390 ING Groep NV 152,033
1,735 Lagardere S.C.A. 109,014
3,616 Societe Generale 309,152
1,489 Swiss Re 97,134
4,893 UBS AG 346,529
-----------
$ 1,187,703
-----------
Total Diversified Financials $ 1,256,068
-----------
Shares Value
Insurance - 5.5%
Life & Health Insurance - 0.8%
4,009 Assicurazioni Generali $ 108,714
-----------
Multi-Line Insurance - 4.0%
10,463 AXA SA $ 232,122
2,217 Zurich Financial Services* 351,799
-----------
$ 583,921
-----------
Reinsurance - 0.7%
3,097 Hannover Rueckversicheru $ 104,114
-----------
Total Insurance $ 796,749
-----------
Software & Services - 0.6%
IT Consulting & Other Services - 0.6%
1,364 Atos Origin* $ 88,246
-----------
Total Software & Services $ 88,246
-----------
Technology Hardware & Equipment - 4.2%
Semiconductors - 1.3%
6,783 Philips Electronics NV $ 184,096
-----------
Communications Equipment - 1.0%
10,079 Nokia Oyj $ 146,254
-----------
Computer Hardware - 0.8%
38,933 Dixons Group Plc $ 116,952
-----------
Electronic Equipment & Instruments - 1.1%
2,201 Siemens AG $ 159,583
-----------
Total Technology Hardware &
Equipment $ 606,885
-----------
Telecommunication Services - 9.9%
Alternate Carriers - 0.9%
4,989 France Telecom SA $ 130,883
-----------
Integrated Telecommunication Services - 5.0%
7,122 Belgacom SA* $ 217,656
25,747 Telecom Italia Mobile S.p.A. 146,594
59,202 Telecom Italia S.p.A. 184,922
12,569 Telefonica SA 186,877
-----------
$ 736,049
-----------
Wireless Telecommunication Services - 4.0%
263,946 Vodafone Group Plc $ 582,271
-----------
Total Telecommunication Services $ 1,449,203
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
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Shares Value
Utilities - 3.0%
Electric Utilities - 3.0%
4,077 E.On AG $ 295,674
17,458 National Grid Transco Plc 136,027
-----------
$ 431,701
-----------
Total Utilities $ 431,701
-----------
TOTAL COMMON STOCKS
(Cost $11,851,998) $14,105,147
-----------
TOTAL INVESTMENT IN
SECURITIES - 97.9%
(Cost $11,935,102) (a) $14,273,318
-----------
OTHER ASSETS AND
LIABILITIES - 2.1% $ 311,386
-----------
TOTAL NET ASSETS - 100.0% $14,584,704
===========
* Non-income producing security.
(a) Distributions of investments by country of issue, as a percentage of
total equity holdings (excluding temporary cash investments) is as
follows:
United Kingdom 29.6%
France 23.6
Switzerland 13.6
Germany 9.4
Italy 6.1
Netherlands 5.8
Spain 4.2
Ireland 2.8
Belgium 2.0
Sweden 1.9
Finland 1.0
-----
100.0%
=====
6 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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FINANCIAL HIGHLIGHTS
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Six Months
Ended 1/2/01
6/30/04 Year Ended Year Ended to
Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01 (a)
Net asset value, beginning of period $ 8.89 $ 6.71 $ 8.29 $11.07
------ ------ ------ ------
Increase (decrease) from investment operations:
Net investment income $ 0.07 $ 0.03 $ 0.01 $ 0.08
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.04 2.17 (1.59) (2.71)
------ ------ ------ -------
Net increase (decrease) from investment operations $ 0.11 $ 2.20 $(1.58) $ (2.63)
Distributions to shareowners:
Net investment income (0.06) (0.02) -- (0.15)
Net realized gain -- -- -- --
------ ------ ------ -------
Net increase (decrease) in net asset value $ 0.05 $ 2.18 $(1.58) $ (2.78)
------ ------ ------ -------
Net asset value, end of period $ 8.94 $ 8.89 $ 6.71 $ 8.29
====== ====== ====== =======
Total return* 1.22% 32.92% (19.06)% (23.44) %
Ratio of net expenses to average net assets+ 1.76%** 1.79% 1.86% 3.22%* *
Ratio of net investment income (loss) to average net assets+ 2.01%** 0.56% 0.25% (2.56)%**
Portfolio turnover rate 74%** 52% 95% 73%
Net assets, end of period (in thousands) $6,022 $5,005 $1,829 $ 398
Ratios with no waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 2.21%** 2.75% 2.66% 4.57%* *
Net investment income (loss) 1.55%** (0.40)% (0.54)% (3.90)%**
(a) Class II shares were first publicly offered on January 2, 2001.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
7
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Europe
VCT Portfolio
ASSETS:
Investment in securities, at value
(Cost $11,935,102) $14,273,318
Cash 295,005
Foreign currencies, at value --
Receivables --
Investment securities sold 47,786
Fund shares sold 37,989
Variation margin --
Dividends, interest and foreign taxes withheld 45,476
Forward foreign currency settlement contracts, net --
Due from Pioneer Investment Management, Inc. 2,606
Other 369
-----------
Total assets $14,702,549
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 71,100
Fund shares repurchased 3,968
Dividends --
Upon return of securities loaned --
Forward foreign currency settlement contracts, net 437
Reserve for repatriation taxes --
Due to bank --
Due to affiliates 10,679
Accrued expenses 31,661
-----------
Total liabilities $ 117,845
-----------
NET ASSETS:
Paid-in capital $20,406,813
Accumulated net investment income (loss) 155,154
Accumulated undistributed net realized gain (loss) (8,317,054)
Net unrealized gain (loss) on:
Investments 2,338,216
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 1,575
-----------
Total net assets $14,584,704
-----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 8,562,896
Shares outstanding 940,919
-----------
Net asset value per share $ 9.10
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 6,021,808
Shares outstanding 673,287
-----------
Net asset value per share $ 8.94
8 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Europe
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $40,379) $ 264,706
Interest 1,946
Income on securities loaned, net --
Other --
---------
Total investment income $ 266,652
---------
EXPENSES:
Management fees $ 72,527
Transfer agent fees 1,536
Distribution fees (Class II) 7,024
Administrative fees 9,250
Custodian fees 28,760
Professional fees 25,032
Printing 2,983
Fees and expenses of nonaffiliated trustees --
Miscellaneous 735
---------
Total expenses $ 147,847
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (31,868)
---------
Net expenses $ 115,979
---------
Net investment income (loss) $ 150,673
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 706,240
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (3,507)
---------
$ 702,733
---------
Change in net unrealized gain or loss from:
Investments $(667,025)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (5,768)
$(672,793)
---------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ 29,940
=========
Net increase (decrease) in net assets resulting
from operations $ 180,613
=========
The accompanying notes are an integral part of these financial statements.
9
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Europe VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 150,673 $ 110,674
Net realized gain (loss) on investments 702,733 (108,393)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (672,793) 3,419,238
----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 180,613 $ 3,421,519
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (65,952) $ (36,322)
Class II (38,910) (9,367)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
----------- -----------
Total distributions to shareowners $ (104,862) $ (45,689)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 1,713,293 $ 6,502,123
Reinvestment of distributions 104,862 45,689
Cost of shares repurchased (1,644,175) (6,113,517)
----------- -----------
Net increase (decrease) in net assets
resulting from fund share transactions $ 173,980 $ 434,295
----------- -----------
Net increase (decrease) in net assets $ 249,731 $ 3,810,125
----------- -----------
NET ASSETS:
Beginning of period $14,334,973 $10,524,848
----------- -----------
End of period $14,584,704 $14,334,973
=========== ===========
Accumulated/(distributions in excess of)
net investment income (loss) $ 155,154 $ 109,343
=========== ===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Europe Portfolio (the 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 nineteen 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)
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 financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objective of Europe VCT Portfolio is to seek long-term capital
growth.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting years. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for the
is open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
Trading in foreign equity securities is substantially completed each day at
various times prior to the close of the New York Stock Exchange. The value of
such securities used in computing the net asset value of the Portfolio's
shares, based on the last sale price on the principal exchange where they
traded, are determined as of such times. At June 30, 2004, there were no fair
valued securities except as follows. All securities that trade in foreign
markets whose closing prices are as of times prior to the close of the New
York Stock Exchange ("NYSE") and that are held by Europe Portfolio are fair
valued using vendor-supplied pricing updates for each security to the time of
the close of the NYSE.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have passed
are recorded as soon as the Portfolio becomes aware of the ex-dividend data
in the exercise of reasonable diligence. Interest income, including interest
on income bearing cash accounts, is recorded on the accrual basis, net of
unrecoverable foreign taxes withheld at the applicable country rates. All
discounts/premiums
11
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
are accreted/amortized for financial reporting purposes.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicableportfolios are computed once daily, on each day the New York Stock
Exchange
B. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
C. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolio's
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
D. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of each Portfolio's distributions may be shown in the
accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
The Portfolio elected to defer $49,695 in capital losses recognized between
November 1, 2003 and December 31, 2003 to its fiscal year ending December 31,
2004.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Europe VCT Portfolio had a capital loss
carryforward of $7,882,463 of which the following amounts will expire between
2008 and 2011 if not utilized: $837,566 in 2008, $4,365,566 in 2009 and
$1,896,288 in 2010 and $783,043 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the components
of distributable earnings (accumulated losses) as of December 31, 2003 and
the distributions paid during the year ended December 31, 2003 on a tax basis
as of December 31, 2003.
- --------------------------------------------------------------------------------
Pioneer
Europe
VCT Portfolio
2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 45,689
Long-Term capital gain --
-----------
$ 45,689
Return of Capital --
-----------
Total distributions $ 45,689
===========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 104,830
Undistributed long-term gain/
(Capital loss carryforward) (7,882,463)
Unrealized appreciation (depreciation) 1,929,468
-----------
Total $(5,848,165)
===========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
12
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
E. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively. Shareowners of each class share all expenses and fees paid to
the transfer agent, Pioneer Investment Management Shareholder Services, Inc.
(PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3). Income, common expenses and realized and unrealized
gains and losses are calculated at the Portfolio level and allocated daily to
each class of shares based on the respective percentage of adjusted net
assets at the beginning of the day. Dividends and distributions to
shareowners are recorded on the ex-dividend date. Distributions paid by the
Portfolio with respect to each class of shares are calculated in the same
manner, at the same time, and in the same amount, except that Class I and
Class II shares can bear different transfer agent and distribution fees.
Income, expenses (excluding 12b-1 fees) and gains and losses are calculated
at the Portfolio level and are allocated daily based on the respective
percentage of adjusted net assets at the beginning of the day.
F. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Trust. The loans are secured by collateral of at least 102%,
at all times, of the fair value of the securities loaned. The fair value of
the collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand. The
Trust invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
G. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase. The
collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at least
equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets.
In addition, under the management and administration agreement, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $9,045 was payable to PIM
related to management fees, administrative fees and certain other services, and
is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$1,376 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
13
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Portfolio Tax Cost Appreciation Depreciation (Depreciation)
- -------------------------------------------------------------------------------------------
Europe Portfolio $13,022,731 $1,297,351 $(46,764) $1,250,587
=========== ========== ========= ==========
- -------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $5,352,378 and $5,238,860, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- -------------------------------------------------------------------------------------------
Europe Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -------------------------------------------------------------------------------------------
CLASS I:
Shares sold 13,195 $ 121,336 59,876 $ 462,031
Reinvestment of distributions 7,232 65,952 4,817 36,322
Shares repurchased (110,796) (1,006,213) (308,777) (2,225,749)
--------------------------------------------------------
Net increase (decrease) (90,369) $ (818,925) (244,084) $(1,727,396)
========================================================
CLASS II:
Shares sold 176,925 $ 1,591,957 836,602 $ 6,040,092
Reinvestment of distributions 4,343 38,910 1,262 9,367
Shares repurchased (70,861) (637,962) (547,441) (3,887,768)
--------------------------------------------------------
Net increase (decrease) 110,407 $ 992,905 290,423 $ 2,161,691
========================================================
- -------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts
During the six months ended June 30, 2004, certain Portfolios had entered into
various contracts that obligate the Portfolios to deliver currencies at
specified future dates. At the maturity of a contract, the Portfolios must make
delivery of the foreign currency. Alternatively, prior to the settlement date of
a portfolio hedge, the Portfolio may close out such contracts by entering into
an offsetting hedge contract. As of June 30, 2004, the Portfolio had no
outstanding portfolio hedges.
Outstanding forward currency settlement contracts were as follows:
- -------------------------------------------------------------------------------------------
Net
Gross Settlement Gross Receivable/
Portfolio Receivable Date Payable (Payable)
- -------------------------------------------------------------------------------------------
Europe Portfolio $(39,985) 7/1/04 $(40,379) $(394)
Europe Portfolio $ 42,274 7/1/04 $ 42,317 $ (43)
- -------------------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelly, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16074-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Equity Income VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Equity Income VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 7
Notes to Financial Statements 11
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[The following table was depicted as a pie chart in the printed material.]
U.S. Common Stocks 94.2%
Temporary Cash Investment 4.4%
Convertible Preferred Stocks 1.3%
Convertible Corporate Bonds 0.1%
Sector Distribution
(As a percentage of equity holdings)
[The following table was depicted as a pie chart in the printed material.]
Financials 22.4%
Utilities 16.1%
Energy 12.0%
Consumer Discretionary 10.9%
Industrials 9.3%
Health Care 7.5%
Consumer Staples 7.1%
Telecommunication Services 6.9%
Materials 5.3%
Information Technology 2.5%
Five Largest Holdings
(As a percentage of equity holdings)
1. ChevronTexaco Corp. 4.15%
2. ConocoPhillips 3.93
3. PACCAR, Inc. 3.78
4. Exxon Mobil Corp. 3.21
5. Charter One Financial, Inc. 3.07
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 18.62 $ 18.09
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.180 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Equity Income VCT Portfolio at net asset value, compared to that of the Russell
1000 Value Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[The following table was depicted as a line chart in the printed material.]
Russell 1000 Value Index Pioneer Equity Income VCT Portfolio*
------------------------ ------------------------------------
3/95 10000 10000
12632 12025
12/96 15366 13852
20773 18732
12/98 24021 22816
25787 23092
12/00 27597 26522
26054 24673
12/02 22010 20770
28620 25466
12/04 29745 26470
Index comparison begins 2/28/95. The Russell 1000 Value Index measures the
performance of those Russell 1000 companies with lower price-to-book ratios and
lower forecasted growth values. Index returns assume reinvestment of dividends
and, unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. Portfolio returns are based on net asset value and do not reflect any
annuity-related costs. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 11.31%
(3/1/95)
5 Years 1.54%
1 Year 17.83%
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
2
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 (UNAUDITED)
In the following discussion, portfolio manager John Carey reviews the
performance of Pioneer Equity Income VCT Portfolio over the six months ended
June 30, 2004.
Q: How did the portfolio fare over the past six months?
A: Stock prices generally showed gains during the period. The Russell 1000 Value
Index rose by 3.94%, and Pioneer Equity Income VCT Portfolio rose by exactly
the same amount, 3.94% at net asset value. After the market of 2003, when the
prices of many highly cyclical stocks moved dramatically, the first six
months of 2004 saw investors return to steadier companies. Information
technology, which had been the strongest performing sector in 2003 with the
sharp recovery of many deeply depressed stocks, was one of the weakest areas
of the market through June of this year. On the other hand, consumer staples,
energy, and industrials all performed above the benchmark average as
investors looked more favorably on companies with substantial earnings and
also dividends.
While financials actually underperformed the benchmark Russell 1000 Value
Index, our Portfolio experienced the largest contribution to total return
from our investments there. Two of our holdings, Charter One Financial and
South Trust, received take-over bids from other banks at substantial premiums
to their current share prices (and also to our average cost on the shares),
producing sharp gains in the market value of those positions. We also did not
own any shares of the lackluster performer Citigroup, a major component of
the Russell index.
Offsetting results came from our weightings and stock selection in
telecommunications services and utilities. In telecomm, our AT&T stock
declined as investors worried about mounting price competition amid slower
growth. Further affecting our relative performance in that sector was our
lack of ownership of AT&T Wireless, the cellular provider operating
independently of its former parent since late 2001. That company received an
acquisition offer from Cingular, a joint venture between two companies that
we did own, BellSouth and SBC Communications. The stocks of those companies
fell on concerns about the acquisition price, while stock in AT&T Wireless
rose in recognition of the premium price to be paid.
With regard to our holdings in the utilities sector, we have continued to
favor the strong utilities with well-supported and consistent dividend-paying
records. It so happened that some of the best-performing utility stocks
during the period were the so-called turnaround stories, some of which had
even sharply reduced or eliminated their dividends. We shall stick with our
long-term strategy and emphasis on financial strength and business stability.
Q: What changes did you make to the Portfolio in the first half of the period?
A: Overall we added seven positions and liquidated nine. With the high oil
prices and positive outlook for energy, we thought it reasonable to enlarge
our exposure somewhat in that sector and added Occidental Petroleum. A
specialist in coatings and other chemical products, Valspar shows good
earnings potential as the economy improves. J. C. Penney has re-focused on
its department stores after negotiating the sale of its sagging drugstore
operation, and the results show it. Clorox, is benefiting from better
management. Ameren and Equitable Resources were two additions in utilities,
and U. S. Bancorp is a strong regional bank headquartered in Minneapolis.
Little bespeaks quality and reliability better than a long dividend-paying
record, and here is how our new holdings compare in that regard: Occidental
Petroleum, payments every year since 1975; Valspar, each year since 1964; J.
C. Penney, continuous payments starting in 1922; Clorox, without interruption
since 1968; Ameren and Equitable Resources, since 1906 and 1950,
respectively; and U. S. Bancorp, through its predecessor companies, an
unbroken record going back all the way to the year of the Battle of
Gettysburg, 1863.
The list of names leaving the Portfolio in the period included Deere,
Illinois Tool Works, Norfolk Southern, Tribune, Biomet, Bank of America,
Merrill Lynch, Equity Office Properties, and Electronic Data Systems.
Q: What is your outlook on the stock market and the economy for the remainder of
2004?
A: At the midpoint of 2004, the market appears in disarray. Truth be told,
interest rates have not really moved very much at all, but there appears
great anxiety about greater moves to come. Inflation is not a current
problem, yet the high oil prices provide the worriers a reason to focus on
the risk of inflation. Corporate earnings are generally very strong and also
strongly up from last year, but the expressed concern is with respect to
slowing of the wonderful comparisons. And so it goes as well when it comes to
discussion of international events and corporate-governance issues and much
else: the glass is half empty, not half full, as the common expression goes.
From our point of view, the market remains quite attractive, and especially
the good companies with good records. Betting which way the market might go
on a short-term basis has never seemed to us like a particularly fruitful
endeavor. So our intention is to stay invested over the coming months, and to
stay invested in the solid kinds of companies we always aim to own. Thank you
for your support.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
Shares Value
CONVERTIBLE PREFERRED STOCKS - 1.4%
Automobiles & Components - 1.4%
Automobile Manufacturers - 1.4%
2,600 General Motors, 5.25%, 3/6/32 $ 64,025
55,600 Ford Capital Trust, 6.5%, 1/15/32 3,033,536
------------
$ 3,097,561
------------
Total Automobiles & Components $ 3,097,561
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $2,691,323) $ 3,097,561
------------
Principal
Amount
CONVERTIBLE CORPORATE BOND - 0.0%
Retailing - 0.0%
Apparel Retail - 0.0%
$200,000 Gap Inc., 5.75%, 3/15/09 $ 311,000
------------
Total Retailing $ 311,000
------------
TOTAL CONVERTIBLE CORPORATE BOND
(Cost $200,000) $ 311,000
------------
Shares
COMMON STOCKS - 95.5%
Energy - 11.7%
Integrated Oil & Gas - 11.7%
98,300 ChevronTexaco Corp. $ 9,251,013
114,865 ConocoPhillips 8,763,051
161,066 Exxon Mobil Corp. 7,152,941
35,000 Occidental Petroleum Corp. 1,694,350
------------
$ 26,861,355
------------
Total Energy $ 26,861,355
------------
Materials - 5.2%
Commodity Chemicals - 1.7%
50,300 Air Products & Chemicals, Inc. $ 2,638,235
27,341 E.I. du Pont de Nemours and Co. 1,214,487
------------
$ 3,852,722
------------
Construction Materials - 0.7%
35,000 Vulcan Materials Co. $ 1,664,250
------------
Diversified Chemical - 0.7%
25,300 PPG Industries, Inc. $ 1,580,997
------------
Paper Products - 0.8%
62,400 Meadwestvaco Corp. $ 1,833,936
------------
Specialty Chemicals - 0.3%
15,000 Valspar Corp. $ 755,850
------------
Steel - 1.0%
24,700 Nucor Corp. $ 1,895,972
20,050 Roanoke Electric Steel Corp. 272,680
------------
$ 2,168,652
------------
Total Materials $ 11,856,407
------------
Shares Value
Capital Goods - 8.6%
Aerospace & Defense - 3.0%
51,600 Boeing Co. $ 2,636,244
43,200 General Dynamics Corp. 4,289,760
------------
$ 6,926,004
------------
Electrical Components & Equipment - 1.6%
59,000 Emerson Electric Co. $ 3,749,450
------------
Industrial Conglomerates - 2.7%
58,100 Johnson Controls, Inc. $ 3,101,378
32,700 United Technologies Corp. 2,991,396
------------
$ 6,092,774
------------
Industrial Machinery - 1.3%
22,000 Gorman-Rupp Co. $ 597,740
92,200 The Timken Co. 2,442,378
------------
$ 3,040,118
------------
Total Capital Goods $ 19,808,346
------------
Transportation - 0.4%
Railroads - 0.4%
26,500 Burlington Northern, Inc. $ 929,355
------------
Total Transportation $ 929,355
------------
Automobiles & Components - 3.7%
Automobile Manufacturers - 3.7%
145,175 PACCAR, Inc. $ 8,418,698
------------
Total Automobiles & Components $ 8,418,698
------------
Media - 3.2%
Movies & Entertainment - 1.8%
132,400 Cedar Fair, L.P. (a) $ 4,177,220
------------
Publishing - 1.4%
40,500 McGraw-Hill Co., Inc. $ 3,101,085
------------
Total Media $ 7,278,305
------------
Retailing - 2.3%
Department Stores - 1.6%
30,000 J.C. Penney Co., Inc. $ 1,132,800
92,825 May Department Stores Co. 2,551,759
------------
$ 3,684,559
------------
General Merchandise Stores - 0.7%
40,300 Sears, Roebuck and Co. $ 1,521,728
------------
Total Retailing $ 5,206,287
------------
Food, Beverage & Tobacco - 5.4%
Packaged Foods & Meats - 4.4%
147,500 Campbell Soup Co. $ 3,964,800
47,300 General Mills, Inc. 2,248,169
73,700 H.J. Heinz Co., Inc. 2,889,040
46,900 Sara Lee Corp. 1,078,231
------------
$ 10,180,240
------------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
Shares Value
Soft Drinks - 1.0%
12,900 The Coca-Cola Co. $ 651,192
28,600 PepsiCo, Inc. 1,540,968
------------
$ 2,192,160
------------
Total Food, Beverage & Tobacco $ 12,372,400
------------
Household & Personal Products - 1.5%
Household Products - 1.5%
20,000 Clorox Co. $ 1,075,600
39,200 Colgate-Palmolive Co. 2,291,240
------------
$ 3,366,840
------------
Total Household & Personal
Products $ 3,366,840
------------
Health Care Equipment & Services - 3.7%
Health Care Distributors - 2.8%
88,900 Abbott Laboratories $ 3,623,564
50,600 Johnson & Johnson 2,818,420
------------
$ 6,441,984
------------
Health Care Equipment - 0.9%
38,200 Becton, Dickinson & Co. $ 1,978,760
------------
Total Health Care Equipment &
Services $ 8,420,744
------------
Pharmaceuticals & Biotechnology - 3.6%
Pharmaceuticals - 3.6%
57,900 Eli Lilly & Co. $ 4,047,789
74,300 Merck & Co., Inc. 3,529,250
20,000 Pfizer, Inc. 685,600
------------
$ 8,262,639
------------
Total Pharmaceuticals &
Biotechnology $ 8,262,639
------------
Banks - 12.6%
Diversified Banks - 5.4%
154,900 Charter One Financial, Inc. $ 6,845,031
86,100 U.S. Bancorp 2,372,916
53,700 Wells Fargo & Co. 3,073,251
------------
$ 12,291,198
------------
Regional Banks - 5.8%
62,200 First Horizon National Corp. $ 2,828,234
96,900 National City Corp. 3,392,469
79,600 SouthTrust Corp. 3,089,276
63,000 SunTrust Banks, Inc. 4,094,370
------------
$ 13,404,349
------------
Thrifts & Mortgage Finance - 1.4%
85,400 Washington Mutual, Inc. $ 3,299,856
------------
Total Banks $ 28,995,403
------------
Shares Value
Diversified Financials - 3.5%
Asset Management & Custody Banks - 2.9%
45,100 Eaton Vance Corp. $ 1,723,271
98,600 T. Rowe Price Associates, Inc. 4,969,440
------------
$ 6,692,711
------------
Investment Banking & Brokerage - 0.6%
43,100 A.G. Edwards, Inc. $ 1,466,693
------------
Total Diversified Financials $ 8,159,404
------------
Insurance - 4.4%
Property & Casualty Insurance - 4.4%
51,600 Chubb Corp. $ 3,518,088
86,800 Safeco Corp. 3,819,200
68,900 St. Paul Travelers Companies, Inc. 2,793,206
------------
$ 10,130,494
------------
Total Insurance $ 10,130,494
------------
Real Estate - 1.1%
Real Estate Investment Trusts - 1.1%
51,600 Simon DeBartolo Group, Inc. $ 2,653,272
------------
Total Real Estate $ 2,653,272
------------
Software & Services - 0.8%
Application Software - 0.4%
31,000 Microsoft Corp. $ 885,360
------------
Data Processing & Outsourced Services - 0.4%
25,000 Automatic Data Processing, Inc. $ 1,047,000
------------
Total Software & Services $ 1,932,360
------------
Technology Hardware & Equipment - 1.6%
Computer Hardware - 1.6%
44,300 Diebold, Inc. $ 2,342,141
40,000 Hewlett-Packard Co. 844,000
6,200 IBM Corp.* 546,530
------------
$ 3,732,671
------------
Total Technology Hardware &
Equipment $ 3,732,671
------------
Telecommunication Services - 6.6%
Integrated Telecommunication Services - 6.6%
41,800 Alltel Corp. $ 2,115,916
170,000 AT&T Corp. 2,487,100
98,500 BellSouth Corp. 2,582,670
169,800 SBC Communications, Inc. 4,117,650
110,000 Verizon Communications, Inc. 3,980,900
------------
$ 15,284,236
------------
Total Telecommunication Services $ 15,284,236
------------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Utilities - 15.6%
Electric Utilities - 10.1%
60,000 Ameren Corp. $ 2,577,600
55,800 American Electric Power Co., Inc. 1,785,600
56,300 Consolidated Edison, Inc. 2,238,488
153,500 Constellation Energy Group 5,817,650
33,000 FPL Group, Inc. 2,110,350
94,900 Great Plains Energy, Inc. 2,818,530
64,000 NSTAR 3,064,320
98,700 Southern Co. 2,877,105
------------
$ 23,289,643
------------
Gas Utilities - 4.3%
111,700 KeySpan Energy Corp. (a) $ 4,099,390
110,300 Questar Corp. 4,261,992
61,100 Vectren Corp. 1,532,999
------------
$ 9,894,381
------------
Multi-Utilities & Unregulated Power - 0.6%
24,000 Equitable Resources, Inc. $ 1,241,040
------------
Water Utilities - 0.6%
71,000 Aqua America, Inc. $ 1,423,550
------------
Total Utilities $ 35,848,614
------------
TOTAL COMMON STOCKS
(Cost $178,138,936) $219,517,830
------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 4.5%
Repurchase Agreement - 2.9%
$ 6,700,000 UBS Warburg, Inc., 1.25%, dated 6/30/04,
repurchase price of $6,700,000 plus
accrued interest on 7/1/04
collateralized by $6,540,000 U.S.
Treasury Bill, 2.125%, 10/31/04 $ 6,700,000
------------
Shares
Security Lending Collateral - 1.6%
3,514,541 Securities Lending Investment
Fund, 1.29% $ 3,514,541
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $10,214,541) $ 10,214,541
------------
TOTAL INVESTMENT IN
SECURITIES - 101.4%
(Cost $191,244,800) (a) $233,140,932
------------
OTHER ASSETS AND
LIABILITIES - (1.4)% $ (3,183,134)
------------
TOTAL NET ASSETS - 100.0% $229,957,798
============
* Non-income producing security.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
40,000 Cedar Fair, L.P. $1,235,200
60,393 KeySpan Energy Corp. 2,190,454
----------
Total $3,425,654
==========
6 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year
6/30/04 Ended Ended
Class I (unaudited) 12/31/03 12/31/02
Net asset value, beginning of period $ 18.09 $ 15.11 $ 18.40
-------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.22 $ 0.41 $ 0.42
Net realized and unrealized gain (loss) on investments 0.49 2.96 (3.30)
-------- -------- --------
Net increase (decrease) from investment operations $ 0.71 $ 3.37 $ (2.88)
Distributions to shareowners:
Net investment income (0.18) (0.39) (0.41)
Net realized gain -- -- --
-------- -------- --------
Net increase (decrease) in net asset value $ 0.53 $ 2.98 $ (3.29)
-------- -------- --------
Net asset value, end of period $ 18.62 $ 18.09 $ 15.11
======== ======== ========
Total return* 3.94% 22.61% (15.82)%
Ratio of net expenses to average net assets+ 0.72%** 0.78% 0.80%
Ratio of net investment income (loss) to average net assets+ 2.34%** 2.55% 2.48%
Portfolio turnover rate 18%** 12% 12%
Net assets, end of period (in thousands) $158,805 $155,634 $133,258
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.72%** 0.78% 0.80%
Net investment income (loss) 2.34%** 2.55% 2.48%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.72%** 0.78% 0.80%
Net investment income (loss) 2.34%** 2.55% 2.48%
Year Year Year
Ended Ended Ended
Class I 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 21.28 $ 20.72 $ 21.44
-------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.40 $ 0.51 $ 0.42
Net realized and unrealized gain (loss) on investments (1.86) 2.28 (0.15)
-------- -------- --------
Net increase (decrease) from investment operations $ (1.46) $ 2.79 $ 0.27
Distributions to shareowners:
Net investment income (0.36) (0.49) (0.41)
Net realized gain (1.06) (1.74) (0.58)
-------- -------- --------
Net increase (decrease) in net asset value $ (2.88) $ 0.56 $ (0.72)
-------- -------- --------
Net asset value, end of period $ 18.40 $ 21.28 $ 20.72
======== ======== ========
Total return* (6.97)% 14.85% 1.21%
Ratio of net expenses to average net assets+ 0.75% 0.71% 0.70%
Ratio of net investment income (loss) to average net assets+ 2.07% 2.40% 1.97%
Portfolio turnover rate 13% 13% 23%
Net assets, end of period (in thousands) $164,019 $181,920 $226,379
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.75% 0.71% 0.70%
Net investment income (loss) 2.07% 2.40% 1.97%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.75% 0.71% 0.70%
Net investment income (loss) 2.07% 2.40% 1.97%
* 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.
The accompanying notes are an integral part of these financial statements. 7
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
Pioneer
Equity
Income
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $3,425,654)
(Cost $191,244,800) $233,140,932
Cash 165,432
Foreign currencies, at value --
Receivables --
Investment securities sold --
Fund shares sold 107,679
Dividends, interest and foreign taxes withheld 386,897
Other 272
------------
Total assets $233,801,212
------------
LIABILITIES:
Payables --
Investment securities purchased $ --
Fund shares repurchased 129,721
Dividends --
Upon return for securities loaned 3,514,541
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 157,442
Accrued expenses 41,710
Other --
------------
Total liabilities $ 3,843,414
------------
NET ASSETS:
Paid-in capital $202,494,815
Accumulated net investment income (loss) 1,549,361
Accumulated undistributed net realized gain (loss) (15,982,510)
Net unrealized gain (loss) on:
Investments 41,896,132
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $229,957,798
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $158,805,031
Shares outstanding 8,530,519
------------
Net asset value per share $ 18.62
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 71,152,767
Shares outstanding 3,801,847
------------
Net asset value per share $ 18.72
8 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
Pioneer
Equity Income
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends $3,355,605
Interest (net of foreign taxes withheld of $94) 44,410
Income on securities loaned, net 5,416
Other --
----------
Total investment income $3,405,431
----------
EXPENSES:
Management fees $ 723,317
Transfer agent fees 1,488
Distribution fees (Class II) 81,276
Administrative fees 22,108
Custodian fees 20,776
Professional fees 24,135
Printing 6,146
Fees and expenses of nonaffiliated trustees 1,681
Miscellaneous 5,460
----------
Total expenses $ 886,387
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
----------
Net expenses $ 886,387
----------
Net investment income (loss) $2,519,044
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ (626,853)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ (626,853)
----------
Change in net unrealized gain or loss from:
Investments $6,585,509
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$6,585,509
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $5,958,656
==========
Net increase (decrease) in net assets resulting
from operations $8,477,700
==========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
Pioneer Equity
Income VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 2,519,044 $ 4,413,641
Net realized gain (loss) on investments (626,853) (634,370)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 6,585,509 34,115,732
------------- -------------
Net increase (decrease) in net assets
resulting from operations $ 8,477,700 $ 37,895,003
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (1,543,147) $ (3,313,897)
Class II (583,520) (860,942)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
------------- -------------
Total distributions to shareowners $ (2,126,667) $ (4,174,839)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 23,048,590 $ 52,433,019
Reinvestment of distributions 2,126,667 4,174,840
Cost of shares repurchased (17,557,375) (34,680,633)
------------- -------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 7,617,882 $ 21,927,226
------------- -------------
Net increase (decrease) in net assets $ 13,968,915 $ 55,647,390
------------- -------------
NET ASSETS:
Beginning of period $ 215,988,883 $ 160,341,493
------------- -------------
End of period $ 229,957,798 $ 215,988,883
============= =============
Accumulated/(distributions in excess of)
net investment income (loss) $ 1,549,361 $ 1,156,984
============= =============
10 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
1. Organization and Significant Accounting Policies
The Pioneer Equity Income 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 nineteen 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)
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 financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objective of Equity Income Portfolio is to seek capital
appreciation.
Trust's financial statements have been prepared in conformity with accounting
principles generally accepted in the United States of America that require the
management of the Trust to, among other things, make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of income, expenses, gains and losses during the reporting
years. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the Trust,
which are in conformity with those generally accepted in the investment company
industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset value for
the portfolio is computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Trading in foreign equity securities is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The value of such securities used in computing the net
asset value of the Portfolio's shares, based on the last sale price on the
principal exchange where they traded, are determined as of such times. As
of June 30, 2004, there were no fair valued securities.
Fixed income securities are valued at prices supplied by independent
pricing services, which consider such factors as Treasury spreads, yields,
maturities and ratings. Valuations may be supplemented by dealers and other
sources, as required. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the Board of Trustees.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable diligence. Interest income,
including interest on income bearing cash accounts, is recorded on the
accrual
11
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
basis, net of unrecoverable foreign taxes withheld at the applicable
country rates. All discounts/premiums are accreted/amortized for financial
reporting purposes. Temporary cash investments are valued at amortized
cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. Upon entering into a futures contract, the Portfolio
is required to deposit with a broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the associated futures
exchange. Subsequent payments for futures contracts ("variation margin")
are paid or received by the Portfolio, depending on the daily fluctuation
in the value of the contracts, and are recorded by the Portfolio as
unrealized gains or losses. When the contract is closed, the Portfolio
realizes a gain or loss equal to the difference between the opening and
closing value of the contract. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio. Changes in the value of the contracts may not
directly correlate to the changes in the value of the underlying
securities. These risks may decrease the effectiveness of the Portfolio's
hedging and trading strategies and potentially result in a loss. As of June
30, 2004, the portfolio had no open futures contracts.
C. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Equity Income VCT Portfolio had a capital loss
carryforward of $15,355,657, of which will the following amounts expire
between 2009 and 2011 if not utilized: $6,328,025 in 2009, $6,407,206 in
2010, and $2,620,426 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
- ------------------------------------------------------------
Pioneer
Equity Income
VCT Portfolio
2003
- ------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 4,174,839
Long-Term capital gain --
------------
$ 4,174,839
Return of Capital --
------------
Total distributions $ 4,174,839
============
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 82,058
Undistributed long-term gain/
(capital loss carryforward) (15,355,657)
Unrealized appreciation/(depreciation) 36,385,549
------------
Total $ 21,111,950
============
- ------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on wash
sales, returns of capital on REITs, and the recognition of unrealized gains or
losses on certain futures contracts.
D. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively. Shareowners of each class share all expenses and
fees paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number
12
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3). Income, common expenses and realized
and unrealized gains and losses are calculated at the Portfolio level and
allocated daily to each class of shares based on the respective percentage
of adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
Distributions paid by the Portfolio with respect to each class of shares
are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day.
E. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase. The
collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at least
equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets. In addition,
under the management and administration agreement, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $141,022 was payable to PIM related to
management fees, administrative fees and certain other services, and is
included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $258 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$16,162 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Portfolio Tax Cost Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------------------------
Equity Income Portfolio $190,169,874 $47,191,020 $ (4,219,962) $42,971,058
- --------------------------------------------------------------------------------------------------
13
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $27,101,040 and $19,453,205, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- ------------------------------------------------------------------------------------------------
Equity Income Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 537,739 $ 9,891,118 1,544,529 $ 24,668,979
Reinvestment of distributions 84,147 1,543,147 204,954 3,313,898
Shares repurchased (694,977) (12,774,712) (1,964,325) (30,892,038)
---------------------------------------------------------------
Net increase (decrease) (73,091) $ (1,340,447) (214,842) $ (2,909,161)
===============================================================
CLASS II:
Shares sold 712,923 $ 13,157,472 1,723,515 $ 27,764,040
Reinvestment of distributions 31,627 583,520 54,432 860,942
Shares repurchased (261,146) (4,782,663) (242,114) (3,788,595)
---------------------------------------------------------------
Net increase 483,404 $ 8,958,329 1,533,833 $ 24,836,387
===============================================================
- ------------------------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------
This page for your notes.
15
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16063-00-0804
[PIONEER INVESTMENTS LOGO]
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Strategic Income VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- -------------------------------------------------------------
Pioneer Strategic Income VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 14
Notes to Financial Statements 18
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Corporate Bonds 55.6%
U.S. Government Securities 21.4%
Foreign Government Bonds 12.8%
Convertible Corporate Bonds 3.1%
Asset Backed Securities 2.7%
Temporary Cash Investment 1.9%
Municipal Bonds 1.2%
Sovereign Issue 0.8%
Supranational Bonds 0.5%
Maturity Distribution
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
0-1 years 4.7%
1-3 years 23.2%
3-4 years 20.9%
4-6 years 31.0%
6-8 years 14.6%
8+ years 5.6%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Norwegian Government,
6.75%, 1/15/07 1.78%
2. Government of France,
3.0%, 7/25/09 1.62
3. Government National
Mortgage Association II,
6.0%, 11/20/33 1.53
4. Federal Home Loan Mortgage
Corp., 6.0%, 6/1/17 1.45
5. Swedish Government,
5.5%, 10/8/12 1.40
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $10.56 $11.01
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.3106 $ - $0.1616
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Strategic Income VCT Portfolio at net asset value, compared to that of the
Lehman Brothers U.S. Universal Index. Portfolio returns are based on net asset
value and do not reflect any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer
Strategic Lehman
Income U.S. Universal
VCT Portfolio Index+
------------- ---------------
7/99 $10,000 $10,000
$10,060 $10,136
6/00 $10,488 $11,234
$11,184 $12,144
6/02 $12,352 $13,338
$15,073 $14,117
6/04 $15,152 $14,140
+ Index comparison begins July 31, 1999. The Lehman Brothers U.S. Universal
Index is the union of the U.S. Aggregate Index, the U.S. High Yield Corporate
Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, the
non-ERISA portion of the CMBS Index and the CMBS High Yield Index. Municipal
debt, private placements and non-dollar-denominated issues are excluded from
the Index. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Portfolio returns, do not reflect any fees, expenses or
sales charges. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ----------------------------------------------------------------------
Net Asset Value
- ----------------------------------------------------------------------
Life-of-Class 8.72%
(7/29/99)
1 Year 6.32%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
2
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
Domestic high-yield corporate bonds and mortgage-backed securities provided the
best relative returns during the first six months of 2004, a period marked by
rapid rises in interest rates as evidence of a strengthening economy became
more pervasive. Higher-rated bonds tended to lose value as market interest
rates rose. In international trading, the U.S. dollar strengthened, limiting
the returns from foreign investment-grade bonds while the prices of emerging
market debt declined after strong gains earlier. The following is an interview
with Kenneth J. Taubes, who discusses the factors that influenced the
Portfolio's performance during the six-month period. Mr. Taubes, head of
Pioneer's Fixed Income Group, oversees the team responsible for daily
management of the Portfolio.
Q: How did the Portfolio perform during the six months ended June 30, 2004?
A: The Portfolio performed reasonably well in a challenging environment. During
the six-month period, the Portfolio's Class II shares had a total return of
0.19%, while the Lehman U.S. Universal Bond Index returned 0.17%. The 30-day
Standardized SEC Yield for the Portfolio's Class II Shares on June 30, 2004,
was 5.82%.
Q: What were the factors that affected performance?
A: The Portfolio's ability to diversify across several different fixed-income
classes worked to its advantage during a period in which rising interest
rates tended to undermine the values of higher-quality domestic bonds and a
strengthening dollar tended to hurt the values of investments in
foreign-denominated securities. The Portfolio's positive performance and
slight edge over the U.S. Universal Bond Index came despite exposure to two
poorly performing areas that are not significantly represented in the index:
foreign investment-grade securities and emerging markets.
Throughout the six months, our emphasis on the domestic high-yield corporate
bonds helped performance substantially, as this was the best-performing part
of the bond market. High-yield bonds, as represented by the Merrill Lynch
High Yield Master II Index, returned 1.36% during the period, while most
higher quality domestic fixed-income classes had negative returns. In our
domestic investment-grade positions, we also focused on the best-performing
area, mortgage-backed securities, which benefited from the lessening of
fears of prepayments and diminishing interest-rate volatility. We
de-emphasized Treasuries, the area most vulnerable to rising interest rates,
and the Treasury securities we did own tended to be inflation-protected
securities that outperformed standard Treasuries. While emerging markets
were down more than 6% during the six months, we focused our holdings on
corporate issuers whose longer-term prospects remained good.
Although we reduced its position, the Portfolio remained overweighted in
non-dollar currencies during the period, and this held back performance as
the U.S. dollar strengthened. In particular, our investments in the
currencies of growth-oriented economies such as Australia and Canada did
poorly, as these currencies weakened even more than the euro and other
currencies tied to economies with less growth.
At the end of the six months, 37% of assets were invested in high-yield
corporates, the largest emphasis of any asset class. Mortgage-backed
securities accounted for 21% of assets, while emerging market debt
represented about 16% of Portfolio assets and international investment-grade
bonds accounted for another 16%. Investment-grade corporate bonds
represented just 9% of Portfolio assets, and the Treasury position at the
end of the six months was less than 1%.
Average credit quality on June 30 was BBB-.
Q: What changes did you make in the Portfolio during the six months?
A: We continued our emphasis on domestic high-yield corporate bonds. We expect
the economy to continue to expand, helping to strengthen the financial
health of high-yield issuers, many of which are starting to enjoy greater
pricing power over their products. Also, high-yield bonds can remain less
sensitive to the negative price impacts of rising interest rates because of
their yield advantage over higher quality securities.
In spite of the strength of the U.S. dollar during the period, we thought
the long-term trend of the dollar continued to be one of weakening versus
other currencies. As a result, we maintained investments in growth-oriented
countries such as Australia, Canada, Sweden and Norway.
Q: What types of individual investments had the greatest influence on
performance?
A: Several high-yield holdings helped substantially. The bonds of Metro PCS, a
wireless telecommunications provider in several metropolitan areas,
including in Georgia and California, rose substantially in price on the news
that the company intended to proceed with an initial public stock offering.
Bonds issued by Corning, which restructured its business to focus on the
production of the material used for flat-screen television, did very well,
as did securities of several hotel companies, whose earnings increased as
the economy improved and business travel improved. Among the
better-performers in the Portfolio were bonds issued by the Hilton, Starwood
and John Q. Hammond hotel chains.
While emerging market debt tended to detract from performance, the bonds of
Brazilian brewer AMBEV gained after the announcement of plans for its
acquisition by the European firm Interbrew.
Disappointments included the bonds of Primus Telecommunications, a
multi-national telecommunications service provider based in the United
States. While its earnings were positive, the bonds fell because of investor
skepticism about the sector. The bonds of Brazilian steel company CSN also
detracted from performance in the general decline in emerging markets,
despite strong company fundamentals.
Q: What is your outlook for the bond market?
A: With an outlook for continuing economic expansion, we expect that short-term
interest rates are likely to rise further in the coming months. The Federal
Reserve began to raise the Fed Funds Rate, the most influential short-term
rate, on June 30. The Fed has signaled it plans to raise rates gradually,
but to continue to be accommodative and encourage growth, a policy likely to
keep interest rates low by historical standards. Market rates on longer-term
bonds, which rose in the months leading up to the June 30 announcement,
probably are priced appropriately for current conditions, but pressure
should continue for the rates of shorter-term and intermediate-term bonds to
rise.
The financial health of domestic corporations should continue to improve.
More companies report they have gained additional pricing power, which
should help them strengthen their balance sheets. At the same time, the
weaker dollar has improved the competitiveness of many industries in world
markets.
In our domestic portfolio, we expect to continue to focus on high-yield
corporate bonds and mortgage-backed securities and position the Portfolio to
mute the impact of rising interest rates of short- and intermediate-term
securities with a relatively short duration.
While foreign currencies fell during the most recent six months, we believe
the U.S. dollar may weaken in the coming months, particularly if the Federal
Reserve maintains its commitment to an accommodative monetary policy. We
have emphasized the Australian and Canadian currencies and also hold
investments in growth-oriented European economies, such as Sweden and
Norway. After several years of avoiding the yen, we also have initiated a
small position in the Japanese currency to benefit from expanding global
growth.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
International investing may involve special risks, including differences in
accounting and currency as well as economic and political instability.
3
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
Principal
Amount S&P/Moody's
USD ($) Ratings Value
CONVERTIBLE CORPORATE BONDS - 3.1%
Pharmaceuticals & Biotechnology - 0.8%
Biotechnology - 0.8%
90,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 84,375
150,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 151,875
-----------
Total Pharmaceuticals & Biotechnology $ 236,250
-----------
Technology Hardware & Equipment - 1.1%
Communications Equipment - 0.6%
200,000 B-/B3 Nortel Networks, 4.25%, 9/1/08 $ 191,500
-----------
Electronic Manufacturing Services - 0.4%
150,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 140,250
-----------
Total Technology Hardware & Equipment $ 331,750
-----------
Semiconductors - 1.2%
Semiconductor Equipment - 0.8%
170,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 $ 165,750
100,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 99,125
-----------
$ 264,875
-----------
Semiconductors - 0.4%
130,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 124,475
-----------
Total Semiconductors $ 389,350
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $852,165) $ 957,350
-----------
ASSET BACKED SECURITIES - 2.7%
Diversified Financials - 1.3%
Consumer Finance - 0.1%
DKK 98,058 AA+/Aa1 Realkredit Danmark, 7.0%, 10/1/32 $ 17,475
-----------
Diversified Financial Services - 1.3%
229,036 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 225,855
172,022 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 175,165
-----------
$ 401,020
-----------
Total Diversified Financials $ 418,495
-----------
Real Estate - 0.5%
Real Estate Investment Trusts - 0.5%
160,000 BBB-/Baa3 Global Signal Trust, 5.395%, 1/15/34 (144A) $ 153,739
-----------
Total Real Estate $ 153,739
-----------
Utilities - 0.8%
Electric Utilities - 0.8%
247,500 BBB-/Baa3 Empresa Electric Guacolda, 8.625%, 4/30/13 $ 256,835
-----------
Total Utilities $ 256,835
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $855,330) $ 829,069
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
CORPORATE BONDS - 55.7%
Miscellaneous - 0.5%
150,000 B/B3 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 151,500
-----------
Total Miscellaneous $ 151,500
-----------
Energy - 5.1%
Oil & Gas Drilling - 0.6%
ITL 275,000,000 BBB-/Baa2 Petroleos Mexicanos, 7.375%, 8/13/07 $ 186,963
-----------
Oil & Gas Equipment And Services - 0.3%
76,000 B+/B3 Transmontaigne Inc., 9.125%, 6/1/10 $ 78,280
-----------
Oil & Gas Exploration & Production - 3.3%
80,000 B/B2 Compton Petroleum Corp., 9.9%, 5/15/09 $ 87,400
200,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 209,500
200,000 BB/Ba3 Cie Generale De Geophysique SA, 10.625%, 11/15/07 213,000
55,000 B/B2 Comstock Resources, Inc., 6.875%, 3/1/12 52,250
50,000 B/B2 Paramount Resources, Ltd., 8.875%, 7/15/2014 49,875
300,000 BB-/Ba2 Gaz Capital SA, 8.625%, 4/28/34 (144A) 290,625
100,000 B/B3 Paramount Resources, Ltd., 7.875%, 11/1/10 95,500
-----------
$ 998,150
-----------
Oil & Gas Refining Marketing & Transportation - 0.9%
75,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 82,125
200,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%, 6/1/14 200,898
-----------
$ 283,023
-----------
Total Energy $ 1,546,416
-----------
Materials - 11.2%
Commodity Chemicals - 1.0%
100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 98,000
105,000 BBB-/Ba1 Methanex Corp., 7.75%, 8/15/05 109,463
25,000 B+/B1 Lyondell Petrochemical Co., 9.875%, 5/1/07 26,125
75,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 78,375
-----------
$ 311,963
-----------
Construction Materials - 1.9%
NOK 2,700,000 NR/NR Kvaerner A.S., 0.0%, 10/30/11 $ 245,373
NOK 60,000 NR/NR Kvaerner A.S., 0.0%, 10/30/11 37,800
300,000 B/B2 Ship Finance International, Ltd., 8.5%, 12/15/13 (144A) 289,500
-----------
$ 572,673
-----------
Diversified Chemical - 0.5%
EUR 130,000 CCC+/Caa1 Huntsman ICI Chemicals LLC, 10.125%, 7/1/09 $ 156,937
-----------
Diversified Metals & Mining - 2.0%
140,000 B-/B2 Freeport-McMoran Copper & Gold, 10.125%, 2/1/10 $ 154,700
250,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 228,750
150,000 NR/Ba2 Vale Overseas, Ltd., 8.25%, 1/17/34 130,500
100,000 BBB/Ba1 Kennametal, Inc., 7.2%, 6/15/12 105,762
-----------
$ 619,712
-----------
Forest Products - 0.2%
75,000 B+/B1 Ainsworth Lumber, 6.75%, 3/15/14 (144A) $ 70,312
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Metal & Glass Containers - 1.1%
130,000 B+/B2 Greif Brothers Corp., 8.875%, 8/1/12 $ 139,912
EUR 150,000 B+/NR Crown Holdings, 10.25%, 3/1/11 202,116
-----------
$ 342,028
-----------
Paper Packaging - 0.2%
10,000 B/B2 Stone Container Corp., 9.75%, 2/1/11 $ 11,000
50,000 B/B2 Stone Container Corp., 8.375%, 7/1/12 52,250
-----------
$ 63,250
-----------
Paper Products - 0.3%
100,000 BB/Ba2 Abitibi-Consolidated Inc., 6.0%, 6/20/13 $ 88,507
-----------
Specialty Chemicals - 2.0%
135,000 B-/B3 United Industries Co., 9.875%, 4/1/09 $ 140,400
170,000 B-/Caa2 OM Group, Inc., 9.25%, 12/15/11 174,250
100,000 BBB-/Baa3 Ferro Corp., 7.125%, 4/1/28 100,728
EUR 45,000 CCC+/Caa1 Rhodia SA, 9.25%, 6/1/11 (144A) 45,819
EUR 140,000 CCC+/B3 Rhodia SA, 8.0%, 6/1/10 (144A) 155,352
-----------
$ 616,549
-----------
Steel - 2.0%
150,000 BB/Ba3 International Steel Group, 6.5%, 4/15/14 (144A) $ 140,625
200,000 B-/Caa1 Ispat Inland ULC, 9.75%, 4/1/14 (144A) 206,000
325,000 B+/B1 CSN Islands VIII Corp., 9.75%, 12/16/13 (144A) 290,875
-----------
$ 637,500
-----------
Total Materials $ 3,479,431
-----------
Capital Goods - 6.3%
Aerospace & Defense - 1.3%
200,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 7/15/13 $ 193,000
100,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 97,500
100,000 CCC+/Caa2 Hexcel Corp., 9.75%, 1/15/09 104,875
-----------
$ 395,375
-----------
Building Products - 0.5%
50,000 B-/B3 US Concrete, Inc., 8.375%, 4/1/14 (144A) $ 49,875
90,000 B+/B2 NCI Building Systems, Inc., 9.25%, 5/1/09 94,500
-----------
$ 144,375
-----------
Construction & Farm Machinery & Heavy Trucks - 0.7%
75,000 BB+/Ba2 Cummins, Inc., 7.125%, 3/1/28 $ 71,250
140,000 B-/B3 American Rock Salt Co. LLC, 9.5%, 3/15/14 (144A) 143,500
-----------
$ 214,750
-----------
Constuction & Engineering - 0.3%
100,000 B+/B2 North American Energy Partners, 8.75%, 12/1/11 (144A) $ 99,000
-----------
Electrical Component & Equipment - 0.2%
50,000 BB-/Ba2 MSW Energy Holdings, 7.375%, 9/1/10 (144A) $ 49,750
-----------
Heavy Electrical Equipment - 0.6%
199,780 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 $ 188,792
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Industrial Machinery - 2.7%
125,000 B/B2 The Manitowoc Co., Inc., 10.5%, 8/1/12 (144A) $ 143,125
125,000 BB+/Ba3 SPX Corp., 7.5%, 1/1/13 128,125
175,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 (a) 178,062
250,000 B+/Ba2 Sun Sage BV, 8.25%, 3/26/09 (144A) 241,875
125,000 BBB-/Ba1 Timken Co., 5.75%, 2/15/10 125,262
-----------
$ 816,449
-----------
Total Capital Goods $ 1,908,491
-----------
Commercial Services & Supplies - 1.3%
Commercial Printing - 0.7%
200,000 B/B1 Sheridan Group, 10.25%, 8/15/11 (144A) $ 210,500
-----------
Diversified Commercial Services - 0.4%
115,000 B-/B3 Cornell Co's, Inc., 10.75%, 7/1/12 (144A) $ 116,150
-----------
Environmental Services - 0.2%
75,000 B-/B3 IESI Corp., 10.25%, 6/15/12 $ 81,750
-----------
Total Commercial Services & Supplies $ 408,400
-----------
Transportation - 2.2%
Air Freight & Couriers - 0.5%
130,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 136,500
-----------
Airlines - 0.5%
50,000 CCC/Caa2 AMR Corp., 9.0%, 9/15/16 $ 37,750
85,000 CCC/Caa2 AMR Corp., 9.8%, 10/1/21 61,200
35,000 CCC/Caa2 AMR Corp., 9.0%, 8/1/12 (a) 27,650
50,000 B-/Caa1 Northwest Airlines, Inc., 9.875%, 3/15/07 39,500
-----------
$ 166,100
-----------
Marine - 0.3%
100,000 B-/B3 Horizon Lines LLC, 9.0%, 11/1/12 (144A) $ 100,000
-----------
Railroads - 0.4%
120 B/B3 Atlantic Express Transport, 12.0%, 4/15/08 $ 118,800
-----------
Transportation - 0.5%
150,000 B/B2 TFM SA De CV, 11.75%, 6/15/09 $ 146,250
-----------
Total Transportation $ 667,650
-----------
Automobiles & Components - 0.5%
Auto Parts & Equipment - 0.4%
140,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 126,000
-----------
Automobile Manufacturers - 0.1%
35,000 BBB-/A3 Ford Motor Credit Co., 5.8%, 1/12/09 $ 35,329
-----------
Total Automobiles & Components $ 161,329
-----------
Hotels Restaurants & Leisure - 0.8%
Hotels, Resorts & Cruise Lines - 0.8%
100,000 BB+/Ba1 Starwood Hotels & Resorts, 7.875%, 5/1/12 $ 107,000
125,000 B/B2 John Q Hamons Hotels, 8.875%, 5/15/12 135,625
-----------
Total Hotels Restaurants & Leisure $ 242,625
-----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Media - 1.6%
Broadcasting & Cable TV - 1.3%
EUR 100,000 B-/B3 Telenet Communication NV, 9.0%, 12/15/13 (144A) $ 121,330
100,000 B/B3 Kabel Deutschland GMBH, 10.625%, 7/1/14 (144A) 102,750
175,000 BB-/Ba3 Echostar DBS Corp., 6.375%, 10/1/11 (144A) 172,375
-----------
$ 396,455
-----------
Publishing - 0.3%
80,000 BBB-/Baa3 News America Holdings, 8.5%, 2/23/25 $ 96,330
-----------
Total Media $ 492,785
-----------
Retailing - 1.3%
Department Stores - 0.5%
150,000 BB+/Ba3 J.C. Penney, 7.125%, 11/15/23 $ 153,750
-----------
Specialty Stores - 0.8%
100,000 BB/Ba2 Toys R Us, 7.375%, 10/15/18 $ 92,375
145,000 B/B3 Asbury Automotive Group, 8.0%, 3/15/14 138,475
-----------
$ 230,850
-----------
Total Retailing $ 384,600
-----------
Food, Beverage & Tobacco - 1.1%
Brewers - 0.7%
220,000 BBB-/Baa3 CIA Brasileira De Bebida, 8.75%, 9/15/13 (144A) $ 232,100
-----------
Soft Drinks - 0.3%
80,000 BBB-/Baa3 CIA Brasileira de Bebida, 10.5%, 12/15/11 $ 91,600
-----------
Total Food, Beverage & Tobacco $ 323,700
-----------
Household & Personal Products - 0.4%
Household Products - 0.4%
125,000 B-/B3 Solo Cup Co., 8.5%, 2/15/14 (144A) $ 116,250
-----------
Total Household & Personal Products $ 116,250
-----------
Health Care Equipment & Services - 1.8%
Health Care Distributors - 0.2%
60,000 BB+/Ba2 Omnicare, Inc., 6.125%, 6/1/13 $ 57,300
-----------
Health Care Facilities - 1.2%
165,000 B-/B3 Curative Health Services, 10.75%, 5/1/11 (144A) $ 158,400
200,000 BBB-/Ba1 HCA, Inc., 6.3%, 10/1/12 200,103
-----------
$ 358,503
-----------
Health Care Supplies - 0.4%
125,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 127,812
-----------
Total Health Care Equipment & Services $ 543,615
-----------
Pharmaceuticals & Biotechnology - 0.3%
Pharmaceuticals - 0.3%
80,000 B/B3 Alaris Medical, Inc., 7.25%, 7/1/11 $ 88,000
-----------
Total Pharmaceuticals & Biotechnology $ 88,000
-----------
Banks - 0.1%
Diversified Banks - 0.1%
15,000 BBB+/A1 Skandinaviska Enskilda Bank, 8.125%, 9/6/49 (144A) $ 16,394
-----------
Total Banks $ 16,394
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Diversified Financials - 5.6%
Investment Banking & Brokerage - 1.6%
EUR 200,000 B-/B3 BCP Caylux Holdings Lux SCA, 10.375%, 6/15/14 (144A) $ 257,903
225,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11 (144A) 223,875
-----------
$ 481,778
-----------
Diversified Financial Services - 2.2%
157,000 CCC/Caa1 Alamosa Delaware, Inc., 0.0%, 7/31/09 $ 151,505
210,000 B/B3 Dollar Financial Group, 9.75%, 11/15/11 (144A) 219,450
315,000 BBB/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) 292,175
-----------
$ 663,130
-----------
Specialized Finance - 1.8%
100,000 B-/B3 UGS Corp., 10.0%, 6/1/12 (144A) $ 106,500
200,000 B/B2 Inmarsat Finance Plc, 7.625%, 6/3/12 (144A) 193,500
80,000 BBB-/Baa3 GATX Financial Corp., 8.875%, 6/1/09 89,757
145,000 BB-/B3 Consolidated Commercial Holdings, 9.75%, 4/1/12 (144A) 147,175
-----------
$ 536,932
-----------
Total Diversified Financials $ 1,681,840
-----------
Insurance - 4.5%
Life & Health Insurance - 1.8%
265,000 B+/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 265,994
300,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 (a) 285,692
-----------
$ 551,686
-----------
Multi-Line Insurance - 0.6%
210,000 BB/Ba3 Allmerica Financial Corp., 7.625%, 10/15/25 $ 197,400
-----------
Property & Casualty Insurance - 1.4%
285,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 280,098
150,000 BB-/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 150,318
-----------
$ 430,416
-----------
Reinsurance - 0.7%
200,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 214,993
-----------
Total Insurance $ 1,394,495
-----------
Real Estate - 2.3%
Real Estate Management & Development - 0.9%
100,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 $ 97,500
185,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 185,925
-----------
$ 283,425
-----------
Real Estate Investment Trusts - 1.4%
120,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 118,800
155,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 161,975
150,000 B-/B1 Meristar Hospitality Operations Finance Corp., 10.5%, 6/15/09 159,750
-----------
$ 440,525
-----------
Total Real Estate $ 723,950
-----------
The accompanying notes are an integral part of these financial statements. 9
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
Technology Hardware & Equipment - 2.0%
Communications Equipment - 0.7%
150,000 BB+/Ba2 Corning, Inc., 6.3%, 3/1/09 $ 152,749
50,000 BB+/Ba2 Corning, Inc., 5.9%, 3/15/14 46,750
-----------
$ 199,499
-----------
Electronic Manufacturing Services - 0.2%
50,000 BB-/Ba2 Sanmina-SCI Corp., 10.375%, 1/15/10 $ 57,250
-----------
Office Electronics - 0.4%
120,000 B-/B3 Xerox Corp., 8.0%, 2/1/27 $ 109,500
-----------
Technology Distributors - 0.7%
200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 $ 208,912
-----------
Total Technology Hardware & Equipment $ 575,161
-----------
Telecommunication Services - 5.9%
Integrated Telecom Services - 2.4%
125,000 B+/B2 GCI, Inc., 7.25%, 2/15/14 $ 119,375
125,000 CCC/B3 Primus Telecomm Group., 8.0%, 1/15/14 (144A) 110,000
150,000 B-/B3 TSI Telecommunication Services, 12.75%, 2/1/09 161,250
145,000 B+/B2 Innova S De R.L., 9.375%, 9/19/13 151,887
200,000 NR/Baa3 Tele Norte Leste Participacoes SA, 8.0%, 12/18/13 (144A) 179,001
-----------
$ 721,513
-----------
Wireless Telecom Services - 3.5%
150,000 CCC/Caa1 Alamosa Delaware, Inc., 8.5%, 1/31/12 (144A) $ 147,000
170,000 CCC+/B3 MetroPCS, Inc., 10.75%, 10/1/11 (144A) 184,450
275,000 CCC/Caa1 Ubiquitel Operating Co., 9.87%, 3/1/11 (144A) 275,000
CAD 240,000 BB+/Ba3 Rogers Cantel, Inc., 10.5%, 6/1/06 194,866
150,000 CCC+/B3 Mobifon Holdings, 12.5%, 7/31/10 (144A) 171,000
115,000 B+/Ba3 Mobile Telesystems Finance, 8.375%, 10/14/10 (144A) 108,388
-----------
$ 1,080,704
-----------
Total Telecommunication Services $ 1,802,217
-----------
Utilities - 0.9%
Electric Utilities - 0.6%
189,200 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) $ 185,416
-----------
Multi-Utilities & Unregulated Power - 0.3%
30,000 B/B1 Reliant Resources, Inc., 9.25%, 7/15/10 $ 32,025
60,000 B/B1 Reliant Resources, Inc., 9.5%, 7/15/13 64,650
-----------
$ 96,675
-----------
Total Utilities $ 282,091
-----------
TOTAL CORPORATE BONDS
(Cost $16,575,719) $16,990,940
-----------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.4%
395,358 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 to 11/1/33 $ 404,327
350,035 AAA/Aaa Federal Home Loan Mortgage Corp. (Gold), 5.0%, 6/1/34 338,260
91,229 AAA/Aaa Federal Home Loan Mortgage Corp. (Gold), 6.0%, 11/1/33 93,293
86,744 AAA/Aaa Federal Home Loan Bank, 5.5%, 10/1/16 88,915
415,710 AAA/Aaa Federal Home Loan Bank, 6.0%, 6/1/17 433,784
250,000 AAA/Aaa Federal National Mortgage Association, 6.0%, TBA 255,156
414,338 AAA/Aaa Federal National Mortgage Association, 5.5%, 3/1/18 to 5/1/34 419,071
767,760 AAA/Aaa Federal National Mortgage Association, 6.0%, 7/1/17 to 1/1/34 788,211
AUD 300,000 AAA/Aaa Federal National Mortgage Association, 6.375%, 8/15/07 212,738
28,419 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/31 to 2/1/32 29,638
2,293 AAA/Aaa Federal National Mortgage Association, 7.0%, 9/1/29 2,428
462 AAA/Aaa Federal National Mortgage Association, 7.5%, 6/1/30 496
198,714 AAA/Aaa Government National Mortgage Association, 5.5%, 4/20/34 198,549
1,588,679 AAA/Aaa Government National Mortgage Association, 6.0%, 6/15/17 to 10/15/33 1,638,648
628,729 AAA/Aaa Government National Mortgage Association, 6.5% 3/15/29 to 1/15/34 657,893
10,160 AAA/Aaa Government National Mortgage Association, 7.0%, 3/15/31 10,800
33,092 AAA/Aaa Government National Mortgage Association, 7.5% 5/15/23 35,339
445,636 AAA/Aaa Government National Mortgage Association II, 6.0%, 11/20/33 456,882
196,808 AAA/Aaa Government National Mortgage Association II, 5.5%, 3/20/34 196,644
75,000 AAA/Aaa U.S. Treasury Bond, 5.25%, 2/15/29 73,535
190,000 AAA/Aaa U.S. Treasury Notes 5.375%, 2/15/31 191,625
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $6,520,373) $ 6,526,232
-----------
FOREIGN GOVERNMENT BONDS - 12.8%
ITL 410,000,000 B+/B2 Banco Nac De Desen Econo , 8.0% 4/28/10 $ 229,962
CAD 27,000 AAA/Aaa Canadian Government, 4.25%, 9/1/08 20,345
CAD 315,000 AAA/Aaa Canadian Government, 5.25%, 6/1/12 243,276
CAD 200,000 AAA/Aaa Candian Government, 5.75%, 9/1/06 157,301
100,000 B+/B2 Federal Republic of Brazil, 11.0%,1/11/12 100,600
AUD 150,000 AAA/Aaa Government of Australia, 4.0%, 8/20/15 145,242
EUR 343,000 AAA/Aaa Government of France, 3.0%, 7/25/09 486,153
SEK 5,000 TSY/Aaa Swedish Government, 5.25%, 3/15/11 698
NOK 3,410,000 TSY/Aaa Norwegian Government, 6.75%, 1/15/07 534,409
AUD 332,000 AA/Aa2 Ontario Province, 5.5%, 4/23/13 219,785
AUD 207,000 NR/Aaa Queensland Treasury, 6.0%, 8/14/13 144,105
253,509 BB+/Ba2 Republic of Columbia, 9.75%, 4/9/11 280,127
185,000 BB-/Ba3 Republic of Peru, 8.375%, 5/3/16 172,050
EUR 125,000 BBB/Baa2 Republic of South Africa, 5.25%, 5/16/13 148,233
145,000 BB+/Baa3 Russia Regs., 5.0%, 3/31/30 132,385
SEK 2,955,000 TSY/Aaa Swedish Government, 5.5%, 10/08/12 418,061
SEK 2,150,000 TSY/Aaa Swedish Government, 8.0%, 8/15/07 322,873
AUD 25,000 AA+/Aa1 Swedish Export Credit, 4.1%, 2/13/06 16,994
DEM 180,000 BBB-/Baa3 United Mexican States, 8.25%, 2/24/09 127,161
-----------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $3,492,603) $ 3,899,760
-----------
The accompanying notes are an integral part of these financial statements. 11
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount S&P/Moody's
USD ($) Ratings Value
SOVEREIGN ISSUES - 0.7%
75,000 CC/B3 Dominican Republic, 9.04%, 1/23/13 (144A) $ 47,250
75,000 BB-/Ba3 Republic of Peru, 9.125%, 2/21/12 76,875
100,000 BB-/Ba3 Republic of Peru, 9.875%, 2/6/15 104,500
-----------
TOTAL SOVEREIGN ISSUES
(Cost $267,376) $ 228,625
-----------
SUPERNATIONAL BONDS - 0.5%
Insurance - 0.5%
NZD 258,000 AAA/Aaa International Finance Corp., 6.75%, 7/15/09 $ 164,996
-----------
TOTAL SUPERNATIONAL BONDS
(Cost $113,817) $ 164,996
-----------
MUNICIPAL BONDS - 1.2%
90,000 BBB/Baa3 Golden State Tobacco Securitization, 6.75%, 6/1/39 $ 80,862
100,000 NR/NR Wayne Charter County SPL, 6.75%, 12/1/15 85,344
175,000 B/Caa2 New Jersey Economic Development Authority
Special Facility Revenue, 7.0%, 11/15/30 135,630
60,000 BBB/Baa3 Tobacco Settlement Financing Corp., 7.0%, 6/1/41 55,553
-----------
TOTAL MUNICIPAL BONDS
(Cost $346,230) $ 357,389
-----------
Shares
TEMPORARY CASH INVESTMENT - 1.9%
Securities Lending Collateral - 1.8%
578,396 Securities Lending Investment Fund, 1.29% $ 578,395
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $578,396) $ 578,395
-----------
TOTAL INVESTMENT IN SECURITIES - 97.8%
(Cost $29,602,009) (a) $30,532,756
-----------
OTHER ASSETS AND LIABILITIES - 2.2% $ 696,710
-----------
TOTAL NET ASSETS - 100.0% $31,229,467
===========
12 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
N/R Not rated by either S&P or Moddy's
TSY Treasury Security
* Non-income producing security.
TBA TBA (To Be Assigned) securities are purchased on a forward commitment
basis with an approximate (generally plus/minus 2.5%) principal and no
definite maturity date period The actual principal amount and maturity
date will be determined upon settlement when the specific mortgage pools
are assigned.
(144A) Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $7,731,379 or 24.7%
of total net assets.
Note: The Porfolio's investments in mortgage-backed securites of the Government
Mortgage Association (GNMA) and the Federal National Mortgage Association
(FNMA) are interests in separate pools of mortgages. All separate
investments in the issuer which have the same coupon rate have been
aggregated for the purpose of presentation in the schedule of
investments.
Note: Principal amounts are denominated in US dollars unless otherwise denoted.
AUD Australian dollar
DKK Danish kroner.
EURO Euro dollar.
NZD New Zealand dollar.
DEM Deutsche Marks.
CAD Canadian Dollar.
ITL Italian Lira.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
33,250 AMR Corp., 9.0%, 8/1/12 $ 27,174
166,250 JLG Industries Inc., 8.375%, 6/15/12 169,740
95,000 Lucent Technologies, Inc., 5.5%, 11/15/08* 90,190
285,000 Provident Companies Inc., 7.0%, 7/15/18 278,708
----------
Total $ 565,812*
==========
*Security sold as of June 30, 2004, but not returned from loan.
The accompanying notes are an integral part of these financial statements. 13
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 5/1/03
6/30/04 to
Class II (unaudited) 12/31/03 (a)
Net asset value, beginning of period $ 11.01 $10.41
------- ------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.25 $ 0.41
Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.23) 0.62
------- ------
Net increase from investment operations $ 0.02 $ 1.03
Distributions to shareowners:
Net investment income (0.31) (0.43)
Net realized gain (0.16) -
------- ------
Net increase (decrease) in net asset value $ (0.45) $ 0.60
-------- ------
Net asset value, end of period $ 10.56 $11.01
======= ======
Total return* 0.19% 10.90%
Ratio of net expenses to average net assets+ 1.42%** 1.49%**
Ratio of net investment income (loss) to average net assets+ 5.60%** 5.08%**
Portfolio turnover rate 51%** 68%
Net assets, end of period (in thousands) $11,833 $3,663
Ratios with no waiver of management fees and assumption of expenses by
PIM and no reduction for fees paid indirectly:
Net expenses 1.42%** 1.49%**
Net investment income (loss) 5.60%** 5.08%**
(a) Class II shares were first publicly offered on May 1, 2003.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
14 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Strategic
Income
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $565,812)
(Cost $29,602,009) $30,532,756
Cash 1,103,312
Foreign currencies, at value (cost $452,063) 452,882
Receivables --
Investment securities sold 99,189
Fund shares sold 63,956
Dividends, interest and foreign taxes withheld 518,040
Other 395
-----------
Total assets $32,770,530
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 732,931
Fund shares repurchased 182,840
Dividends 2,901
Upon return for securities loaned 578,396
Forward foreign currency portfolio hedge contracts, open -- net 5,662
Due to bank --
Due to affiliates 22,297
Accrued expenses 16,036
Other --
-----------
Total liabilities $ 1,541,063
-----------
NET ASSETS:
Paid-in capital $29,754,738
Accumulated net investment income (loss) 136,607
Accumulated undistributed net realized gain (loss) 412,206
Net unrealized gain (loss) on:
Investments 930,747
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (4,831)
-----------
Total net assets $31,229,467
-----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $19,396,101
Shares outstanding 1,836,427
-----------
$ 10.56
Class II:
No par value (unlimited number of shares authorized)
Net assets $11,833,366
Shares outstanding 1,120,547
-----------
Net asset value per share $ 10.56
The accompanying notes are an integral part of these financial statements. 15
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Strategic Income
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends $ --
Interest 940,961
Income on securities loaned, net 1,048
Other --
-----------
Total investment income $ 942,009
-----------
EXPENSES:
Management fees $ 87,824
Transfer agent fees 1,383
Distribution fees (Class II) 9,221
Administrative fees 9,250
Custodian fees 11,172
Professional fees 34,553
Printing 4,607
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,010
-----------
Total expenses $ 159,020
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
-----------
Net expenses $ 159,020
-----------
Net investment income (loss) $ 782,989
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 416,409
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (3,412)
-----------
$ 412,997
-----------
Change in net unrealized gain or loss from:
Investments $(1,181,610)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 12,963
-----------
$(1,168,647)
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ (755,650)
===========
Net increase (decrease) in net assets resulting
from operations $ 27,339
===========
16 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Strategic
Income VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 782,989 $ 1,068,721
Net realized gain (loss) on investments 412,997 713,901
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (1,168,647) 1,695,515
----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 27,339 $ 3,478,137
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (586,082) $(1,087,224)
Class II (212,869) (52,386)
Net realized gain
Class I (294,735) --
Class II (171,204) --
Tax return of capital
Class I -- --
Class II -- --
----------- -----------
Total distributions to shareowners $(1,264,890) $(1,139,610)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $11,917,524 $11,160,025
Reinvestment of distributions 1,239,783 1,105,582
Cost of shares repurchased (3,666,138) (6,320,659)
----------- -----------
Net increase (decrease) in net assets
resulting from fund share transactions $ 9,491,169 $ 5,944,948
----------- -----------
Net increase (decrease) in net assets $ 8,253,618 $ 8,283,475
----------- -----------
NET ASSETS:
Beginning of period $22,975,849 $14,692,374
----------- -----------
End of period $31,229,467 $22,975,849
=========== ===========
Accumulated/(distributions in excess of)
net investment income (loss) $ 136,607 $ 152,569
=========== ===========
The accompanying notes are an integral part of these financial statements. 17
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Strategic Income VCT Portfolio (The Portfolio) is a portfolio of
Pioneer Variable Contracts Trust (the Trust) 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 nineteen 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)
The portfolio commenced operations on May 1, 2003. Portfolio shares may only be
purchased by insurance companies for the purpose of funding variable annuity or
variable life insurance contracts, and may also be purchased by qualified
pension and retirement plans.
The investment objective of Strategic Income Portfolio is to produce a high
level of current income.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting years. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolios are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Trading in foreign equity securities is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The value of such securities used in computing the net
asset value of the Portfolio's shares, based on the last sale price on the
principal exchange where they traded, are determined as of such times. As
of June 30, 2004, there were no securities fair valued.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable diligence. Interest income,
including interest on income bearing cash accounts, is recorded on the
accrual basis. Discounts and premiums on fixed income securities are
accreted and amortized, respectively, on a yield-to-maturity basis and are
included in interest income. Dividend and interest income from foreign
securities are reported net of unrecoverable foreign taxes withheld at the
applicable country rates.
Fixed income securities are valued at prices supplied by independent
pricing services, which consider such
18
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
factors as Treasury spreads, yields, maturities and ratings. Valuations may
be supplemented by dealers and other sources, as required. Securities for
which market quotations are not readily available are valued at their fair
values as determined by, or under the direction of, the Board of Trustees.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable diligence. Interest income,
including interest on income bearing cash accounts, is recorded on the
accrual basis, net of unrecoverable foreign taxes withheld at the
applicable country rates. All discounts/premiums are accreted/amortized for
financial reporting purposes.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
D. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
In addition to the requirements of the Internal Revenue Code, the Portfolio
may also be required to pay local taxes on the recognition of capital gains
and/or the repatriation of foreign currencies in certain countries. During
the six months ended June 30, 2004, no such taxes were paid.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
19
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Pioneer
Strategic
Income
VCT Portfolio
2003
--------------
Distributions paid from:
Ordinary Income $1,139,610
Long-Term capital gain --
----------
1,139,610
Return of Capital --
----------
Total distributions $1,139,610
==========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 380,350
Undistributed long-term gain/
(Capital loss carryforward) 212,557
Unrealized appreciation (depreciation) 2,119,373
----------
Total $2,712,280
==========
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively. Shareowners of each class share all expenses and
fees paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3). Income, common expenses and realized
and unrealized gains and losses are calculated at the Portfolio level and
allocated daily to each class of shares based on the respective percentage
of adjusted net assets at the beginning of the day. Distributions paid by
the Portfolio with respect to each class of shares are calculated in the
same manner, at the same time, and in the same amount, except that Class I
and Class II shares can bear different transfer agent and distribution
fees. Dividends and distributions to shareowners are recorded on the
ex-dividend date. Income, expenses (excluding 12b-1 fees) and gains and
losses are calculated at the Portfolio level and are allocated daily based
on the respective percentage of adjusted net assets at the beginning of the
day.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets.
The portion of the Portfolios' expenses attributable to Class II will be
reduced only to the extent such expenses are reduced for Class I shares (or
Class II shares). Pioneer may subsequently recover reimbursed expenses (within
three years of being incurred) from certain Portfolios if the expense ratio of
the Class I (or Class II) shares would otherwise be less than the expense
limitation of the class. Each class will reimburse PIM no more than the amount
by which that class' expenses were reduced.
20
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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- --------------------------------------------------------------------------------
In addition, under the management and administration agreement, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $19,621 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $258 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$2,418 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------------------------
Strategic Income Portfolio $29,602,495 $1,359,738 $(427,477) $930,261
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $14,699,615 and 6,400,106, respectively. The cost of
purchases and the proceeds from sales of U.S. Government obligations were
$192,761 and $398,065, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Strategic Income Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -------------------------------------------------------------------------------------------
CLASS I:
Shares sold 276,859 $ 3,041,159 712,653 $ 7,385,764
Reinvestment of distributions 79,451 855,733 100,561 1,053,192
Shares repurchased (273,985) (2,992,605) (579,108) (6,045,569)
-------- ----------- -------- -----------
Net increase 82,325 $ 904,287 234,106 $ 2,393,387
======== =========== ======== ===========
CLASS II:
Shares sold 813,612 $ 8,876,365 353,538 $ 3,774,292
Reinvestment of distributions 35,881 384,050 4,862 52,365
Shares repurchased (61,738) (673,533) (25,608) (275,096)
-------- ----------- -------- -----------
Net increase 787,755 $ 8,586,882 332,792 $ 3,551,561
======== =========== ======== ===========
21
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts
During the six months ended June 30, 2004, certain Portfolios had entered into
various contracts that obligate the Portfolios to deliver currencies at
specified future dates. At the maturity of a contract, the Portfolios must make
delivery of the foreign currency. Alternatively, prior to the settlement date
of a portfolio hedge, the Portfolio may close out such contracts by entering
into an offsetting hedge contract. As of June 30, 2004, the Portfolio had no
outstanding settlement hedges.
Outstanding forward portfolio hedge contracts were as follows:
Net
Unrealized
Contracts to In Exchange Settlement Gain
Portfolio Deliver For Date Value (Loss)
- -----------------------------------------------------------------------------------------------------------
Strategic Income Portfolio EURO (970,000) $(1,176,610) 7/21/04 $(1,182,307) $ 5,697
Strategic Income Portfolio EURO (118,399) $ (143,014) 7/2/04 $ (144,459) $ 1,445
Strategic Income Portfolio NOK (500,000) $ 72,171 7/6/04 $ 72,192 $ (21)
Strategic Income Portfolio NOK (1,000,000) $ 143,014 7/2/04 $ 144,473 $(1,459)
22
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This page for your notes.
23
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This page for your notes.
24
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This page for your notes.
25
[PIONEER INVESTMENTS LOGO]
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16075-00-0804
[PIONEER INVESTMENTS LOGO]
PIONEER VARIABLE CONTRACTS TRUST
Pioneer America Income VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------
Pioneer America Income VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 6
Notes to Financial Statements 10
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Government & Agency Obligations 90.7%
Temporary Cash Investment 6.9%
Collateralized Mortgage Obligations 1.8%
U.S. Corporate Bonds 0.6%
Maturity Distribution
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
0-1 years 3.8%
1-3 years 42.4%
3-4 years 26.4%
4-6 years 18.3%
6-8 years 0.5%
8+ years 8.6%
Five Largest Holdings
(As a percentage of equity holdings)
1. U.S. Treasury Notes, 6.5%,
2/15/10 13.05%
2. U.S. Treasury Notes,
6.25%, 8/15/23 5.05
3. Federal Home Loan Mortgage
Corp., 6.0%, 3/1/33 3.47
4. U.S. Treasury Notes,
6.375%, 8/15/27 2.57
5. Federal Home Loan Mortgage
Corp., 6.0%, 5/1/34 2.52
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $10.04 $10.37
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.3209 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
America Income VCT Portfolio at net asset value, compared to that of the Lehman
Brothers Fixed-Rate Mortgage-Backed Securities Index and of Lehman Brothers
Government Bond Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer Lehman Lehman
America Income Government Fixed Rate
VCT Portfolio Bond Index+ Mortgage Index+
-------------- ----------- ---------------
3/95 $10,000 $10,000 $10,000
$10,555 $11,302 $11,098
6/96 $10,665 $11,615 $11,693
$11,536 $12,727 $12,802
6/98 $12,445 $13,981 $13,694
$12,092 $13,667 $13,947
6/00 $13,480 $15,477 $15,505
$14,317 $16,598 $16,779
6/02 $15,755 $18,506 $18,246
$16,340 $18,943 $18,802
6/04 $16,327 $18,920 $18,948
+ Index comparisons begin 2/28/95. The Lehman Brothers Fixed-Rate
Mortgage-Backed Securities Index is an unmanaged index including 15- and
30-year fixed rate securities backed by pools of the Government National
Mortgage Association, Federal Home Loan Mortgage Corporation and Federal
National Mortgage Association. The Lehman Brothers Government Bond Index is
an unmanaged performance measure of U.S. Treasury debt, all publicly issued
debt of U.S. government agencies and quasi-federal corporations of corporate
debt guaranteed by the U.S. government. Index returns are calculated monthly,
assume reinvestment of dividends and, unlike Portfolio returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in
any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- -------------------------------------------------------------------------
Net Asset Value
- -------------------------------------------------------------------------
Life-of-Class 5.38%
(3/1/95)
5 Years 6.17%
1 Year -0.26%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
2
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In an improving economy, uncertainty about rising interest rates dominated
market sentiment. As a result, the yields on fixed-income securities declined
and then rose, as investors tried to determine when the Federal Reserve would
raise interest rates and by how much. In this volatile environment, Pioneer
America Income VCT Portfolio delivered a relatively high level of income to
shareholders. In the following interview, Richard Schlanger, a member of the
Pioneer fixed-income team, discusses the factors that affected the fixed-income
market and the Portfolio over the past six months.
Q: How did the Portfolio perform during the six-month period ended June 30,
2004?
A: For the six-month period ended June 30, 2004, Class II shares of Pioneer
America Income VCT Portfolio produced a total return of -0.08% at net asset
value. The Portfolio outperformed the Lehman Brothers Government Bond
Index, which returned -0.13% for the same period. It underperformed the
Lehman Brothers Fixed-Rate Mortgage-Backed Index, which returned 0.77%. At
the end of the period, the 30-day SEC yield for Class A shares was 2.94%.
Q: What was the investment environment like during the period?
A: For the first three months of 2004, concerns about geopolitical issues and
the "jobless" economic recovery kept interest rates at 45-year lows. When
we moved into the second calendar quarter of 2004, however, the employment
picture changed dramatically. Several hundred thousand jobs were added to
the economy in April and May, leading to concerns about the pace of Federal
Reserve tightening, accelerating inflation and higher interest rates. In
this environment, market rates rose, causing the yield curve to flatten.
(The yield curve shows the relationship between bond yields and maturity
lengths.) Normally, the yield curve is positively sloped with yields on
long-term bonds exceeding those on short-term bonds. The yield curve
flattens when yields on short-term bonds rise more than those on long-term
bonds. This was the case during the period. As interest rates rose, bond
yields went up and prices declined.
Q: What investment strategies contributed to performance?
A: About 65% of net assets were diversified in mortgage-backed securities
issued by Government Sponsored Enterprises, such as the Government National
Mortgage Association (Ginnie Mae), the Federal Home Loan Mortgage
Corporation (Freddie Mac) and the Federal National Mortgage Association
(Fannie Mae). (Ginnie Mae securities are backed by the full faith and
credit of the government. A full faith and credit backing applies to
underlying Portfolio securities not to Portfolio shares.) Because mortgages
outperformed Treasury securities, the Portfolio's overweight in the sector
relative to the benchmark was the biggest aid to total return. In the
volatile interest-rate environment, we were concerned about the prepayment
risk that is associated with mortgage-backed securities. When interest
rates decline, homeowners often "prepay" their existing mortgages and
refinance their homes at a lower rate. Significant prepayment activity can
result in declining yields and share prices in portfolios with investments
in mortgages. To mitigate this risk, we selected mortgages with lower
weighted average coupon rates that we believe are less likely to be
prepaid.
Q: What investment strategies detracted from performance?
A: A little more than 31% of the Portfolio was invested in Treasury and agency
securities with predominently short- and intermediate-term maturities. As
yields on securities in these maturity ranges moved higher, their prices
declined. As a result, the Portfolio's exposure to bonds in the middle of
the yield curve held back results.
Q: What is your outlook over the next several months?
A: We believe the economy is on a sustained path for improvement and are
concerned that the seeds for higher inflation are being planted. The
Federal Reserve raised interest rates by 0.25% on June 30 and is likely to
continue doing so at a measured pace over the next two years. As interest
rates move higher, we will consider using a barbell strategy in managing
the Treasury portion of the Portfolio. This means we may sell some of our
intermediate-term holdings and add securities in the one-to-two-year range
and in the 20 plus-year range. With this approach, the Portfolio should
benefit from the higher yields that long-term bonds provide and from the
relative price stability of short-term securities. We will also seek
mortgage-backed securities that are selling at a discount and that can
provide the Portfolio with relatively high yields as well as the potential
for price appreciation.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Principal
Amount Value
CORPORATE BONDS - 0.6%
Miscellaneous - 0.6%
$ 250,000 Private Export Funding, 3.375%, 2/15/09 $ 242,131
----------
TOTAL CORPORATE BONDS
(Cost $240,945) $ 242,131
----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 93.1%
550,000 Federal Farm Credit Bank, 6.5%, 9/29/06 $ 589,480
100,000 Federal Farm Credit Bank, 5.88%, 9/8/08 107,242
400,000 Federal Farm Credit Bank, 4.9%, 3/17/14 375,846
200,000 Federal Farm Credit Bank, Medium Term Note, 6.38%, 11/27/06 214,430
400,000 Federal Home Loan Mortgage Corp., 4.53%, 10/30/06 411,843
850,000 Federal Home Loan Mortgage Corp., 5.875%, 11/15/07 909,101
300,000 Federal Home Loan Mortgage Corp., 5.89%, 6/30/08 322,359
3,921,848 Federal Home Loan Mortgage Corp., 6.0%, 10/1/32 to 5/1/34 4,011,435
901,212 Federal Home Loan Mortgage Corp., 6.5%, 1/1/29 to 7/1/32 940,477
140,000 Federal Home Loan Mortgage Corp., 6.7%, 1/5/07 151,495
185,833 Federal Home Loan Mortgage Corp., 7.0%, 4/1/30 to 4/1/32 196,977
73,070 Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 78,699
2,419,765 Federal National Mortgage Association, 5.5%, 3/1/18 to 3/1/34 2,436,771
2,289,692 Federal National Mortgage Association, 6.0%, 12/1/11 to 6/1/33 2,349,031
500,000 Federal National Mortgage Association, 6.5%, TBA 30 Year 520,469
1,720,919 Federal National Mortgage Association, 6.5%, 7/1/21 to 9/1/32 1,794,641
467,446 Federal National Mortgage Association, 7.0%, 9/1/18 to 1/1/32 495,003
35,476 Federal National Mortgage Association, 7.5%, 2/1/31 38,031
81,061 Federal National Mortgage Association, 9.0%, 4/1/33 90,116
500,000 Government National Mortgage Association, 4.5%, TBA 30 Year 469,375
723,092 Government National Mortgage Association, 4.5%, 8/15/33 to 6/15/34 680,471
374,405 Government National Mortgage Association, 5.0%, 7/15/17 379,866
1,305,089 Government National Mortgage Association, 5.5%, 4/15/31 to 7/1/33 1,306,546
3,966,710 Government National Mortgage Association, 6.0%, 5/15/17 to 9/15/33 4,079,080
3,312,786 Government National Mortgage Association, 6.5%, 4/15/17 to 1/15/34 3,470,454
940,004 Government National Mortgage Association, 7.0%, 1/15/26 to 4/15/33 999,827
172,281 Government National Mortgage Association, 7.5%, 10/15/22 to 1/15/32 185,983
148,618 Government National Mortgage Association I, 6.0%, 11/15/30 152,523
275,243 Government National Mortgage Association I, 6.5%, 5/15/29 to 5/15/31 288,099
125,788 Government National Mortgage Association I, 7.0%, 11/15/30 to 12/15/30 133,783
35,837 Government National Mortgage Association I, 7.5%, 1/15/31 38,624
416,154 Government National Mortgage Association II, 5.0%, 12/20/18 418,994
488,390 Government National Mortgage Association II, 5.5%, 12/20/34 487,983
607,748 Government National Mortgage Association II, 6.0%, 12/20/18 to 6/20/34 624,636
200,086 Government National Mortgage Association II, 6.5%, 8/20/28 to 9/20/31 209,062
255,695 Government National Mortgage Association II, 7.0%, 5/20/26 to 1/20/31 271,797
13,284 Government National Mortgage Association II, 7.5%, 8/20/27 14,326
4,640 Government National Mortgage Association II, 8.0%, 8/20/25 5,091
12,000 Tennessee Valley Authority, 6.75%, 6/1/28 282,000
400,000 U.S. Treasury Bonds, 7.25%, 5/15/16 483,578
925,000 U.S. Treasury Bonds, 6.375%, 8/15/27 1,044,058
4,700,000 U.S. Treasury Notes, 6.5%, 2/15/10 5,295,946
4 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
Principal
Amount Value
U.S. Government and Agency Obligations - (Con't)
$ 200,000 U.S. Treasury Notes, 4.75%, 5/15/14 $ 202,086
1,850,000 U.S. Treasury Notes, 6.25%, 8/15/23 2,048,587
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $39,224,189) $39,606,221
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.7%
Government - 1.7%
250,000 Freddie Mac 3.2%, 5/21/08 $ 244,210
300,000 Freddie Mac 5.25%, 11/15/12 294,354
191,180 Freddie Mac 5.0%, 1/15/16 195,031
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS - 1.72%
(Cost $749,943) $ 733,595
-----------
TEMPORARY CASH INVESTMENT - 7.0%
Repurchase Agreement - 7.0%
3,000,000 UBS Warburg 1.25% dated 6/30/04, repurchase price of $3.000,000 plus
accrued interest on 7/1/04, collateralized by $2,911,000
U.S. Treasury Note, 5.75%, 11/15/05 $ 3,000,000
-----------
TOTAL TEMPORARY CASH INVESTMENT - 7.0%
(Cost $3,000,000) $ 3,000,000
-----------
TOTAL INVESTMENTS IN SECURITIES - 102.4%
(Cost $43,215,077) $43,581,947
-----------
OTHER ASSETS AND LIABILITIES - (2.4%) $(1,028,597)
-----------
TOTAL NET ASSETS - 100.0% $42,553,350
===========
(d) TBA (To Be Assigned) securities are purchased on a forward commitment basis
with an approximate (generally plus/minus 2.5%) principal and no definite
maturity date period. The actual principal amount and maturity date will be
determined upon settlement when the specific mortgage pools are assigned.
The accompanying notes are an integral part of these financial statements. 5
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 5/1/03(a)
6/30/04 to
Class II (a) (unaudited) 12/31/03
Net asset value, beginning of period $10.37 $10.57
------ ------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.22 $ 0.21
Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.23) (0.15)
------ ------
Net increase (decrease) from investment operations $(0.01) $0.06
Distributions to shareowners:
Net investment income (0.32) (0.26)
Net realized gain -- --
------ ------
Net increase (decrease) in net asset value $(0.33) $(0.20)
------ ------
Net asset value, end of period $10.04 $10.37
------ ------
Total return* (0.08)% 2.60%
Ratio of net expenses to average net assets+ 1.08%** 1.01%**
Ratio of net investment income (loss) to average net assets+ 4.12%** 2.42%**
Portfolio turnover rate 28%** 34%
Net assets, end of period (in thousands) $7,118 $2,637
Ratios with no waiver of management fees and assumption of expenses by PIM and
no reduction for fees paid indirectly:
Net expenses 1.08%* * 1.01%**
Net investment income (loss) 4.12%* * 2.42%**
(a) Class II shares were first publicly offered on May 1, 2003.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.)
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
6 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
America
Income
VCT Portfolio
ASSETS:
Investment in securities, at value
(Cost $43,215,077) $43,581,947
Cash 31,752
Foreign currencies, at value --
Receivables --
Investment securities sold --
Fund shares sold 58,936
Dividends, interest and foreign taxes withheld 357,466
Other 418
-----------
Total assets $44,030,519
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 1,424,051
Fund shares repurchased 45
Dividends --
Upon return for securities loaned --
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 24,632
Accrued expenses 28,441
Other --
-----------
Total liabilities $ 1,477,169
-----------
NET ASSETS:
Paid-in capital $43,324,529
Accumulated net investment income (loss) (239,082)
Accumulated undistributed net realized gain (loss) (898,967)
Net unrealized gain (loss) on:
Investments 366,870
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
Total net assets $42,553,350
-----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $35,435,314
Shares outstanding 3,533,687
-----------
Net asset value per share $ 10.03
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 7,118,036
Shares outstanding 708,630
-----------
Net asset value per share $ 10.04
The accompanying notes are an integral part of these financial statements. 7
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
America
Income
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends $ --
Interest 1,130,558
Income on securities loaned, net --
Other --
----------
Total investment income $1,130,558
----------
EXPENSES:
Management fees $ 118,586
Transfer agent fees 1,383
Distribution fees (Class II) 5,992
Administrative fees 9,250
Custodian fees 10,276
Professional fees 26,051
Printing 3,519
Fees and expenses of nonaffiliated trustees --
Miscellaneous 573
----------
Total expenses $ 175,630
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
----------
Net expenses $ 175,630
----------
Net investment income (loss) $ 954,928
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ (18,903)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ (18,903)
----------
Change in net unrealized gain or loss from:
Investments $ (878,602)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ (878,602)
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ (897,505)
==========
Net increase (decrease) in net assets resulting
from operations $ 57,423
==========
8 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer America
Income VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 954,928 $ 2,011,935
Net realized gain (loss) on investments (18,903) 193,917
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (878,602) (1,192,887)
------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 57,423 $ 1,012,965
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (1,275,683) $ (2,321,232)
Class II (149,828) (26,127)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
------------ ------------
Total distributions to shareowners $ (1,425,511) $ (2,347,359)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 6,288,054 $ 10,875,454
Reinvestment of distributions 1,425,494 2,347,346
Cost of shares repurchased (10,954,747) (34,276,542)
------------ ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ (3,241,200) $(21,053,742)
------------ ------------
Net increase (decrease) in net assets $ (4,609,288) $(22,388,136)
------------ ------------
NET ASSETS:
Beginning of period $ 47,162,638 $ 69,550,779
------------ ------------
End of period $ 42,553,350 $ 47,162,643
============ ============
Accumulated/(distributions in excess of)
net investment income (loss) $ (239,082) $ 231,501
============ ============
The accompanying notes are an integral part of these financial statements. 9
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer America Income VCT Portfolio (The Portfolio) is a portfolio of
Pioneer Variable Contracts Trust (the Trust) 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 nineteen 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)
The Portfolio commenced operations on May 1, 2003. Portfolio shares may only be
purchased by insurance companies for the purpose of funding variable annuity or
variable life insurance contracts, and may also be purchased by qualified
pension and retirement plans.
The investment objective of America Income Portfolio is to produce a high level
of current income as consistent with preservation of capital.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting years. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolios are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Trading in foreign equity securities is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The value of such securities used in computing the net
asset value of the Portfolio's shares, based on the last sale price on the
principal exchange where they traded, are determined as of such times. As
of June 30, 2004 there were no fair valued securities.
Fixed income securities are valued at prices supplied by independent
pricing services, which consider such factors as Treasury spreads, yields,
maturities and ratings. Valuations may be supplemented by dealers and other
sources, as required. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the Board of Trustees. Temporary cash investments
are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
10
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
D. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, America Income Trust Portfolio had a net
capital loss carryforward of $817,947, of which the following amounts will
expire between 2008 and 2011 if not utilized: $382,424 in 2008 and $435,523
in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
Pioneer
America
Income
VCT Portfolio
2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $2,347,359
Long-Term capital gain --
----------
$2,347,359
Return of Capital --
----------
Total distributions $2,347,359
==========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 422,952
Undistributed long-term gain/
(Capital loss carryforward) (817,957)
Unrealized appreciation (depreciation) 1,046,300
----------
Total $ 651,305
==========
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively. Shareowners of each class share all expenses and
fees paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number
11
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3). Income, common expenses and realized
and unrealized gains and losses are calculated at the Portfolio level and
allocated daily to each class of shares based on the respective percentage
of adjusted net assets at the beginning of the day. Distributions paid by
the Portfolio with respect to each class of shares are calculated in the
same manner, at the same time, and in the same amount, except that Class I
and Class II shares can bear different transfer agent and distribution
fees. Dividends and distributions to shareowners are recorded on the
ex-dividend date. Income, expenses (excluding 12b-1 fees) and gains and
losses are calculated at the Portfolio level and are allocated daily based
on the respective percentage of adjusted net assets at the beginning of the
day.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.55% of the Portfolio's average daily net assets.
In addition, under the management and administration agreement, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $22,840 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $258 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$1,534 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ------------------------------------------------------------------------------------------------
America Income Portfolio $43,414,254 $391,118 $(223,425) $167,693
=========== ======== ========= ========
12
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of U.S. Government
obligations for the six months ended June 30, 2004, were $5,943,558 and
10,883,367, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
America Income Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- --------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 168,394 $ 1,696,627 711,258 $ 8,118,733
Reinvestment of distributions 124,770 1,275,682 221,712 2,321,232
Shares repurchased (1,059,762) (10,858,369) (3,202,256) (34,132,706)
--------------------------------------------------------------
Net increase (766,598) $ (7,886,060) (2,269,286) $(23,692,741)
==============================================================
CLASS II:
Shares sold 449,092 $ 4,591,427 265,643 $ 2,756,721
Reinvestment of distributions 14,695 149,812 2,521 26,114
Shares repurchased (9,382) (96,378) (13,939) (143,836)
--------------------------------------------------------------
Net increase 454,405 $ 4,644,861 254,225 $ 2,638,999
==============================================================
13
[PIONEER INVESTMENTS LOGO]
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16073-00-0804
[PIONEER INVESTMENTS LOGO]
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Emerging Markets VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- ----------------------------------------------
Pioneer Emerging Markets VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 10
Notes to Financial Statements 14
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
International Common Stocks 62.1%
Depositary Receipts for International Stocks 25.7%
U.S. Common Stocks 5.5%
Temporary Cash Investment 4.1%
International Preferred Stocks 2.6%
Geographical Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF PIE CHART]
South Korea 22.6%
Taiwan 9.7%
Brazil 9.4%
South Africa 7.1%
Mexico 6.8%
India 6.3%
Russia 4.6%
Thailand 4.1%
Malaysia 4.0%
Turkey 3.7%
Chile 3.2%
Indonesia 2.2%
Hungary 2.0%
Israel 1.9%
Singapore 1.9%
Poland 1.9%
Peru 1.5%
People's Republic of China 1.4%
Philippines 1.4%
United Kingdom 1.0%
Egypt 1.0%
Other (individually less than 1%) 2.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. Samsung Electronics Co. 4.09%
2. Telefonos de Mexico SA 3.11
3. Petrobras Brasileiro SA
(A.D.R.) 2.53
4. Anglo American Plc 2.25
5. Alumax, Inc. 2.09
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 16.27 $ 17.26
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.1286 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Emerging Markets VCT Portfolio at net asset value, compared to that of the
Morgan Stanley Capital International (MSCI) Emerging Markets Free Index.
Portfolio returns are based on net asset value and do not reflect any
applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer MSCI
Emerging Markets Emerging Markets
VCT Portfolio* Free Index
---------------- ----------------
10/98 $10,000 $10,000
$10,486 $10,675
$18,695 $17,766
6/00 $12,317 $12,330
$11,410 $12,037
6/02 $11,247 $11,315
$17,756 $17,682
6/04 $16,862 $17,540
The MSCI Emerging Markets Free Index is an unmanaged, capitalization-weighted
measure of 679 securities trading in 26 emerging markets; it reflects only
those securities available to foreign investors. Index returns are calculated
monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in the
Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ---------------------------------------------------------------------
Net Asset Value
- ---------------------------------------------------------------------
Life-of-Class 9.65%
(10/30/98)
5 Years 3.65%
1 Year 30.06%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
2
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
For the six months ended June 30, 2004, Pioneer Emerging Markets VCT
Portfolio's Class II shares delivered a total return at net asset value of
- -5.03%. Over the same time period, the MSCI Emerging Markets Free Index had a
total return of -0.78%.
In the following discussion, Mark Madden, portfolio manager of Pioneer Emerging
Markets VCT Portfolio, addresses the factors affecting the Portfolio's
performance and the outlook for the emerging markets.
Q: What factors influenced the performance of emerging markets in the six
months ended June 30, 2004?
A: A combination of accelerating economic growth, attractive stock valuations,
positive economic reforms, strong commodity prices and low interest rates
led to strong returns in emerging markets from March 2003 to early April
2004. However, beginning in mid-April 2004, emerging markets experienced
declines due to a number of factors. First, interest rates started to climb
higher as investors anticipated a U.S. Federal Reserve change in monetary
policy. Investors sought safe-haven investments while withdrawing funds
from emerging markets and other higher-risk asset classes. Second, the
Chinese government's efforts to slow its overheating economy led to
declines in Chinese stocks and stocks throughout Asia. Third, rising oil
and energy prices were perceived to pose a threat to global growth while
increasing the risk of inflation.
Over the last six months, the total return for the Portfolio was below that
of the benchmark MSCI Emerging Markets Free Index. One area that contributed
to the Portfolio's underperformance was a sell-off of Brazil's stock market
due to the country's reliance on external debt and concerns for higher rates.
We remain positive on Brazil's outlook, however, and we believe investors do
not adequately recognize the improvements that have been made in the economy
in recent years. Brazil now has both a large fiscal surplus and a current
account surplus; domestic real interest rates are the lowest in more than a
decade; and there is substantial pent-up domestic demand that should drive an
acceleration of economic growth.
Q: What is your investment strategy?
A: Our investment process is driven by rigorous research that focuses on
companies with strong long-term growth prospects and proven management
ability that sell at a discount to our estimation of fair value. We look
for companies that are well positioned in countries and industries with
favorable long-term trends and growth potential. We manage risk through
diversification among various countries, sectors and companies while
emphasizing stocks that are attractively valued.
Q: Where are you finding attractive opportunities in emerging markets?
A: As for countries, we currently favor Brazil, Thailand and Turkey. In all
three markets we see very attractive stock valuations and improved economic
prospects. Recent volatility has provided an opportunity, in our opinion,
to add to positions at attractive prices. The Portfolio long maintained an
overweight in India, but we recently reduced that position to slightly
above the index weight following the recent elections. In a surprising
outcome, Sonia Gandhi and the Congress party coalition soundly defeated the
incumbent National Democratic Alliance (NDA) party, which had been credited
with the progress seen in the Indian economy over the last few years.
Investors became concerned that the new administration may not have the
same emphasis on economic reforms necessary for future growth. We are more
cautious on our outlook for India until we see the policies of the new
administration.
As for sectors, we like the energy and consumer staples sectors. Energy
stocks are enjoying increasing profitability due to tight supply and strong
demand, and we expect this to continue in the medium term. Consumer spending
is picking up in many countries, and we expect the attractively valued stocks
in the consumer staples sector to benefit from this trend. We are less
optimistic on the technology sector, where we do not believe stronger demand
can be sustained. Technology profit margins continue to be under pressure,
and a weaker dollar may further erode profit margins of emerging markets
firms that export most of their production to the United States.
Q: What is your outlook?
A: In our last annual report, we wrote that we were optimistic on the prospects
for emerging markets over the next several years although we did expect
some correction in the coming year. Emerging markets have been correcting
over the last two months, and we expect this volatility may continue in the
near term. However, the basis for our longer term optimism remains in
place. Stock valuations in emerging markets are less expensive than in
developed markets, while economic growth rates of developing countries are
higher than those of developed markets. In addition, many companies in
emerging markets are gaining global market share by delivering quality
products and services at very competitive prices. The main risk to these
investments relates to the potential for global growth to falter. On the
other hand, if growth is too strong, inflation may accelerate, leading to
higher interest rates and lower stock valuations. We believe that the
markets are already beginning to price in these risks, and an opportunity
is developing to acquire stocks with strong long-term prospects at
attractive prices.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Investing in emerging markets carries its own set of risks, including but not
limited to, currency fluctuations, and social and economic instability.
However, we feel confident that the long-term prospects invite serious
consideration.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCKS - 2.6%
Materials - 0.3%
Diversified Metals & Mining - 0.3%
259,000 Caemi Mineracao E Metalurgia SA* $ 99,034
-----------
Total Materials $ 99,034
-----------
Capital Goods - 0.1%
Industrial Conglomerates - 0.1%
1,855 GS Holdings Corp.* $ 16,639
3,445 LG Corp. 30,901
-----------
$ 47,540
-----------
Total Capital Goods $ 47,540
-----------
Banks - 0.7%
Diversified Banks - 0.7%
2,541,700 Banco Itau Holding Financeira $ 235,144
-----------
Total Banks $ 235,144
-----------
Telecommunication Services - 1.5%
Integrated Telecommunication Services - 0.7%
14,401 Tele Norte Leste Participacoes (A.D.R.) $ 183,325
-----------
Wireless Telecommunication Services - 0.8%
10,900 Telesp Celular Participacoes (A.D.R.)* $ 85,894
5,800 Telemig Celular Participacoes (A.D.R.) 171,100
-----------
$ 256,994
-----------
Total Telecommunication Services $ 440,319
-----------
TOTAL PREFERRED STOCKS
(Cost $663,334) $ 822,037
-----------
COMMON STOCKS - 92.5%
Energy - 10.3%
Integrated Oil & Gas - 6.2%
225,000 CNOOC, Ltd. $ 95,517
5,480 Lukoil Holding (A.D.R.) 574,030
30,900 Petrobras Brasileiro SA (A.D.R.) 778,680
13,500 Surgutneftegaz (A.D.R.) (b)* 442,125
15,644,450 Tupras-Turkiye Petrol Rafinerileri AS 102,718
-----------
$ 1,993,070
-----------
Oil & Gas Equipment And Services - 0.4%
3,000 Samchully Co., Ltd. $ 143,240
-----------
Oil & Gas Exploration & Production - 2.0%
183,600 China Petroleum & Chemical $ 67,671
6,100 Mol Magyar Olaj 243,471
179,000 Panva Gas Holdings, Ltd.* 77,535
67,000 PTT Public Co., Ltd. 252,428
-----------
$ 641,105
-----------
Shares Value
Oil & Gas Refining Marketing &
Transportation - 1.7%
983,500 Petron Corp. $ 53,590
7,400 Polski Koncern Nafto (G.D.R.) 116,980
7,500 S-OIL Corp.* 313,146
2,120 TelecomAsia Corp. Public Co., Ltd. 69,430
-----------
$ 553,146
-----------
Total Energy $ 3,330,561
-----------
Materials - 14.7%
Aluminum - 0.1%
12,000 Catcher Technology Co., Ltd. $ 38,556
-----------
Commodity Chemicals - 1.5%
3,869 Daelim Industrial Co. $ 121,643
11,300 Reliance Industries, Ltd. (144A)* 226,848
12,010,000 Ultrapar Participacoes SA 128,312
-----------
$ 476,803
-----------
Construction Materials - 1.1%
5,150 Asia Cement Co., Ltd. $ 115,063
29,013,250 Akcansa Cimento AS 58,636
40,422 Lafarge Malayan Cement* 8,679
14,400 Siam City Cement Co., Ltd. 74,686
12,000 Siam Cement Co., Ltd. 71,872
2,932 Suez Cement Co. (G.D.R.)* 24,042
-----------
$ 352,978
-----------
Diversified Chemicals - 0.7%
200 Israel Chemicals, Ltd. $ 386
2,600 LG Chemicals, Ltd. 88,515
258,360 Sinopac Holdings Co. 135,772
-----------
$ 224,673
-----------
Diversified Metals & Mining - 3.0%
11,400 Anglo American Plc $ 238,032
4,900 Antofagasta Plc 83,845
3,800 Companhia Vale do Rio Doce (A.D.R.) 148,580
3,900 Industrias Penoles SA 13,936
17,200 KGHM Polska Miedz SA* 131,684
4,100 Norilsk Nickel 226,013
127,000 Yanzhou Coal Mining (Class H) 139,864
-----------
$ 981,954
-----------
Gold - 0.4%
25,500 IAMGOLD Corp. (b) $ 142,290
-----------
Paper Products - 0.2%
2,370 Aracruz Cellulose SA (A.D.R.)* $ 77,404
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Precious Metals & Minerals - 4.5%
33,200 Anglo American Plc $ 694,786
1,750 Anglogold, Ltd. 55,955
8,600 Anglogold, Ltd. (A.D.R.)(b) 276,576
20,400 Compania de Minas Buenaventura SA 450,840
-----------
$ 1,478,157
-----------
Specialty Chemicals - 0.9%
85,501 Formosa Plastic Corp.* $ 121,327
135,055 Nan Ya Plastics Corp. 178,645
-----------
$ 299,972
-----------
Steel - 2.1%
231,106 China Steel Corp., Ltd. $ 219,413
7,700 Pohang Iron & Steel Co., Ltd. (A.D.R.)* 258,027
16,800 Remgro, Ltd. 205,595
-----------
$ 683,035
-----------
Total Materials $ 4,755,822
-----------
Capital Goods - 4.1%
Building Products - 0.8%
12,500 Daewoo Heavy Industries & Machinery, Ltd. $ 151,670
2,530 Hanil Cement Co., Ltd. 97,062
-----------
$ 248,732
-----------
Construction, Farm Machinery &
Heavy Trucks - 0.2%
17,700 Punjab Tractors, Ltd.* $ 78,632
-----------
Construction & Engineering - 1.2%
240,000 CTCI Corp. $ 119,451
2,386,626 Enka Insaat VE Sanayi AS 49,004
7,900 Kyeryong Construction Industrial Co., Ltd. 72,767
9,600 LG Construction, Ltd. 158,825
-----------
$ 400,047
-----------
Electrical Components & Equipment - 0.6%
14,900 Bharat Heavy Electricals (Demat Shares) $ 162,829
7,512 Crompton Greaves, Ltd.* 21,267
-----------
$ 184,096
-----------
Industrial Conglomerates - 0.4%
3,675 GS Holdings Corp.* $ 54,673
6,825 LG Corp. 101,535
-----------
$ 156,208
-----------
Metal Fabricators - 0.3%
5,470 Korea Zinc Co. $ 90,913
-----------
Industrial Machinery - 0.6%
187,000 Yungtay Engineering Co., Ltd. $ 99,949
12,200 Daewoo Heavy Industries &
Machinery, Ltd.* 82,391
-----------
$ 182,340
-----------
Total Capital Goods $ 1,340,968
-----------
Shares Value
Commercial Services & Supplies - 0.5%
Diversified Commercial Services - 0.5%
17,656 Bidvest Group, Ltd. $ 150,339
-----------
Total Commercial Services &
Supplies $ 150,339
-----------
Transportation - 1.3%
Air Freight & Couriers - 0.2%
153,400 Singapore Post, Ltd. $ 78,675
-----------
Airlines - 0.3%
6,600 Korean Air* $ 86,183
-----------
Marine - 0.6%
11,880 Hyundai Merchant Marine Co.* $ 89,610
19,800 Samsung Heavy Industries Co., Ltd. 89,244
-----------
$ 178,854
-----------
Railroads - 0.2%
23,000 Malaysia International Shipping $ 72,759
-----------
Total Transportation $ 416,471
-----------
Automobiles & Components - 4.0%
Auto Parts & Equipment - 1.0%
27,900 Dongyang Mechatronics Corp. $ 75,207
3,000 Hyundai Mobis 133,766
28,600 Jardine Cycle & Carriage, Ltd. 106,742
-----------
$ 315,715
-----------
Automobile Manufacturers - 3.0%
12,800 Edaran Otomobile Nasional $ 31,865
5,230 Hyundai Heavy Industries 125,045
5,900 Hyundai Motor Co., Ltd. 228,102
7,100 Kia Motors 60,968
42,818,482 Koc Holdings AS* 193,285
143,653 PT Astra International 84,365
106,100 Sime Darby 155,008
13,999 Tata Motors 115,901
-----------
$ 994,539
-----------
Total Automobiles & Components $ 1,310,254
-----------
Consumer Durables & Apparel - 1.0%
Footwear - 0.2%
346,700 Symphony Holdings, Ltd. $ 59,888
-----------
Homebuilding - 0.5%
563,500 Ayala Land, Inc. $ 58,368
67,000 Corporacion GEO, SA de CV* 88,361
-----------
$ 146,729
-----------
Leisure Products - 0.3%
104,200 Berjaya Sports Toto $ 104,254
-----------
Total Consumer Durables & Apparel $ 310,871
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Hotels, Restaurants & Leisure - 0.3%
Hotels, Resorts & Cruise Lines - 0.2%
9,200 Indian Hotels Co., Ltd. $ 70,251
-----------
Restaurants - 0.1%
63,700 Jollibee Foods Corp. $ 27,425
-----------
Total Hotels, Restaurants & Leisure $ 97,676
-----------
Media - 2.3%
Broadcasting & Cable TV - 1.1%
33,500 ABS-CBN Broadcasting Corp.* $ 13,499
107,000 BEC World Public Co., Ltd. 47,119
370,903 Media Prima* 152,240
289,300 United Broadcasting Corp., Plc* 140,138
-----------
$ 352,996
-----------
Movies & Entertainment - 0.9%
322,800 Grammy Entertainment Plc $ 120,828
57,700 Zee Telefilms, Ltd. 158,449
-----------
$ 279,277
-----------
Publishing - 0.3%
41,650 Singapore Press Holdings $ 100,952
-----------
Total Media $ 733,225
-----------
Retailing - 0.3%
Department Stores - 0.0%
7,300 Robinson Department Store Plc.* $ 704
-----------
General Merchandise Stores - 0.3%
20,400 Jaya Jusco Stores $ 59,148
1,300 LG Home Shopping 53,083
-----------
$ 112,231
-----------
Total Retailing $ 112,935
-----------
Food & Drug Retailing - 2.9%
Food Distributors - 0.7%
10,500 Compania Cervecerias Unidas SA $ 224,490
-----------
Food Retail - 2.2%
12,000 Brasil Distributor Pao Acu (A.D.R.) $ 207,600
3,780 CJ Corp. 205,247
5,700 Distribucion y Servicio D&A SA 86,640
256,700 Metro Cash & Carry, Ltd.* 100,037
8,827,000 Migros Turk T.A.S. 42,837
199,800 PT Indofood Sukses Makmur Tbk 14,936
5,000 Tiger Brands, Ltd. 73,882
-----------
$ 731,179
-----------
Total Food & Drug Retailing $ 955,669
-----------
Food, Beverage & Tobacco - 5.1%
Agricultural Products - 0.4%
25,000 Makhteshim-Agan Industries, Ltd. $ 116,485
-----------
Shares Value
Distillers & Vintners - 1.4%
3,575,700 Andalou efes Biracilik VE $ 41,675
12,500 Companhia de Bebidas PR (A.D.R.) 250,875
62,600 Grupo Modelo SA de CV 157,488
-----------
$ 450,038
-----------
Packaged Foods & Meats - 0.2%
71,017 Rainbow Chicken, Ltd. $ 61,981
-----------
Soft Drinks - 1.4%
2,100 Coca-Cola, S.A. de C.V. (A.D.R.)* $ 46,599
14,200 Embotelladora Andina SA (A.D.R.) 171,962
3,700 Fomento Economico Mexicano SA de CV 169,608
140,600 Sermsuk Public Co., Ltd. 83,313
-----------
$ 471,482
-----------
Tobacco - 1.7%
13,700 British American Tobacco (Malaysia) Bhd $ 182,161
6,200 Korea Tobacco* 143,187
100 Philip Morris CR AS* 61,114
52,100 PT Gudang Garam Public Co., Ltd. 76,116
186,500 PT Hanjaya Mandala Sampoerna Tbk 101,487
-----------
$ 564,065
-----------
Total Food, Beverage & Tobacco $ 1,664,051
-----------
Household & Personal Products - 0.8%
Household Products - 0.7%
23,183,610 Arcelik A.S.* $ 114,832
3,600 LG Household & Health Care, Ltd. 102,977
-----------
$ 217,809
-----------
Personal Products - 0.1%
2,350 Natura Cosmeticos SA* $ 37,915
-----------
Total Household & Personal
Products $ 255,724
-----------
Health Care Equipment & Services - 1.5%
Health Care Distributors - 1.5%
7,130 Teva Pharmaceutical Industries, Ltd. $ 479,778
-----------
Total Health Care Equipment &
Services $ 479,778
-----------
Pharmaceuticals & Biotechnology - 1.4%
Pharmaceuticals - 1.4%
17,200 Aurobindo Pharma, Ltd. $ 122,108
3,300 Biocon, Ltd.* 36,004
1,275 Gideon Richter (G.D.R.) 129,576
6,000 Lupin, Ltd.* 82,931
110,200 PT Tempo Scan Pacific 82,073
-----------
$ 452,692
-----------
Total Pharmaceuticals &
Biotechnology $ 452,692
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Banks - 8.2%
Diversified Banks - 8.2%
24,612,250 Akbank T.A.S. $ 90,447
2,222 Banco Bradesco SA 102,101
3,303 Banco Santiago 88,190
29,835 Canara Bank, Ltd. 78,518
217,960 Chinatrust Financial Holding Co., Ltd. 243,915
107,600 Commerce Asset Holdings 137,786
25,400 Commercial International Bank 95,566
7,100 Hana Bank 150,917
23,775 Hong Leong Bank* 30,273
54,700 Kasikornbank* 69,767
1,900 Kookmin Bank* 59,383
900 Kookmin Bank (A.D.R.) (b)* 28,242
58,700 Malayan Banking Bhd 156,218
162,700 Metropolitan Bank & Trust Co. 78,354
9,500 MISR International 30,400
342,300 National Finance Public Co., Ltd. 123,354
4,300 OTP Bank Rt* 88,099
407,500 PT Bank Central Asia Tbk 81,393
2,136,076 PT Lippo Bank* 113,095
37,656 Public Bank Bhd (Foreign) 65,541
59,100 Siam Commercial Bank Plc (Foreign) 67,026
24,400 Standard Bank Group, Ltd. 171,042
13,600 State Bank of India 127,540
40,130,800 Turkiye Garanti Bankasi AS* 119,578
39,834,952 Turkiye Is Bankasi (Isbank) 144,998
5,700 Uniao de Bancos
Brasileiros SA (G.D.R.) (144A) 112,689
-----------
$ 2,654,432
-----------
Total Banks $ 2,654,432
-----------
Diversified Financials - 4.3%
Investment Banking & Brokerage - 0.2%
203,600 O.S.K. Holdings $ 83,715
-----------
Diversified Financial Services - 4.1%
3,955,000 Alarko Holding AS* $ 77,279
457,700 Bank Mandiri 57,371
408,344 China Development Financial 209,894
42,000 Citic Pacific, Ltd. 103,317
78,300 FirstRand, Ltd. 130,264
137,000 Fubon Group 119,826
37,217,239 Haci Omer Sabanci Holding AS* 110,331
118,200 Kiatnakin Finance Plc 104,826
109,000 MCL Ladn, Ltd. 87,633
32,066 RMB Holdings, Ltd. 85,768
76,900 Sanlam, Ltd. 110,688
632,700 SM Prime Holdings 68,868
78,300 TISCO Finance Public Co., Ltd. 52,200
-----------
$ 1,318,265
-----------
Total Diversified Financials $ 1,401,980
-----------
Shares Value
Insurance - 1.0%
Multi-Line Insurance - 0.6%
2,800 Samsung Fire & Marine Insurance $ 179,648
-----------
Property & Casualty Insurance - 0.4%
7,900 Cathay Financial Holding Co., Ltd.
(G.D.R.) (144A)* $ 141,489
-----------
Total Insurance $ 321,137
-----------
Real Estate - 0.4%
Real Estate Management & Development - 0.4%
98,200 Marco Polo Developments, Ltd. $ 116,009
-----------
Total Real Estate $ 116,009
-----------
Software & Services - 0.9%
Application Software - 0.9%
1,583 Infosys Technologies, Ltd. $ 190,400
14,200 Satyam Computer Services* 94,455
-----------
$ 284,855
-----------
Total Software & Services $ 284,855
-----------
Technology Hardware & Equipment - 6.9%
Semiconductors - 1.7%
43,800 Hon Hai Precision Industry $ 163,461
268,605 Taiwan Semiconductor Manufacturing Co. 388,889
-----------
$ 552,350
-----------
Communications Equipment - 1.0%
1,500 China Unicom (A.D.R.)* $ 11,850
12,140 Empresa Nacional De Telecom 68,663
8,000 Matav Rt (A.D.R.)* 162,480
3,100 Samsung Electro Mechanics Co., Ltd.* 88,337
-----------
$ 331,330
-----------
Computer Hardware - 0.4%
109,160 Compal Electronics $ 118,972
-----------
Computer Storage & Peripherals - 0.5%
107,000 Asia Vital Components $ 123,329
16,400 Quanta Computer, Inc. 34,960
-----------
$ 158,289
-----------
Electronic Equipment & Instruments - 3.2%
28,000 Anpec Electronics Corp. $ 34,886
53,375 Asustek Computer, Inc. 121,959
32,150 Elec & Eltek International Co., Ltd. 90,105
4,050 LG Electronics, Inc. 193,745
6,400 Mtekvision Co., Ltd.* 201,726
12,000 Novatek Microelectronics, Ltd. 39,802
10,000 Richtek Technology Corp.* 29,120
8,000 Samsung Corp.* 98,270
770 Samsung Display Devices* 81,495
154,900 Varitronix International, Ltd. 153,116
-----------
$ 1,044,224
-----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Office Electronics - 0.1%
5,700 Baiksan OPC Co. $ 49,660
-----------
Total Technology Hardware &
Equipment $ 2,254,825
-----------
Semiconductors - 4.4%
3,030 Samsung Electronics $ 1,261,174
240,621 United Microelectronics Corp., Ltd.* 180,003
-----------
$ 1,441,177
-----------
Total Semiconductors $ 1,441,177
-----------
Telecommunication Services - 12.7%
Integrated Telecommunication Services - 7.3%
6,400 Brasil Telecom Participacoes SA $ 196,480
4,900 Compania de Telephonos de
Chile SA ADR 59,731
16,800 KT Corp.(b)* 303,072
29,587 Mahanagar Telephone Nigam, Ltd. 214,506
29,900 Mahanagar Telephone 85,917
11,900 SPT Telecom AS* 145,977
3,440 Telekomunik Indonesia SP (A.D.R.)* 53,492
28,800 Telefonos de Mexico SA 958,176
79,500 Telekomunikacja Polska SA 330,002
-----------
$ 2,347,353
-----------
Wireless Telecommunication Services - 5.4%
27,200 Advanced Service Co., Ltd. (Foreign) $ 59,224
17,700 Alumax, Inc. 643,749
18,800 Bharti Televentures* 55,843
6,600 Korea Telecom Freetel Co. 114,992
13,300 Mobinil-Egyptian Mobile Services 160,177
24,337 SK Telecom Co., Ltd. (b)* 510,834
146,000 Taiwan Cellular Corp. 139,305
22,400 Venfin, Ltd. 72,617
-----------
$ 1,756,741
-----------
Total Telecommunication Services $ 4,104,094
-----------
Utilities - 3.2%
Electric Utilities - 2.3%
156,700 Empresa Nacional de Electricid SA $ 64,502
1,992,335 Enersis SA* 235,543
14,600 Korea Electric Power Corp.* 235,684
216,400 Manila Electric Co.* 116,189
4,360 Unified Energy System (G.D.R.) 115,494
-----------
$ 767,412
-----------
Shares Value
Gas Utilities - 0.6%
2,300 Gazprom (A.D.R.) (b) $ 67,017
4,200 Korea Gas Corp.* 121,811
-----------
$ 188,828
-----------
Water Utilities - 0.3%
8,500 Cia Saneamento Basic de
Estado de Sao Paulo (b)* $ 92,905
-----------
Total Utilities $ 1,049,145
-----------
TOTAL COMMON STOCKS
(Cost $24,410,123) $29,994,690
-----------
RIGHTS/WARRANTS - 0.0%
Commercial Services & Supplies - 0.0%
Diversified Commercial Services - 0.0%
1,580 Bidbee Group, Ltd., 12/8/06* $ 1,494
-----------
Total Commercial Services &
Supplies $ 1,494
-----------
Telecommunication Services - 0.0%
Integrated Telecommunication Services - 0.0%
32,210 True Corp., Plc* $ --
-----------
Total Telecommunication Services $ --
-----------
TOTAL RIGHTS/WARRANTS
(Cost $9,539) $ 1,494
-----------
TEMPORARY CASH INVESTMENT - 4.1%
Security Lending Collateral - 4.1%
1,335,560 Securities Lending
Investment Fund, 1.29% $ 1,335,560
-----------
TOTAL TEMPORARY
CASH INVESTMENT
(Cost $1,335,560) $ 1,335,560
-----------
TOTAL INVESTMENT IN
SECURITIES - 99.2%
(Cost $26,418,556) (a)(b) $32,153,781
-----------
OTHER ASSETS AND
LIABILITIES - 0.8% $ 271,080
-----------
TOTAL NET ASSETS - 100.0% $32,424,861
===========
8 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(A.D.R.) American Depositary Receipt
(G.D.R.) Global Depositary Receipt
* Non-income producing security.
144A Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $481,026 or 1.5% of
net assets.
(a) Distributions of investments by country of issue, as a percentage of
total equity holdings (excluding temporary cash investments) is as
follows:
South Korea 22.6%
Taiwan 9.7%
Brazil 9.4%
South Africa 7.1%
Mexico 6.8%
India 6.3%
Russia 4.6%
Thailand 4.1%
Malaysia 4.0%
Turkey 3.7%
Chile 3.2%
Indonesia 2.2%
Hungary 2.0%
Israel 1.9%
Singapore 1.9%
Poland 1.9%
Peru 1.5%
People's Republic of China 1.4%
Philippines 1.4%
United Kingdom 1.0%
Egypt 1.0%
Other (individually less than 1%) 2.3%
-----
100.0%
=====
(b) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
7,125 Anglogold, Ltd. (A.D.R.) $ 226,718
8,060 Cia Saneamento Basic de
Estado de Sao Paulo* 84,952
155 Gazprom (A.D.R.) 4,301
24,225 IAMGOLD Corp. 129,846
500 Kookmin Bank (A.D.R.)* 15,690
15,905 KT Corp.* 285,495
5,635 SK Telecom Co., Ltd.* 118,504
12,705 Surgutneftegaz (A.D.R.)* 398,937
----------
Total $1,264,443
==========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year 5/1/00
6/30/04 Ended Ended Ended to
Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00
Net asset value, beginning of period $ 17.26 $ 10.98 $11.19 $12.08 $18.02
------- ------- ------ ------ ------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.09 $ 0.12 $ 0.02 $ 0.09 $(0.02)
Net realized and unrealized gain (loss) on investments and foreign
currency transactions (0.95) 6.21 (0.17) (0.98) (5.59)
------- ------- ------ ------ ------
Net increase (decrease) from investment operations $ (0.86) $ 6.33 $(0.15) $(0.89) $(5.61)
Distributions to shareowners:
Net investment income (0.13) (0.05) (0.06) -- --
Net realized gain -- -- -- -- (0.33)
------- ------- ------ ------ ------
Net increase (decrease) in net asset value $ (0.99) $ 6.28 $(0.21) $(0.89) $(5.94)
------- ------- ------ ------ ------
Net asset value, end of period $ 16.27 $ 17.26 $10.98 $11.19 $12.08
======= ======= ====== ====== ======
Total return* (5.03)% 57.87% (1.42)% (7.37)% (31.65)%
Ratio of net expenses to average net assets+ 1.99%** 1.99% 1.99% 1.90% 2.11%**
Ratio of net investment income to average net assets+ 1.00%** 1.04% 0.28% 1.05% (0.73)%**
Portfolio turnover rate 64%** 79% 124% 175% 156%**
Net assets, end of period (in thousands) $25,125 $26,537 $8,852 $7,861 $5,819
Ratios with no waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 2.11%** 2.65% 3.11% 4.12% 4.47%**
Net investment income (loss) 0.88%** 0.38% (0.84)% (1.17)% (3.09)%**
Ratios with waiver of management fees and assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 1.99%** 1.99% 1.99% 1.90% 2.09%**
Net investment income (loss) 1.00%** 1.04% 0.28% 1.05% (0.71)%**
(a) Class 2 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.
10 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Emerging
Markets
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $1,264,443)
(Cost $26,418,556) $32,153,781
Cash 2,806,900
Foreign currencies, at value (Cost $97,982) 97,118
Receivables --
Investment securities sold 97,441
Fund shares sold 26,435
Variation margin --
Dividends, interest and foreign taxes withheld 105,985
Forward foreign currency settlement contracts, net 32
Due from Pioneer Investment Management, Inc. --
Other 3,186
-----------
Total assets $35,290,878
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 1,303,499
Fund shares repurchased 37,473
Dividends --
Upon return of securities loaned 1,335,560
Forward foreign currency settlement contracts, net --
Reserve for repatriation taxes 86,981
Due to bank --
Due to affiliates 28,056
Accrued expenses 74,448
-----------
Total liabilities $ 2,866,017
-----------
NET ASSETS:
Paid-in capital $31,725,483
Accumulated net investment income (loss) 122,425
Accumulated undistributed net realized gain (loss) (5,068,348)
Net unrealized gain (loss) on:
Investments 5,648,244
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (2,943)
-----------
Total net assets $32,424,861
-----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 7,300,338
Shares outstanding 445,997
-----------
Net asset value per share $ 16.37
Class II:
No par value (unlimited number of shares authorized)
Net assets $25,124,523
Shares outstanding 1,544,610
-----------
Net asset value per share $ 16.27
The accompanying notes are an integral part of these financial statements. 11
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Emerging Markets
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $65,563) $ 514,353
Interest 4,135
Income on securities loaned, net 4,740
Other --
-----------
Total investment income $ 523,228
-----------
EXPENSES:
Management fees $ 201,264
Transfer agent fees 1,508
Distribution fees (Class II) 33,390
Administrative fees 9,250
Custodian fees 72,734
Professional fees 33,721
Printing 5,746
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,870
-----------
Total expenses $ 359,483
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (21,299)
-----------
Net expenses $ 338,184
-----------
Net investment income (loss) $ 185,044
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 3,090,302
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (38,564)
-----------
$ 3,051,738
-----------
Change in net unrealized gain or loss from:
Investments (includes the change in reserve for repatriation taxes of $86,981) $(4,991,310)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (5,835)
-----------
$(4,997,145)
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $(1,945,407)
===========
Net increase (decrease) in net assets resulting
from operations $(1,760,363)
===========
12 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Emerging
Markets VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 185,044 $ 262,378
Net realized gain (loss) on investments 3,051,738 1,187,664
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (4,997,145) 10,449,480
----------- ------------
Net increase (decrease) in net assets
resulting from operations $(1,760,363) $ 11,899,522
----------- ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (65,091) $ (25,889)
Class II (196,317) (60,429)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
----------- ------------
Total distributions to shareowners $ (196,317) $ (86,319)
----------- ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 5,260,358 $ 16,360,576
Reinvestment of distributions 259,912 85,767
Cost of shares repurchased (6,009,356) (8,062,148)
----------- ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ (489,086) $ 8,384,195
----------- ------------
Net increase (decrease) in net assets $(2,510,857) $220,197,398
----------- ------------
NET ASSETS:
Beginning of period $34,935,718 $ 14,738,320
----------- ------------
End of period $32,424,861 $ 34,935,718
=========== ============
Accumulated/(distributions in excess of)
net investment income (loss) $ 122,425 $ 198,789
=========== ============
The accompanying notes are an integral part of these financial statements. 13
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Emerging Markets Portfolio (the Portfolio) is a Portfolio of the
Pioneer Variable Contracts Trust (the Trust) 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 nineteen 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)
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 financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objective of Emerging Markets VCT Portfolio is to seek long-term
capital growth.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting years. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolios are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Trading in foreign equity securities is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The value of such securities used in computing the net
asset value of the Portfolio's shares, based on the last sale price on the
principal exchange where they traded, are determined as of such times. At
June 30, 2004, there were no fair valued securities except as follows. All
securities that trade in foreign markets whose closing prices are as of
times prior to the close of the New York Stock Exchange ("NYSE") and that
are held by Emerging Markets Portfolio are fair valued using
vendor-supplied pricing updates for each security to the time of the close
of the NYSE.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable diligence. Interest income,
including interest on income bearing cash accounts, is recorded on the
accrual basis, net of unrecoverable foreign taxes withheld at the
applicable
14
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
country rates. All discounts/premiums are accreted/amortized for financial
reporting purposes.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
The Portfolio's investments in emerging markets or countries with limited
or developing markets may subject the Portfolio to a greater degree of risk
than in a developed market. Risks associated with these developing markets
include political, social or economic factors and may affect the price of
the Portfolio's investments and income generated by these investments, as
well as the Portfolio's ability to repatriate such amounts.
B. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
D. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
In addition to the requirements of the Internal Revenue Code, the Portfolio
may also be required to pay local taxes on the recognition of capital gains
and/or the repatriation of foreign currencies in certain countries. During
the six months ended June 30, 2004, no such taxes were paid.
In determining the daily net asset value, the Portfolio estimates the
reserve for such taxes, if any, associated with investments in certain
countries. The estimated reserve for taxes on capital gains is based on the
net unrealized appreciation on certain portfolio securities, the holding
year of such securities and the related tax rates, tax loss carryforward
(if applicable) and other such factors. The estimated reserve for taxes on
repatriation of foreign currencies is based on principal balances and/or
unrealized appreciation of applicable securities, the holding year of such
investments and the related tax rates and other such factors. As of June
30, 2004, the Portfolio had $86,981 in reserves related to taxes on the
repatriation of foreign currencies.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Emerging Markets VCT Portfolio had a capital
loss carryforward of $7,611,017 of which the following amounts will expire
between 2008 and 2010 if not utilized: $1,376,025 in 2008, $5,058,209 in
2009 and $1,176,783 in 2010.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
15
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Pioneer Emerging
Markets VCT
Portfolio 2003
---------------
Distributions paid from:
Ordinary Income $ 86,319
Long-Term capital gain --
----------
$ 86,319
Return of Capital --
----------
Total distributions $ 86,319
==========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 261,372
Undistributed long-term gain/
(Capital loss carryforward) (7,611,017)
Unrealized appreciation (depreciation) 10,070,794
----------
Total $2,721,149
==========
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
E. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively. Shareowners of each class share all expenses and
fees paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3). Income, common expenses and realized
and unrealized gains and losses are calculated at the Portfolio level and
allocated daily to each class of shares based on the respective percentage
of adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
Distributions paid by the Portfolio with respect to each class of shares
are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day.
F. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
G. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 1.15% of the Portfolio's average daily net assets.
The portion of the Portfolio's expenses attributable to Class II will be
reduced only to the extent such expenses are reduced for Class I shares (or
Class II shares). Pioneer may subsequently recover reimbursed expenses (within
three years of being incurred) from certain Portfolios if the expense ratio of
the Class I (or Class II) shares would otherwise be less than the expense
limitation of the class. Each class will reimburse PIM no more than the amount
by which that class' expenses were reduced.
16
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Expense limit agreement for Emerging Markets Portfolio does not provide for
the expense reimbursement described above. There can be no assurance that
Pioneer will extend any expense limitation beyond June 30, 2004.
In addition, under the management and administration agreement, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $22,079 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $258 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$5,719 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -------------------------------------------------------------------------------------------
Emerging Markets Portfolio $26,991,159 $5,927,419 $(764,796) $5,162,622
=========== ========== ========= ==========
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $10,761,173 and $12,315,024, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Emerging Markets Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ------------------------------------------------------------------------------------------
CLASS I:
Shares sold 46,186 $ 815,949 143,611 $ 1,837,255
Reinvestment of distributions 3,952 63,595 2,017 25,338
Shares repurchased (87,603) (1,501,936) (195,769) (2,390,316)
-------- ----------- -------- -----------
Net increase (decrease) (37,465) $ (622,392) (50,141) $ (528,316)
======== =========== ======== ===========
CLASS II:
Shares sold 255,499 $ 4,444,409 1,162,017 $14,523,321
Reinvestment of distributions 12,278 196,317 4,838 60,429
Shares repurchased (260,491) (4,507,420) (435,883) (5,671,239)
-------- ----------- --------- -----------
Net increase (decrease) 7,286 $ 133,306 730,972 $ 8,912,511
======== =========== ======== ===========
17
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts
During the six months ended June 30, 2004, certain Portfolios had entered into
various contracts that obligate the Portfolios to deliver currencies at
specified future dates. At the maturity of a contract, the Portfolios must make
delivery of the foreign currency. Alternatively, prior to the settlement date
of a portfolio hedge, the Portfolio may close out such contracts by entering
into an offsetting hedge contract. As of June 30, 2004, the Portfolio had no
outstanding portfolio hedges.
Outstanding forward currency settlement contracts were as follows:
Net
Gross Settlement Gross Receivable/
Portfolio Receivable Date Payable (Payable)
- ----------------------------------------------------------------------------------
Emerging Markets Portfolio $(22,235) 7/1/04 $(22,235) $ --
Emerging Markets Portfolio $ 21,527 7/1/04 $ 21,485 $ 42
Emerging Markets Portfolio $ (3,613) 7/1/04 $ (3,623) $(10)
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21
[PIONEER INVESTMENTS LOGO]
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16071-00-0804
[PIONEER INVESTMENTS LOGO]
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Mid Cap Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
Pioneer Mid Cap Value VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 7
Notes to Financial Statements 11
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[TABULAR REPRESENTATION OF PIE CHART]
U.S. Common Stocks 93.0%
Temporary Cash Investment 6.0%
Depositary Receipts for International Stocks 1.0%
Sector Distribution
(As a percentage of equity holdings)
[TABULAR REPRESENTATION OF PIE CHART]
Financials 21.7%
Consumer Discretionary 15.6%
Industrials 12.6%
Information Technology 12.6%
Health Care 9.6%
Materials 8.5%
Energy 6.6%
Utilities 6.5%
Consumer Staples 6.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. Foot Locker, Inc. 2.58%
2. Mattel, Inc. 2.29
3. W.W. Grainger, Inc. 2.26
4. Safeway, Inc. 2.14
5. CIGNA Corp. 2.13
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 21.82 $ 20.32
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.0598 $ - $ 0.2095
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Mid Cap Value VCT Portfolio at net asset value, compared to that of the Russell
Midcap Value Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[TABULAR REPRESENTATION OF LINE CHART]
Pioneer Russell
Mid Cap Value Midcap
VCT Portfolio Value Index
------------- -----------
6/95 $10,000 $10,000
6/96 $13,193 $14,748
$16,294 $19,812
6/98 $14,734 $20,820
$16,615 $20,799
6/00 $19,800 $24,789
$21,032 $25,369
6/02 $18,639 $22,920
$25,551 $31,643
6/04 $27,778 $33,910
Index comparison begins 2/28/95. The Russell Midcap Value Index measures the
performance of the value-oriented stocks in the Russell Midcap Index. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------
Net Asset Value
- --------------------------------------------------
Life-of-Class 11.45%
(3/1/95)
5 Years 10.12%
1 Year 31.89%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
2
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
Despite interim volatility, stocks tended to gain over the first six months of
2004, riding on the tide of a strengthening economy and generally rising
corporate profitability. In the following interview, Rod Wright discusses the
market environment and portfolio strategies during the six months ended June
30, 2004. Mr. Wright is responsible for day-to-day portfolio supervision of
Pioneer Mid Cap Value VCT Portfolio.
Q: How did the Portfolio perform?
A: The Portfolio performed well. For six months ended June 30, 2004, the
Portfolio's Class II shares had a total return of 8.72% at net asset value,
while the Russell Midcap Value Index returned 7.17%.
Q: What were the principal factors that affected performance?
A: Despite a succession of fears that caused short-term market reversals,
stocks generally rose during the six months as evidence accumulated that
the economy was strengthening and that corporate earnings were increasing.
The rally that had driven the market for most of 2003 continued in early
2004 until March, when market interest rates spiked up on fears about the
effects of rising oil prices, the possibility of increasing inflationary
pressure and the likelihood that the Federal Reserve would tighten monetary
policy. Adding to the uncertainty was the anxiety over the continuing
violence in Iraq. In the final weeks of the period, however, the market
rebounded again in anticipation of good news about corporate earnings and
the widening expectation that the Federal Reserve would act gradually in
raising short-term rates, helping to sustain the economic recovery.
Q: What types of investments helped Portfolio performance?
A: Security selection was the primary factor, as stocks across the industry
spectrum contributed to Portfolio performance. Stocks in the health care,
financial services, telecommunications and industrial sectors did well,
while stocks in basic materials, consumer staples and consumer
discretionary sectors did less well.
The top individual contributor was Charter One Financial, which was taken
over by Royal Bank of Scotland, at a substantial premium to its valuation.
Several other performance leaders were formerly out-of-favor companies whose
stock prices began appreciating as their earnings and business prospects
began to improve. They included: NCR, the technology conglomerate that began
turning around its business in time to benefit from an increase in corporate
capital spending; and Reliant Energy, an independent power producer and
energy merchant whose stock gained as a result of a corporate restructuring
and the sale of undervalued assets. The Portfolio also had success with
stocks such as Becton Dickinson, the medical supplies company, which
benefited from rising earnings and the introduction of new products, and
Providian, a credit-card issuer whose prospects began to improve under a
restructuring plan implemented by new management.
Q: Were there any disappointments?
A: We had a few. Investment Technology Group, a company specializing in
electronic trading operations, declined as it faced increased competition
in the financial markets. However, we continue to hold the stock because of
the value of its assets. We have sold our stake in another disappointment,
Seagate Technology, a manufacturer of disc drives, which became the victim
of industry overcapacity. Similarly, we also eliminated positions in two
disappointing mining stocks, Freeport-McMoRan and Newmont Mining, both of
which declined as the price of gold weakened.
Q: What is your investment outlook?
A: We think that the market trends will continue to be choppy, as a variety of
factors will weigh on investors' minds. However, the outlook for corporate
earnings is generally positive and companies are generating a great deal of
free cash flow. We intend to remain focused on our core discipline,
concentrating on investments in quality companies with reasonable stock
valuations.
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.
Mid-capitalization stocks may be subject to greater short-term price
fluctuations than securities of larger companies.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.9%
Energy - 6.4%
Integrated Oil & Gas - 0.9%
115,840 Occidental Petroleum Corp. $ 5,607,814
------------
Oil & Gas Drilling - 2.9%
138,315 ENSCO International, Inc. $ 4,024,967
98,730 Nabors Industries, Inc.* 4,464,571
155,930 Transocean Offshore, Inc.* 4,512,612
98,235 Weatherford International, Inc.* 4,418,610
------------
$ 17,420,760
------------
Oil & Gas Exploration & Production - 2.0%
82,861 Devon Energy Corp. $ 5,468,826
180,485 Pioneer Natural Resources Co. 6,331,414
------------
$ 11,800,240
------------
Oil & Gas Refining Marketing &
Transportation - 0.6%
57,785 Sun Company, Inc. $ 3,676,282
------------
Total Energy $ 38,505,096
------------
Materials - 8.3%
Commodity Chemicals - 1.0%
115,445 Air Products & Chemicals, Inc. $ 6,055,090
------------
Diversified Chemical - 1.6%
155,120 PPG Industries, Inc. $ 9,693,449
------------
Diversified Metals & Mining - 2.0%
155,285 Phelps Dodge Corp.* $ 12,036,140
------------
Metal & Glass Containers - 1.6%
130,210 Ball Corp. $ 9,381,631
------------
Paper Products - 2.1%
311,267 Flowserve Corp.* $ 7,762,999
164,600 Meadwestvaco Corp. 4,837,594
------------
$ 12,600,593
------------
Total Materials $ 49,766,903
------------
Capital Goods - 6.0%
Aerospace & Defense - 0.9%
148,300 United Defense Industries, Inc.* $ 5,190,500
------------
Electrical Components & Equipment - 1.8%
178,465 American Power Conversion Corp. $ 3,506,837
486,390 Symbol Technologies, Inc. 7,169,389
------------
$ 10,676,226
------------
Industrial Conglomerates - 3.3%
222,080 American Standard Companies, Inc.* $ 8,952,045
131,520 ITT Industries, Inc. 10,916,160
------------
$ 19,868,205
------------
Total Capital Goods $ 35,734,931
------------
Shares Value
Commercial Services & Supplies - 4.6%
Commercial Printing - 2.0%
90,200 John H. Harland Co. $ 2,647,370
294,540 R.R. Donnelly & Sons Co. (a) 9,725,711
------------
$ 12,373,081
------------
Diversified Commercial Services - 1.0%
131,010 H & R Block, Inc. $ 6,246,557
------------
Environmental Services - 1.6%
319,335 Republic Services, Inc. $ 9,241,555
------------
Total Commercial Services &
Supplies $ 27,861,193
------------
Transportation - 1.7%
Airlines - 0.6%
228,310 Southwest Airlines Co. $ 3,828,759
------------
Railroads - 1.1%
149,120 Canadian National Railway Co. $ 6,500,141
------------
Total Transportation $ 10,328,900
------------
Consumer Durables & Apparel - 4.2%
Apparel, Accessories & Luxury Goods - 0.9%
297,010 The Limited Brands, Inc. $ 5,554,087
------------
Housewares & Specialties - 0.5%
105,600 Yankee Candle Co.* $ 3,088,800
------------
Leisure Products - 2.3%
736,530 Mattel, Inc. $ 13,441,673
------------
Photographic Products - 0.5%
115,500 Eastman Kodak Co. $ 3,116,190
------------
Total Consumer Durables & Apparel $ 25,200,750
------------
Hotels, Restaurants & Leisure - 2.3%
Restaurants - 2.3%
148,700 Brinker International, Inc.* $ 5,073,644
230,605 Tricon Global Restaurants, Inc.* 8,583,116
------------
$ 13,656,760
------------
Total Hotels, Restaurants & Leisure $ 13,656,760
------------
Media - 0.8%
Movies & Entertainment - 0.8%
271,660 Regal Entertainment Group (a) $ 4,917,046
------------
Total Media $ 4,917,046
------------
Retailing - 7.9%
Apparel Retail - 2.1%
132,230 Jones Apparel Group, Inc. $ 5,220,440
196,400 Liz Claiborne, Inc. 7,066,472
------------
$ 12,286,912
------------
Department Stores - 0.8%
130,200 J.C. Penney Co., Inc. $ 4,916,352
------------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
General Merchandise Stores - 2.0%
238,200 American Greetings Corp.* $ 5,521,476
172,680 Sears, Roebuck and Co. 6,520,397
------------
$ 12,041,873
------------
Specialty Stores - 3.0%
620,430 Foot Locker, Inc. $ 15,101,266
195,300 Toys "R" Us, Inc.* 3,111,129
------------
$ 18,212,395
------------
Total Retailing $ 47,457,532
------------
Food & Drug Retailing - 6.2%
Drug Retail - 1.5%
211,270 CVS Corp. $ 8,877,565
------------
Food Retail - 3.4%
280,590 ConAgra, Inc. $ 7,598,377
494,200 Safeway, Inc.* 12,523,028
------------
$ 20,121,405
------------
Hypermarkets & Supercenters - 1.3%
313,670 BJ'S Wholesale Club, Inc.* $ 7,841,750
------------
Total Food & Drug Retailing $ 36,840,720
------------
Health Care Equipment & Services - 9.4%
Health Care Distributors - 0.5%
82,400 Par Pharmaceutical Co., Inc.* $ 2,901,304
------------
Health Care Equipment - 2.4%
239,400 Apogent Technologies, Inc.* $ 7,660,800
132,205 Becton, Dickinson & Co. 6,848,219
------------
$ 14,509,019
------------
Health Care Facilities - 3.3%
557,200 Tenet Healthcare Corp.* $ 7,472,052
330,060 Triad Hospitals, Inc.* 12,288,134
------------
$ 19,760,186
------------
Health Care Services - 1.1%
164,630 Laboratory Corp. of America Holdings* $ 6,535,811
------------
Managed Health Care - 2.1%
181,500 CIGNA Corp. $ 12,489,015
------------
Total Health Care Equipment &
Services $ 56,195,335
------------
Banks - 9.1%
Regional Banks - 5.4%
99,000 City National Corp. $ 6,504,300
140,330 KeyCorp 4,194,464
116,165 Marshall & Ilsley Corp. 4,540,890
99,005 North Fork Bancorporation, Inc. 3,767,140
66,240 SouthTrust Corp. 2,570,774
90,775 TCF Financial Corp. 5,269,489
89,400 Zions Bancorporation 5,493,630
------------
$ 32,340,687
------------
Shares Value
Thrifts & Mortgage Finance - 3.7%
115,699 Countrywide Financial Corp. $ 8,127,855
115,375 GreenPoint Financial Corp. 4,580,388
222,760 The PMI Group, Inc. 9,694,515
------------
$ 22,402,758
------------
Total Banks $ 54,743,445
------------
Diversified Financials - 6.0%
Consumer Finance - 3.1%
671,200 Providian Financial Corp.* $ 9,846,504
16,514 White Mountains Insurance Group, Ltd. 8,422,140
------------
$ 18,268,644
------------
Asset Management & Custody Banks - 1.1%
214,590 Federated Investors, Inc. $ 6,510,661
------------
Investment Banking & Brokerage - 1.8%
190,500 A.G. Edwards, Inc. $ 6,482,715
341,950 Investment Technology Group, Inc.* 4,373,541
------------
$ 10,856,256
------------
Total Diversified Financials $ 35,635,561
------------
Insurance - 6.3%
Insurance Brokers - 2.1%
180,710 Platinum Underwriter Holdings, Ltd. (a) $ 5,499,005
187,840 Willis Group Holdings, Ltd. 7,034,608
------------
$ 12,533,613
------------
Life & Health Insurance - 0.9%
99,130 Jefferson - Pilot Corp. $ 5,035,804
------------
Property & Casualty Insurance - 3.3%
104,105 Ambac Financial Group, Inc. $ 7,645,471
278,500 Safeco Corp. 12,254,000
------------
$ 19,899,471
------------
Total Insurance $ 37,468,888
------------
Software & Services - 2.3%
Data Processing & Outsourced Services - 2.3%
555,530 The BISYS Group, Inc.* $ 7,810,752
239,929 SunGard Data Systems, Inc.* 6,238,154
------------
$ 14,048,906
------------
Total Software & Services $ 14,048,906
------------
Technology Hardware & Equipment - 9.4%
Communications Equipment - 3.2%
296,600 Century Telephone Enterprises, Inc. $ 8,909,864
356,121 Tellabs, Inc.* 3,112,498
230,200 Utstarcom, Inc (a)* 6,963,550
------------
$ 18,985,912
------------
Computer Hardware - 1.9%
231,360 NCR Corp.* $ 11,473,142
------------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Computer Storage & Peripherals - 2.1%
284,600 SanDisk Corp. (a)* $ 6,172,974
214,600 Storage Technology Corp.* 6,223,400
------------
$ 12,396,374
------------
Electronic Equipment & Instruments - 2.2%
230,080 W.W. Grainger, Inc. $ 13,229,600
------------
Total Technology Hardware &
Equipment $ 56,085,028
------------
Semiconductors - 0.6%
260,900 Cypress Semiconductor Corp. (a)* $ 3,702,171
------------
Total Semiconductors $ 3,702,171
------------
Utilities - 6.4%
Electric Utilities - 4.6%
148,675 Constellation Energy Group $ 5,634,783
140,350 DTE Energy Co. 5,689,789
115,315 Entergy Corp. 6,458,793
347,300 PG&E Corp.* 9,703,562
------------
$ 27,486,927
------------
Gas Utilities - 0.1%
16,315 KeySpan Energy Corp. $ 598,761
------------
Multi-Utilities & Unregulated Power - 1.7%
920,000 Reliant Energy* $ 9,963,600
------------
Total Utilities $ 38,049,288
------------
TOTAL COMMON STOCKS
(Cost $509,973,009) $586,198,453
------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 6.2%
Repurchase Agreement - 2.0%
$12,100,000 UBS Warburg, Inc. 1.25%,
dated 6/30/04, repurchase price of
$12,100,000 plus accrued interest on
7/1/04 collateralized by $11,094,000
U.S. Treasury Bill, 7.0%, 7/15/06 $ 12,100,000
------------
Shares
Security Lending Collateral - 4.2%
25,038,825 Securities Lending
Investment Fund, 1.29% $ 25,038,825
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $37,138,825) $ 37,138,825
------------
TOTAL INVESTMENT
IN SECURITIES - 104.1%
(Cost $547,111,834) (a) $623,337,278
------------
OTHER ASSETS AND
LIABILITIES - (4.1)% $(24,737,403)
------------
TOTAL NET ASSETS - 100.0% $598,599,875
============
* Non-income producing security.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
105,980 Cypress Semiconductor Corp.* $ 1,462,524
14,695 Platinum Underwriter Holdings Ltd. 445,552
249,900 Regal Entertainment Group 4,510,695
155,000 R.R. Donnelly & Sons Co. 5,128,950
263,720 SanDisk Corp.* 5,909,965
275,023 Utstarcom, Inc* 8,363,449
-----------
Total $25,821,135
===========
6 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year 5/1/00
6/30/04 Ended Ended Ended to
Class II (unaudited) 12/31/03 12/31/02(a) 12/31/01 12/31/00
Net asset value, beginning of period $ 20.32 $ 14.86 $ 17.28 $ 17.75 $16.89
-------- -------- ------- ------- ------
Increase (decrease) from investment operations:
Net investment income (loss) $ (0.01) $ 0.06 $ 0.04 $ 0.14 $ 0.07
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 1.78 5.44 (1.96) 0.94 2.01
-------- -------- ------- ------- ------
Net increase (decrease) from investment operations $ 1.77 $ 5.50 $ (1.92) $ 1.08 $ 2.08
Distributions to shareowners:
Net investment income (0.06) (0.04) (0.04) (0.08) (0.13)
Net realized gain (0.21) -- (0.46) (1.47) (1.09)
-------- -------- ------- ------- ------
Net increase (decrease) in net asset value $ 1.50 $ 5.46 $ (2.42) $ (0.47) $ 0.86
-------- -------- ------- ------- ------
Net asset value, end of period $ 21.82 $ 20.32 $ 14.86 $ 17.28 $17.75
======== ======== ======= ======= ======
Total return* 8.72 % 37.09% (11.38)% 6.22% 13.35 %
Ratio of net expenses to average net assets+ 0.96%** 1.00% 1.07% 1.11% 1.01%**
Ratio of net investment income to average net assets+ 0.39%** 0.60% 0.24% 0.10% 0.37%**
Portfolio turnover rate 71%** 52% 68% 95% 85%**
Net assets, end of period (in thousands) $399,833 $211,120 $61,038 $10,195 $1,943
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% 1.07% 1.11% 1.01%**
Net investment income 0.39%** 0.60% 0.24% 0.10% 0.37%**
Ratios with waiver of management fees and assumption of expenses by
PIM and reduction for fees paid indirectly:
Net expenses 0.96%** 1.00% 1.07% 1.11% 1.01**
Net investment income 0.39%** 0.60% 0.24% 0.10% 0.37**
(a) The per share data presented above is based upon the average shares
outstanding for the period presented.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of
the investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 7
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Mid Cap
Value
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $25,821,135)
(Cost $547,111,834) $623,337,278
Cash 232,088
Foreign currencies, at value --
Receivables --
Investment securities sold 9,079,092
Fund shares sold 824,503
Variation margin --
Dividends, interest and foreign taxes withheld 422,351
Forward foreign currency settlement contracts, net --
Due from Pioneer Investment Management, Inc. --
Other --
------------
Total assets $633,895,312
------------
LIABILITIES:
Payables --
Investment securities purchased $ 9,767,200
Fund shares repurchased 17,620
Dividends --
Upon return of securities loaned 25,038,825
Forward foreign currency settlement contracts, net --
Reserve for repatriation taxes --
Due to bank --
Due to affiliates 439,928
Accrued expenses 31,864
------------
Total liabilities $ 35,295,437
------------
NET ASSETS:
Paid-in capital $491,654,895
Accumulated net investment income (loss) 1,141,650
Accumulated undistributed net realized gain (loss) 29,577,886
Net unrealized gain (loss) on:
Investments 76,225,444
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $598,599,875
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $198,767,124
Shares outstanding 9,037,285
------------
Net asset value per share $ 21.99
Class II:
No par value (unlimited number of shares authorized)
Net assets $399,832,751
Shares outstanding 18,321,840
------------
Net asset value per share $ 21.82
8 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Mid Cap Value
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $5,324) $ 3,149,536
Interest 61,832
Income on securities loaned, net 6,732
Other --
-----------
Total investment income $ 3,218,100
-----------
EXPENSES:
Management fees $ 1,558,884
Transfer agent fees 1,432
Distribution fees (Class II) 369,014
Administrative fees 41,873
Custodian fees 39,878
Professional fees 37,060
Printing 23,211
Fees and expenses of nonaffiliated trustees --
Miscellaneous 5,011
-----------
Total expenses $ 2,076,363
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
-----------
Net expenses $ 2,076,363
-----------
Net investment income (loss) $ 1,141,737
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $31,570,054
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$31,570,054
-----------
Change in net unrealized gain or loss from:
Investments $ 7,930,499
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$ 7,930,499
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $39,500,553
===========
Net increase (decrease) in net assets resulting
from operations $40,642,290
===========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Mid Cap
Value VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 1,141,737 $ 1,803,484
Net realized gain (loss) on investments 31,570,054 6,004,760
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 7,930,499 75,230,670
------------ ------------
Net increase (decrease) in net assets
resulting from operations $ 40,642,290 $ 83,038,914
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (711,725) $ (438,494)
Class II (1,067,643) (236,135)
Net realized gain
Class I (1,863,831) --
Class II (3,740,321) --
Tax return of capital
Class I -- --
Class II -- --
------------ ------------
Total distributions to shareowners $ (7,383,520) $ (674,629)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $196,943,386 $161,143,658
Reinvestment of distributions 7,383,520 674,611
Cost of shares repurchased (20,342,972) (44,550,616)
------------ ------------
Net increase (decrease) in net assets
resulting from fund share transactions $183,983,934 $117,267,653
------------ ------------
Net increase (decrease) in net assets $217,242,704 $199,631,938
------------ ------------
NET ASSETS:
Beginning of period $381,357,171 $181,725,233
------------ ------------
End of period $598,599,875 $381,357,171
============ ============
Accumulated/(distributions in excess of)
net investment income (loss) $ 1,141,650 $ 1,779,281
============ ============
10 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Mid Cap Value 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 nineteen 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)
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 Mid Cap Value Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolio are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. 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. As of June 30, 2004, there were no
securities fair valued.
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. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total
11
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
return. Upon entering into a futures contract, the Portfolio is required to
deposit with a broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value
of the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees,
elements of market risk which may exceed the amounts recognized by the
Portfolio. Changes in the value of the contracts may not directly correlate
to the changes in the value of the underlying securities. These risks may
decrease the effectiveness of the Portfolio's hedging and trading
strategies and potentially result in a loss. As of June 30, 2004, Mid Cap
Value Portfolio had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
Pioneer
Mid Cap Value
VCT Portfolio
2003
--------------
Distributions paid from:
Ordinary Income $ 674,629
Long-Term capital gain --
-----------
$ 674,629
Return of Capital --
-----------
Total distributions $ 674,629
===========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 3,095,345
Undistributed long-term gain/
(Capital loss carryforward) 4,286,038
Unrealized appreciation (depreciation) 66,304,827
-----------
Total $73,686,210
===========
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
12
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Portfolio level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day. Distributions paid by the Portfolio with
respect to each class of shares are calculated in the same manner, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees. Income, expenses
(excluding 12b-1 fees) and gains and losses are calculated at the Portfolio
level and are allocated daily based on the respective percentage of
adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $352,423 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $258 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$87,247 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
13
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ---------------------------------------------------------------------------------------------------
Mid Cap Value Portfolio $549,097,482 $120,657,540 $(46,417,744) $74,239,796
============ ============ ============= ===========
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $343,646,689 and $167,846,365, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Mid Cap Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 1,350,399 $ 28,801,387 2,677,744 $ 46,157,551
Reinvestment of distributions 117,892 2,575,556 26,084 438,476
Shares repurchased (746,981) (15,842,125) (2,465,836) (40,592,863)
--------- ------------ ---------- ------------
Net increase 712,400 $ 15,534,818 237,992 $ 6,003,164
========= ============ ========== ============
CLASS II:
Shares sold 7,925,107 $168,141,999 6,515,291 $114,986,107
Reinvestment of distributions 221,974 4,807,964 93,450 236,135
Shares repurchased (214,474) (4,500,847) (1,080,224) (3,957,753)
--------- ------------ ---------- ------------
Net increase 7,932,607 $168,449,116 6,280,420 $111,264,489
========= ============ ========== ============
14
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This page for your notes.
15
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- --------------------------------------------------------------------------------
This page for your notes.
16
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This page for your notes.
17
[PIONEER INVESTMENTS LOGO]
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16080-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Small Company VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- -------------------------------------------
Pioneer Small Company VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 8
Notes to Financial Statements 12
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
U.S. Common Stocks 88.7%
Temporary Cash Investment 7.2%
Depositary Receipts for International Stocks 3.0%
International Common Stocks 1.1%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
Financials 22.9%
Industrials 16.5%
Information Technology 13.6%
Consumer Discretionary 12.2%
Health Care 12.1%
Energy 7.4%
Materials 6.5%
Consumer Staples 5.1%
Telecommunication Services 2.8%
Utilities 0.9%
Five Largest Holdings
(As a percentage of equity holdings)
1. Advanta Corp. (Class B) 2.37%
2. Alliance Atlantis
Communications, Inc. 1.80
3. Forest Oil Corp. 1.76
4. Corn Products
International, Inc. 1.75
5. Nu Skin Enterprises Inc. 1.74
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $12.04 $11.35
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ -- $ -- $ --
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Small Company VCT Portfolio at net asset value, compared to that of the Russell
2000 Index. Portfolio returns are based on net asset value and do not reflect
any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.]
Date Pioneer Small Company Russell 2000
VCT Portfolio Index
1/31/2001 $10,000 $10,000
12/31/2001 $10,479 $9,741
12/31/2002 $8,683 $7,747
12/31/2003 $10,865 $11,407
6/30/2004 $11,526 $12,177
Index comparison begins 1/31/01. The Russell 2000 Index is an unmanaged measure
of the 2,000 smallest stocks, based on capitalization, in the Russell 3000
Index. Index returns are calculated monthly, assume reinvestment of dividends
and, unlike Portfolio returns do not reflect any fees, expenses or sales
charges. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 5.54%
(1/19/01)
1 Year 24.00%
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
2
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In the following discussion, portfolio manager David Adams and assistant
portfolio manager Jack McPherson review their investment strategies and the
performance of Pioneer Small Company VCT Portfolio.
Q: How did Pioneer Small Company VCT Portfolio perform over this period?
A: For the six months ended June 30, 2004, Class II shares of the Portfolio
returned 6.08% at net asset value. This result slightly trailed the
Portfolio's benchmark, the Russell 2000 Index, which returned 6.76% over the
same period.
Q: Please describe the background for small-company stocks over this period.
A: Stocks, led by small-cap issues, moved higher early in the year on the basis
of solid earnings gains and encouraging job creation in many sectors of the
economy. But investors began to retrench in the spring as demand for goods
and services pushed prices higher. The expectation that the Federal Reserve
Board would raise short-term rates in order to forestall inflationary trends
became a reality near the end of the period. Troubling developments overseas
and high energy prices also kept investors on the sidelines.
Q: Which stocks or sectors influenced performance favorably?
A: Good stock selection in consumer staples and financial services bolstered
returns. NuSkin Enterprises continues to record impressive sales gains in
Asia; Chinese consumers especially have embraced NuSkin's line of diet,
health and beauty products. Shares of Chattem, which markets Gold Bond and
Icy Hot among other brands, moved higher following resolution of pending
legal issues.
Alliance Atlantis, a Canadian cable operator and producer of the CSI
television programs, rose as investors took a favorable view of management's
restructuring efforts. Alliance also holds movie distribution rights for the
Lord of the Rings series and the political documentary Fahrenheit 911.
Wabtac, which fabricates components for rail cars, saw new orders increase
in response to rising freight volumes. A pickup in air freight and security
services aided the Brinks Company; the company also made progress in dealing
with liabilities left over from its coal-mining days, when it was known as
Pittston.
Anticipating possible interest-rate hikes, we avoided thrifts and other
rate-sensitive financial issues. Instead, we favored commercial banks whose
business customers seemed likely to increase their borrowings as economic
conditions improve. California-based City National and Texas Capital
Bankshares both contributed positively to results. The acquisition of Staten
Island Bank by Independence Community Bank also added to returns.
For Advanta, the improving economy meant stepped up demand from its small
business clients for credit cards and other business services, while
Selective Insurance Group, a property and casualty insurer, benefited from
increased premiums and a favorable claims experience. In technology, the
buyout of American Management Systems by CGI made an important contribution.
Q: Which holdings had a negative impact over the period?
A: Disappointing earnings pressured shares of Power Integrations, which makes
semiconductors for electronic devices, including chargers for cell phones and
DC/AC converters. We believe the trend to miniaturization will eventually
boost demand for the company's products. Elsewhere, First Healthgroup, a
managed care company, fell victim to aggressive pricing on the part of
competitors. Unifi, which makes synthetic yarns for textiles, fell sharply
when it was unable to finalize a proposed manufacturing venture in China.
Difficult times for the airlines have hurt AAR, which manufactures parts and
components for aircraft, and its shares fell. Princeton Review, a provider of
preparatory courses for college entrance and other exams, also declined,
following a weak earnings report.
Q: What is your current outlook?
A: The Federal Reserve Board raised interest rates in June, but if the economy
idles for a time an aggressive series of increases seems unlikely. In the
meantime, equity valuations may already reflect the impact of higher rates.
That circumstance has led to a number of attractive investment opportunities
among small company stocks that we are analyzing as candidates for
investment.
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.
Small-capitalization stocks may be subject to greater short-term price
fluctuations than securities of larger companies.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 94.6%
Energy - 7.0%
Oil & Gas Drilling - 2.9%
925 Atwood Oceanics, Inc.* $ 38,619
2,300 Grant Prideco, Inc.* 42,458
8,550 Key Energy Services, Inc.* 80,710
3,363 Patterson Energy, Inc. 112,358
5,075 Todco* 78,510
-----------
$ 352,655
-----------
Oil & Gas Equipment And Services - 1.1%
2,325 Gulfmark Offshore, Inc.* $ 36,689
3,575 Maverick Tube Corp.* 93,880
-----------
$ 130,569
-----------
Oil & Gas Exploration & Production - 2.2%
7,550 Forest Oil Corp.* $ 206,266
1,828 Spinnaker Exploration Co.* 71,981
-----------
$ 278,247
-----------
Oil & Gas Refining Marketing &
Transportation - 0.8%
6,150 Plains Resources, Inc.* $ 104,243
-----------
Total Energy $ 865,714
-----------
Materials - 6.1%
Commodity Chemicals - 1.1%
5,800 Airgas, Inc. $ 138,678
-----------
Gold - 0.5%
10,550 IAMGOLD Corp. (a) $ 58,869
-----------
Materials - 0.5%
600 Mega Blocks, Inc.* $ 9,902
2,950 Mega Blocks, Inc. (144A)* 48,681
-----------
$ 58,583
-----------
Metal & Glass Containers - 0.3%
900 Kennametal, Inc. $ 41,220
-----------
Paper Products - 1.1%
7,575 Wausau-Mosinee Paper Corp. $ 131,048
-----------
Precious Metals & Minerals - 1.2%
11,550 Agnico Eagle Mines, Ltd. (a) $ 152,576
-----------
Specialty Chemicals - 0.6%
8,925 Wellman, Inc. $ 72,560
-----------
Steel - 0.8%
10,000 Graftech International, Ltd.* $ 104,600
-----------
Total Materials $ 758,134
-----------
Shares Value
Capital Goods - 5.4%
Aerospace & Defense - 1.8%
8,450 AAR Corp.* $ 95,908
4,825 MTC Technologies, Inc.* 124,582
-----------
$ 220,490
-----------
Construction, Farm Machinery &
Heavy Trucks - 1.4%
9,950 Wabtec Corp. $ 179,498
-----------
Construction & Engineering - 0.2%
1,500 Insituform Technologies, Inc.* $ 24,405
-----------
Electrical Components & Equipment - 2.0%
2,600 Digital Theater Systems, Inc.* $ 67,912
16,425 Power-One, Inc.* 180,347
-----------
$ 248,259
-----------
Total Capital Goods $ 672,652
-----------
Commercial Services & Supplies - 8.8%
Data Processing Services - 1.2%
8,100 Gartner Group, Inc.* $ 107,082
1,775 TALX Corp. 43,363
-----------
$ 150,445
-----------
Commercial Printing - 0.8%
3,400 John H. Harland Co. $ 99,790
-----------
Diversified Commercial Services - 4.8%
4,951 The Brinks Co. $ 169,572
2,175 Central Parking Corp. 40,651
7,544 FTI Consulting, Inc.* 124,476
3,775 Regis Corp. 168,327
6,000 Tetra Tech, Inc.* 97,920
-----------
$ 600,946
-----------
Employment Services - 1.4%
2,050 Corinthian Colleges, Inc.* $ 50,717
15,600 The Princeton Review, Inc.* 118,092
-----------
$ 168,809
-----------
Environmental Services - 0.6%
11,250 Newpark Resources, Inc.* $ 69,750
-----------
Total Commercial Services &
Supplies $ 1,089,740
-----------
Transportation - 1.3%
Trucking - 1.3%
3,000 Dollar Thrifty Automotive Group* $ 82,320
2,200 Forward Air Corp.* 82,280
-----------
$ 164,600
-----------
Total Transportation $ 164,600
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Consumer Durables & Apparel - 4.2%
Apparel, Accessories & Luxury Goods - 1.1%
15,500 Charming Shoppes, Inc.* $ 138,415
-----------
Housewares & Specialties - 2.1%
8,150 Tupperware Corp. $ 158,355
3,450 Yankee Candle Co.* 100,913
-----------
$ 259,268
-----------
Photographic Products - 0.4%
4,800 Creo Products* $ 42,144
-----------
Textiles - 0.6%
25,886 Unifi, Inc.* $ 75,846
-----------
Total Consumer Durables & Apparel $ 515,673
-----------
Hotels, Restaurants & Leisure - 1.3%
Restaurants - 1.3%
2,334 Applebee's International, Inc. $ 53,729
6,325 O'Charley's, Inc.* 108,727
-----------
$ 162,456
-----------
Total Hotels, Restaurants & Leisure $ 162,456
-----------
Media - 2.8%
Movies & Entertainment - 1.7%
11,425 Alliance Atlantis Communications, Inc.* $ 210,231
-----------
Publishing - 1.1%
6,750 Journal Register Co.* $ 135,000
-----------
Total Media $ 345,231
-----------
Retailing - 3.3%
Apparel Retail - 0.4%
2,175 Genesco, Inc.* $ 51,395
-----------
Catalog Retail - 0.5%
3,400 Insight Enterprises, Inc.* $ 60,384
-----------
General Merchandise Stores - 0.9%
3,975 Tuesday Morning Corp.* $ 115,275
-----------
Specialty Stores - 1.5%
900 Guitar Center, Inc.* $ 40,023
3,825 School Specialty, Inc.* 138,886
-----------
$ 178,909
-----------
Total Retailing $ 405,963
-----------
Food & Drug Retailing - 1.6%
Food Distributors - 0.8%
2,214 THe J.M. Smucker Co. $ 101,645
-----------
Food Retail - 0.8%
1,800 Fresh Del Monte Produce, Inc. (a) $ 45,486
3,300 Wild Oats Markets, Inc.* 46,431
-----------
$ 91,917
-----------
Total Food & Drug Retailing $ 193,562
-----------
Shares Value
Food, Beverage & Tobacco - 1.7%
Agricultural Products - 1.7%
4,395 Corn Products International, Inc. $ 204,587
-----------
Total Food, Beverage & Tobacco $ 204,587
-----------
Household & Personal Products - 1.6%
Household Products - 1.6%
8,025 Nu Skin Enterprises, Inc. $ 203,193
-----------
Total Household & Personal
Products $ 203,193
-----------
Health Care Equipment & Services - 10.2%
Health Care Distributors - 2.4%
6,337 AMN Healthcare Services (a)* $ 96,893
2,625 Chattem, Inc.* 75,784
6,600 Cross Country Healthcares, Inc. (a)* 119,790
-----------
$ 292,467
-----------
Health Care Equipment - 1.1%
4,625 Haemonetics Corp.* $ 137,131
-----------
Health Care Facilities - 2.4%
3,300 Lifepoint Hospitals, Inc.* $ 122,826
2,927 Sunrise Senior Living, Inc. (a)* 114,563
1,200 Universal Health Services, Inc. (Class B) 55,068
-----------
$ 292,457
-----------
Health Care Services - 3.7%
20,875 Hooper Holmes, Inc. $ 119,823
4,496 Parexel International Corp.* 89,021
1,500 Pediatrix Medical Group, Inc.* 104,775
7,625 Providence Service Corp.* 143,274
-----------
$ 456,893
-----------
Managed Health Care - 0.6%
5,100 First Health Group Corp.* $ 79,611
-----------
Total Health Care Equipment &
Services $ 1,258,559
-----------
Pharmaceuticals & Biotechnology - 1.3%
Biotechnology - 0.4%
4,525 Cubist Pharmaceuticals, Inc.* $ 50,228
-----------
Pharmaceuticals - 0.9%
4,500 Adolor Corp.* $ 57,060
7,300 Alnylam Pharmaceuticals, Inc. (a)* 55,188
-----------
$ 112,248
-----------
Total Pharmaceuticals &
Biotechnology $ 162,476
-----------
Banks - 6.9%
Diversified Banks - 1.6%
4,400 Provident Financial Services, Inc. $ 77,220
7,200 Texas Capital Bancshares, Inc.* 119,520
-----------
$ 196,740
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Regional Banks - 3.2%
400 Alliance Bankshares Corp.* $ 6,020
1,500 City National Corp. 98,550
3,575 Sterling Bancshares, Inc. 50,729
3,000 Virginia Commerce Bancorp, Inc.* 88,530
3,377 Whitney Holding Corp. 150,851
-----------
$ 394,680
-----------
Thrifts & Mortgage Finance - 2.1%
4,500 Commercial Federal Corp. $ 121,950
2,975 Webster Financial Corp. 139,885
-----------
$ 261,835
-----------
Total Banks $ 853,255
-----------
Diversified Financials - 6.9%
Consumer Finance - 3.6%
12,103 Advanta Corp. (Class B) $ 277,401
18,597 Rewards Network, Inc. (a)* 167,373
-----------
$ 444,774
-----------
Investment Banking & Brokerage - 0.9%
8,300 Apollo Investment Corp.* $ 114,291
-----------
Multi-Sector Holding - 1.4%
3,600 Leucadia National Corp. $ 178,920
-----------
Diversified Financial Services - 1.0%
2,800 Gabelli Asset Management, Inc. $ 119,000
-----------
Total Diversified Financials $ 856,985
-----------
Insurance - 2.1%
Property & Casualty Insurance - 2.1%
1,120 First American Corp. $ 28,997
6,800 Quanta Capital Holdings (144A)* 73,032
3,970 Selective Insurance Group, Inc. 158,324
-----------
$ 260,353
-----------
Total Insurance $ 260,353
-----------
Real Estate - 5.6%
Real Estate Investment Trusts - 5.6%
1,800 Camden Property Trust $ 82,440
2,700 Colonial Properties Trust 104,031
3,467 Healthcare Realty Trust, Inc. 129,943
9,107 Innkeepers USA Trust 93,893
4,740 Prentiss Properties Trust 158,885
3,450 Shurgard Storage Centers, Inc. 129,030
-----------
$ 698,222
-----------
Total Real Estate $ 698,222
-----------
Shares Value
Software & Services - 5.8%
Application Software - 3.7%
1,300 Avid Technology, Inc.* $ 70,941
4,112 Fair Isaac & Co., Inc. 137,259
2,850 Manhattan Associates, Inc.* 88,008
6,650 Mercury Computer Systems, Inc.* 164,920
-----------
$ 461,128
-----------
Home Entertainment Software - 0.9%
11,325 Plato Learning, Inc. (a)* $ 112,231
-----------
Internet Software & Services - 0.5%
5,825 Lionbridge Technologies, Inc.* $ 44,561
1,000 PEC Solutions, Inc.* 11,930
-----------
$ 56,491
-----------
IT Consulting & Other Services - 0.2%
1,500 ManTech International Corp.* $ 28,155
-----------
Systems Software - 0.5%
7,500 Borland Software Corp.* $ 63,675
-----------
Total Software & Services $ 721,680
-----------
Technology Hardware & Equipment - 4.0%
Communications Equipment - 0.9%
3,025 Avocent Corp.* $ 111,139
-----------
Computer Storage & Peripherals - 0.6%
2,700 Applied Films Corp.* $ 78,354
-----------
Electronic Equipment & Instruments - 0.6%
5,475 Planar Systems, Inc.* $ 73,310
-----------
Electronic Manufacturing Services - 0.9%
8,450 Plexus Corp.* $ 114,075
-----------
Technology Distributors - 1.0%
3,000 Tech Data Corp.* $ 117,390
-----------
Total Technology Hardware &
Equipment $ 494,268
-----------
Semiconductors - 3.1%
Semiconductor Equipment - 2.2%
898 Cymer, Inc.* $ 33,621
2,701 DuPont Photomasks, Inc. (a)* 54,911
4,796 Photronics, Inc.* 90,836
2,401 Varian Semiconductor Equipment
Associates, Inc.* 92,583
-----------
$ 271,951
-----------
Semiconductors - 0.9%
4,425 Power Integrations, Inc.* $ 110,183
-----------
Total Semiconductors $ 382,134
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Telecommunication Services - 2.7%
Integrated Telecommunication Services - 2.0%
8,400 Aeroflex, Inc.* $ 120,372
8,284 CT Communications, Inc. 124,674
-----------
$ 245,046
-----------
Wireless Telecommunication Services - 0.7%
8,600 Boston Communications Group, Inc.* $ 88,150
-----------
Total Telecommunication Services $ 333,196
-----------
Utilities - 0.9%
Gas Utilities - 0.9%
2,525 People's Energy Corp. $ 106,429
-----------
Total Utilities $ 106,429
-----------
TOTAL COMMON STOCKS
(Cost $10,109,655) $11,709,062
-----------
TEMPORARY CASH INVESTMENTS - 7.3%
Security Lending Collateral - 7.3%
906,301 Securities Lending
Investment Fund, 1.29% $ 906,301
-----------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $906,301) $ 906,301
-----------
TOTAL INVESTMENT
IN SECURITIES - 101.9%
(Cost $11,015,956) (a) $12,615,363
-----------
OTHER ASSETS AND
LIABILITIES - (1.9)% $ (231,973)
-----------
TOTAL NET ASSETS - 100.0% $12,383,390
===========
* Non-income producing security.
144A Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $121,713 or 1.0% of
net assets.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
10,160 Agnico Eagle Mines Ltd. $134,823
6,935 Alnylam Pharmaceuticals, Inc.* 49,239
5,664 AMN Healthcare Services* 86,433
4,797 Cross Country Healthcares, Inc.* 87,641
2,305 DuPont Photomasks, Inc.* 46,169
1,685 Fresh Del Monte Produce, Inc. 42,176
10,497 IAMGOLD Corp. 56,264
9,001 Plato Learning, Inc.* 90,460
16,622 Rewards Network, Inc.* 153,754
2,781 Sunrise Senior Living, Inc.* 108,292
--------
Total $855,251
========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year 8/1/01
6/30/04 Ended Ended to
Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $11.35 $ 9.07 $ 10.95 $11.18
------ ------ ------- -----
Increase (decrease) from investment operations:
Net investment income (loss) $(0.03) $(0.01) $ (0.01) $ --
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.72 2.29 (1.87) (0.23)
------ ------ ------- ------
Net increase (decrease) from investment operations $ 0.69 $ 2.28 $ (1.88) $(0.23)
Distributions to shareowners
Net investment income -- -- -- --
Net realized gain -- -- -- --
------ ------ ------- ------
Net increase (decrease) in net asset value $ 0.69 $ 2.28 $ (1.88) $(0.23)
------ ------ ------- ------
Net asset value, end of period $12.04 $11.35 $ 9.07 $10.95
====== ====== ======= ======
Total return* 6.08% 25.14% (17.14)% (2.06)%
Ratio of net expenses to average net assets+ 1.48%** 1.52% 1.58% 1.68%**
Ratio of net investment income to average net assets+ (0.55)%** (0.23)% (0.18)% 0.01%**
Portfolio turnover rate 46%** 38% 53% 72%
Net assets, end of period (in thousands) $8,809 $7,095 $ 3,419 $ 938
Ratios with no waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 1.73%** 2.67% 2.98% 6.71%**
Net investment income (loss) (0.80)%** (1.38)% (1.58)% 5.02%**
(a) Class 2 shares were first publicly offered on August 1, 2001.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.)
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
8 The accompanying notes are an integral part of these financial statements.
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Small
Company
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $855,251)
(Cost $11,015,956) $12,615,363
Cash 704,756
Foreign currencies, at value --
Receivables --
Investment securities sold 923
Fund shares sold 2,836
Variation margin --
Dividends, interest and foreign taxes withheld 9,766
Forward foreign currency settlement contracts, net --
Due from Pioneer Investment Management, Inc. --
Other 408
-----------
Total assets $13,334,052
-----------
LIABILITIES:
Payables --
Investment securities purchased $ --
Fund shares repurchased 4,118
Dividends --
Upon return of securities loaned 906,300
Forward foreign currency settlement contracts, net --
Reserve for repatriation taxes --
Due to bank --
Due to affiliates 11,625
Accrued expenses 28,619
-----------
Total liabilities $ 950,662
-----------
NET ASSETS:
Paid-in capital $11,122,927
Accumulated net investment income (loss) (26,069)
Accumulated undistributed net realized gain (loss) (312,875)
Net unrealized gain (loss) on:
Investments 1,599,407
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
Total net assets $12,383,390
-----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 3,574,012
Shares outstanding 294,266
-----------
Net asset value per share $ 12.15
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 8,809,378
Shares outstanding 731,606
-----------
Net asset value per share $ 12.04
The accompanying notes are an integral part of these financial statements. 9
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Small Company
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $49) $ 50,058
Interest 1,876
Income on securities loaned, net 1,378
Other --
--------
Total investment income $ 53,312
--------
EXPENSES:
Management fees $ 43,522
Transfer agent fees 497
Distribution fees (Class II) 9,708
Administrative fees 9,250
Custodian fees 12,204
Professional fees 10,476
Printing 10,106
Fees and expenses of nonaffiliated trustees --
Miscellaneous 496
--------
Total expenses $ 96,259
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (14,892)
--------
Net expenses $ 81,367
--------
Net investment income (loss) $(28,055)
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $393,255
Futures contracts 13,667
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (3,327)
--------
$403,595
--------
Change in net unrealized gain or loss from:
Investments $325,045
Futures contracts (11,218)
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
--------
$313,827
--------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $717,422
========
Net increase (decrease) in net assets resulting
from operations $689,367
========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Small Company
VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ (28,055) $ (9,162)
Net realized gain (loss) on investments 403,595 (296,269)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 313,827 2,171,849
----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 689,367 $ 1,866,418
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ -- $ --
Class II -- --
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
----------- -----------
Total distributions to shareowners $ -- $ --
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 2,429,035 $ 6,156,243
Reinvestment of distributions -- --
Cost of shares repurchased (1,705,541) (3,911,566)
----------- -----------
Net increase (decrease) in net assets
resulting from fund share transactions $ 723,494 $ 2,244,677
----------- -----------
Net increase (decrease) in net assets $ 1,412,861 $ 4,111,095
----------- -----------
NET ASSETS:
Beginning of period $10,970,529 $ 6,859,434
----------- -----------
End of period $12,383,390 $10,970,529
=========== ===========
Accumulated/(distributions in excess of)
net investment income (loss) $ (26,069) $ 1,986
=========== ===========
The accompanying notes are an integral part of these financial statements. 11
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Small Company 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 nineteen 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)
Portfolio shares may only be purchased by insurance companies for the purpose of
funding variable annuity or variable life insurance contracts, and may also be
purchased by qualified pension and retirement plans.
The investment objective of Small Company Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for the
portfolio are computed once daily, on each day the New York Stock Exchange is
open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
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. As of June 30, 2004, there were no securities fair valued.
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. Temporary
cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicable country rates.
12
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes in
interest rates, securities prices, and currency rates or to seek to increase
total return. Upon entering into a futures contract, the Portfolio is
required to deposit with a broker an amount of cash or securities equal to
the minimum "initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value of
the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees, elements
of market risk which may exceed the amounts recognized by the Portfolio.
Changes in the value of the contracts may not directly correlate to the
changes in the value of the underlying securities. These risks may decrease
the effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, Small Company Portfolio
had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolio's
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of each Portfolio's distributions may be shown in the
accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Small Company VCT Portfolio had a capital loss
carryforward of $613,713, of which the following amounts will expire between
2009 and 2011 if not utilized: $92,858 in 2009, $235,402 in 2010 and $284,913
in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the components
of distributable earnings (accumulated losses) as of December 31, 2003 and
the distributions paid during the year ended December 31, 2003 on a tax basis
as of December 31, 2003.
13
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer
Small Company
VCT Portfolio
2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ --
Long- Term capital gain --
----------
--
Return of Capital --
----------
Total distributions $ --
==========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/
(Capital loss carryforward) (613,173)
Unrealized appreciation (depreciation) 1,184,269
----------
Total $ 571,096
==========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for
its services, which are allocated based on the number of accounts in each
class and the ratable allocation of related out-of-pocket expenses (see Note
3). Income, common expenses and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning of
the day. Distributions paid by the Portfolio with respect to each class of
shares are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day. Dividends and distributions to shareowners are recorded
on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Trust. The loans are secured by collateral of at least 102%,
at all times, of the fair value of the securities loaned. The fair value of
the collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand. The
Trust invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase. The
collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at least
equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.75% of the Portfolio's average daily net assets. In addition,
under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $9,419 was payable to PIM related to
management fees, administrative fees and certain other services, and is included
in due to affiliates.
14
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $255 in transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$1,951 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ------------------------------------------------------------------------------------------------------
Small Company Portfolio $11,106,049 $1,913,795 $(404,481) $1,509,314
----------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $3,888,393 and $2,470,587, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- ------------------------------------------------------------------------------------------------------
Small Company Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ------------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 26,644 $ 310,139 286,397 $ 2,774,242
Reinvestment of distributions -- -- --
Shares repurchased (71,189) (828,339) (324,514) (3,132,628)
--------------------------------------------------------------------
Net increase (decrease) (44,545) $ (518,200) (38,117) $ (358,386)
====================================================================
CLASS II:
Shares sold 180,783 $2,118,896 328,726 $ 3,382,001
Reinvestment of distributions -- -- --
Shares repurchased (74,557) (877,202) (80,215) (778,938)
--------------------------------------------------------------------
Net increase 106,226 $1,241,694 248,511 $ 2,603,063
====================================================================
- ------------------------------------------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16079-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Shares VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 7
Notes to Financial Statements 11
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
U.S. Common Stocks 91.8%
Depositary Receipts for International Stocks 8.2%
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
Sector Distribution
(As a percentage of equity holdings)
Information Technology 30.2%
Health Care 22.9%
Consumer Discretionary 14.5%
Industrials 10.1%
Financials 8.6%
Consumer Staples 7.6%
Materials 3.5%
Telecommunication Services 1.6%
Energy 1.0%
Five Largest Holdings
(As a percentage of equity holdings)
1. Microsoft Corp. 5.50%
2. Intel Corp. 4.41
3. Sandisk Corp. 3.05
4. Bristol-Myers Squibb Co. 3.02
5. Samsung Electronics Co., Ltd. 2.84
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $11.96 $12.10
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Growth Shares VCT Portfolio at net asset value, compared to that of the Russell
1000 Growth Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.]
Date Pioneer Growth Shares Russell 1000
VCT Portfolio* Index
10/31/1997 $10,000 $10,000
$10,222 $10,646
12/31/1998 $13,521 $13,522
$14,539 $16,351
12/31/2000 $13,539 $15,079
$10,934 $13,202
12/31/2002 $7,099 $10,343
$8,855 $13,436
6/30/2004 $8,753 $13,883
The Russell 1000 Growth Index contains those Russell 1000 securities with
greater-than-average growth orientation. Companies in this index tend to exhibit
higher price-to-book and price-to-earnings ratios, lower dividend yields and
higher forecasted growth values than the Value universe. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Portfolio
returns, do not reflect any fees, expenses or sales charges. You cannot invest
directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class -1.98%
(10/31/97)
5 Years -10.08%
1 Year 9.42%
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
The U.S. economy continued to grow during the first half of 2004, but the
general investment environment for equities began turning slightly negative as
rising corporate profit trends began to weaken, consumer spending was not as
strong as expected, and markets began anticipating a tighter monetary policy
from the Federal Reserve. In the following interview, Christopher Galizio
discusses the factors that affected the performance of Pioneer Growth Shares VCT
Portfolio during the six-month period ended June 30, 2004. Mr. Galizio is a
member of the Portfolio's management team.
Q: How did the Portfolio perform during the first half of 2004?
A: For the six-month period ended June 30, 2004, the Growth Shares Portfolio
Class II had a total return of -1.16% at net asset value. For the same
period, the Russell 1000 Growth Index returned 2.74%. We believe the
Portfolio's underperformance was due to the overweight position in
technology, particularly semi-conductor companies, early in the period.
Q: What was the general investment environment like during the period?
A: The overall market sentiment appeared to be turning negative late in the
six-month period.
The stock market surge that that had begun in March 2003 appeared to lose
some energy. Several major corporations, including the retail and
semi-conductor industries, began to report earnings disappointments, and we
saw some weakening in profit trends, notably in the consumer and technology
sectors. Consumer spending trends, in particular, appeared weak as
over-extended consumers finally began to retrench from their high-spending
patterns. As stock market investors anticipated the June 30 announcement by
the Federal Reserve Board that it would begin to tighten monetary policy by
raising short-term interest rates, the share prices of some consumer-oriented
financial institutions began to fade. Industrial stocks, however, tended to
outperform the overall market.
Q: What were your principal strategies during the period?
A: We restructured the Portfolio during the period, focusing on large-cap
companies that we believed offered long-term value, above-average revenue
growth, strong returns on capital and reasonable valuations in relation to
their earnings potential. This strategy led to a reduced emphasis on the
semi-conductor industry and increased weightings in the software, consumer
discretionary and financial services areas.
We reduced our semi-conductor holdings, eliminating positions in Applied
Materials, Cypress Semiconductor, Texas Instruments and Maxim Technology. We
did add Taiwan Semiconductor, a major manufacturer with an attractive stock
valuation. Overall, however, semiconductor stocks went from an overweight to
an underweight position relative to the benchmark S&P 500. The reduced
weightings in technology tended to support performance.
Conversely, we increased the Portfolio's emphasis on software companies,
adding companies such as Macrovision, which has developed a technology to
protect DVDs, CDs and other disc-based products from piracy, as well as
Take-Two Interactive, the developer of video games, including Grand Theft
Auto - the most successful game in history, with a new version soon to be
introduced. We also added Fair Isaac, which has developed software to help
credit card companies analyze the credit-worthiness of applicants. Fair
Isaac tended to detract from performance late in the six-month period as it
reported disappointing earnings, but we continued to hold it because of its
attractive valuation.
We moved from an underweight to an overweight in the consumer discretionary
sector, taking advantage of attractive valuations of Disney, whose media and
theme park properties have improved earnings outlooks, and Viacom, the owner
of the CBS and MTV television networks among other properties. Among
retailers, we sold our Wal-Mart position before the stock fell hard,
investing in Target, Kohl's and Ross Stores.
In addition, we increased the emphasis on financial services stocks, focusing
on insurance companies with excellent valuations that were not as vulnerable
to interest-rate increases as banks and other lenders. We continued to
de-emphasize consumer staples, although we added Altria (the former Philip
Morris), which offered a high dividend yield and an attractive stock price
that we believed was the result of overly pessimistic market evaluations of
the company's tobacco liability.
In addition, we invested in First Data, the leader in processing of credit
card transactions and owner of the Western Union system, and Accenture, an
information technology services consulting firm.
Q: What were some of the investments that influenced performance?
A: Among newer holdings, Macrovision rose significantly during the period as
its revenue grew faster than had been expected. Sepracor, a pharmaceutical
company and a new holding, also advanced on positive news of a drug under
development. Zimmer Holdings, a world leader in orthopedic products,
including hip and knee replacements, was another health care position that
did very well. The timely sale of Wal-Mart also supported performance.
The overweight position in the semiconductor industry early during the
six-month period held back performance, as valuations in that group fell
hard. Corinthian Colleges, operator of adult vocational educational
colleges and programs, was another detractor, as the SEC began an
investigation of its financial records. However, we took advantage of the
price decline to add to the position in Corinthian because of its goods
long-term fundamentals.
Lexar and Sandisk, two manufacturers of flash memories for cameras and cell
phones, also fell on disappointing sales.
Freeport-McMoRan, a leader in the copper mining industry and a strong support
for performance in 2003, also declined both because of problems at one of its
mines and because of fears of an economic slowdown in China, an important
importer of copper. We increased our investment in the company because of its
attractive price. We also believed it experienced some short-term production
problems that would be resolved.
Q: What is your investment outlook?
A: We are cautions about the near-term opportunities in the domestic stock
market, as stock valuations appear relatively expensive and the Federal
Reserve Board has moved to a less accommodating monetary policy. The home
refinancing boom of the past two years may hurt the future earnings of banks,
while the technology industry faces a number of challenges, from pricing
pressure on its products to calls to change the way many companies have
treated stock options in their accounting. Health care stocks, however,
appear to be more reasonably valued.
Given this outlook, we are paying very strict attention to our analysis and
selection of individual companies. We also have somewhat reduced our exposure
to the domestic stock market with investments in Europe and the emerging
markets. We have, for example, increased our position in Vodafone, the
world's largest wireless communications service company, and we have added
small holdings from Korea, Taiwan and Israel.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 99.6%
Energy - 1.0%
Integrated Oil & Gas - 1.0%
2,500 ConocoPhillips $ 190,725
4,200 Occidental Petroleum Corp. 203,322
-----------
$ 394,047
-----------
Total Energy $ 394,047
-----------
Materials - 3.5%
Diversified Metals & Mining - 3.5%
19,700 Freeport-McMoRan Copper & Gold, Inc.
(Class B) $ 653,055
8,900 Phelps Dodge Corp.* 689,839
-----------
$ 1,342,894
-----------
Total Materials $ 1,342,894
-----------
Capital Goods - 6.9%
Aerospace & Defense - 1.1%
6,200 L-3 Communications Holdings, Inc. $ 414,160
-----------
Electrical Component & Equipment - 1.3%
15,200 General Electric Co. $ 492,480
-----------
Industrial Conglom - 4.5%
16,900 American Standard Companies, Inc.* $ 681,239
21,400 Tyco International Ltd. 709,196
4,000 United Technologies Corp. 365,920
-----------
$ 1,756,355
-----------
Total Capital Goods $ 2,662,995
-----------
Commercial Services & Supplies - 2.0%
Employment Services - 2.0%
31,300 Corinthian Colleges, Inc.* $ 774,362
-----------
Total Commercial Services &
Supplies $ 774,362
-----------
Transportation - 1.2%
Trucking - 1.2%
5,900 United Parcel Service $ 443,503
-----------
Total Transportation $ 443,503
-----------
Hotels, Restaurants & Leisure - 3.0%
Casinos & Gaming - 1.3%
13,400 International Game Technology $ 517,240
-----------
Hotels, Resorts & Cruise Lines - 0.8%
6,400 Carnival Corp. $ 300,800
-----------
Restaurants - 0.9%
9,100 Tricon Global Restaurants, Inc.* $ 338,702
-----------
Total Hotels, Restaurants & Leisure $ 1,156,742
-----------
Shares Value
Media - 3.3%
Broadcasting & Cable TV - 0.9%
9,300 Clear Channel Communications, Inc. $ 343,635
-----------
Movies & Entertainment - 2.4%
21,300 The Walt Disney Co. $ 542,937
10,400 Viacom, Inc. (Class B) 371,488
-----------
$ 914,425
-----------
Total Media $ 1,258,060
-----------
Retailing - 8.2%
Apparel Retail - 2.3%
5,400 Liz Claiborne, Inc. $ 194,292
3,900 Nike, Inc. 295,425
15,200 Ross Stores, Inc. 406,752
-----------
$ 896,469
-----------
Department Stores - 2.1%
7,500 J.C. Penney Co., Inc. $ 283,200
12,300 Kohl's Corp.* 520,044
-----------
$ 803,244
-----------
General Merchandise Stores - 2.4%
9,900 Family Dollar Stores, Inc. $ 301,158
14,700 Target Corp. 624,309
-----------
$ 925,467
-----------
Home Improvement Retail - 1.4%
10,000 Lowe's Companies, Inc. $ 525,500
-----------
Total Retailing $ 3,150,680
-----------
Food & Drug Retailing - 2.1%
Drug Retail - 0.6%
5,900 Walgreen Co. $ 213,639
-----------
Food Distributors - 1.5%
8,500 Cardinal Health, Inc. $ 595,425
-----------
Total Food & Drug Retailing $ 809,064
-----------
Food, Beverage & Tobacco - 5.5%
Soft Drinks - 3.6%
17,000 The Coca-Cola Co. $ 858,160
9,800 PepsiCo, Inc. 528,024
-----------
$ 1,386,184
-----------
Tobacco - 1.9%
14,500 Altria Group, Inc. $ 725,725
-----------
Total Food, Beverage & Tobacco $ 2,111,909
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Health Care Equipment & Services - 10.8%
Health Care Distributors - 5.7%
47,400 Bristol-Myers Squibb Co. $ 1,161,300
6,203 Teva Pharmaceutical Industries, Ltd. 417,400
17,100 Wyeth 618,336
-----------
$ 2,197,036
-----------
Health Care Equipment - 4.3%
16,700 Guidant Corp. $ 933,196
5,400 St. Jude Medical, Inc.* 408,510
3,500 Zimmer Holdings, Inc.* 308,700
-----------
$ 1,650,406
-----------
Managed Health Care - 0.8%
2,800 Wellpoint Health Networks, Inc.* $ 313,628
-----------
Total Health Care Equipment &
Services $ 4,161,070
-----------
Pharmaceuticals & Biotechnology - 11.9%
Biotechnology - 2.8%
12,758 Amgen, Inc.* $ 696,204
35,400 Cubist Pharmaceuticals, Inc.* 392,940
-----------
$ 1,089,144
-----------
Pharmaceuticals - 9.1%
16,000 Merck & Co., Inc. $ 760,000
27,851 Pfizer, Inc. 954,732
17,200 Sepracor, Inc.* 909,880
23,400 Schering-Plough Corp. 432,432
14,400 Sanofi-Synthelabo SA (A.D.R.)* 460,656
-----------
$ 3,517,700
-----------
Total Pharmaceuticals &
Biotechnology $ 4,606,844
-----------
Banks - 2.3%
Diversified Banks - 1.1%
4,900 Bank of America Corp. $ 414,638
-----------
Thrifts & Mortgage Finance - 1.2%
7,400 Freddie Mac $ 468,420
-----------
Total Banks $ 883,058
-----------
Diversified Financials - 1.3%
Consumer Finance - 0.6%
15,900 Providian Financial Corp.* $ 233,253
-----------
Investment Banking & Brokerage - 0.7%
2,800 Goldman Sachs Group, Inc. $ 263,648
-----------
Total Diversified Financials $ 496,901
-----------
Shares Value
Insurance - 5.0%
Insurance Brokers - 0.8%
8,200 Willis Group Holdings, Ltd. $ 307,090
-----------
Multi-Line Insurance - 2.4%
13,000 American International Group, Inc. $ 926,640
-----------
Property & Casualty Insurance - 1.8%
9,000 ACE, Ltd. $ 380,520
7,400 Safeco Corp. 325,600
-----------
$ 706,120
-----------
Total Insurance $ 1,939,850
-----------
Software & Services - 11.6%
Application Software - 8.4%
9,200 Fair Isaac & Co., Inc. $ 307,096
74,000 Microsoft Corp. 2,113,440
21,500 Macrovision Corp.* 538,145
9,500 Veritas Software Corp.* 263,150
-----------
$ 3,221,831
-----------
Data Processing & Outsourced Services - 1.5%
12,600 First Data Corp. $ 560,952
-----------
Home Entertainment Software - 0.7%
9,300 Take-Two Interactive Software, Inc.* $ 284,952
-----------
IT Consulting & Other Services - 1.0%
14,100 Accenture, Ltd.* $ 387,468
-----------
Total Software & Services $ 4,455,203
-----------
Technology Hardware & Equipment - 13.0%
Communications Equipment - 1.8%
16,600 Nokia Corp. (A.D.R.) $ 241,364
15,100 Utstarcom, Inc.* 456,775
-----------
$ 698,139
-----------
Computer Hardware - 4.3%
21,800 Dell, Inc.* $ 780,876
41,600 Hewlett-Packard Co. 877,760
-----------
$ 1,658,636
-----------
Computer Storage & Peripherals - 4.1%
61,800 Lexar Media, Inc.* $ 412,824
53,900 Sandisk Corp.* 1,169,091
-----------
$ 1,581,915
-----------
Electronic Equipment &
Instruments - 2.8%
5,300 Samsung Electronics Co., Ltd.* $ 1,091,126
-----------
Total Technology Hardware &
Equipment $ 5,029,816
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Semiconductors - 5.5%
61,300 Intel Corp. $ 1,691,880
51,100 Taiwan Semiconductor
Manufacturing Co. (A.D.R.) 424,641
-----------
$ 2,116,521
-----------
Total Semiconductors $ 2,116,521
-----------
Telecommunication Services - 1.6%
Wireless Telecommunication Services - 1.6%
27,100 Vodafone Group Plc (A.D.R.) $ 598,911
-----------
Total Telecommunication Services $ 598,911
-----------
TOTAL COMMON STOCKS
(Cost $38,249,059) $38,392,430
-----------
TOTAL INVESTMENT
IN SECURITIES - 99.6%
(Cost $38,249,059) $38,392,430
-----------
OTHER ASSETS AND
LIABILITIES - 0.4% $ 169,200
-----------
TOTAL NET ASSETS - 100.0% $38,561,630
===========
* Non-income producing security.
(A.D.R.) American Depository Receipt
6 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year 5/1/00
6/30/04 Ended Ended Ended to
Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00
Net asset value, beginning of period $12.10 $ 9.70 $ 14.94 $18.50 $21.68
------ ------ ------- ------ ------
Increase (decrease) from investment operations:
Net investment income (loss) $(0.01) $(0.02) $ (0.13) $(0.05) $(0.03)
Net realized and unrealized gain (loss) on investments (0.13) 2.42 (5.11) (3.51) (1.23)
------ ------ ------- ------ ------
Net increase (decrease) from investment operations $(0.14) $ 2.40 $ (5.24) $(3.56) $(1.26)
Distributions to shareowners:
Net investment income -- -- -- -- --
Net realized gain -- -- -- -- (1.92)
------ ------ ------- ------ ------
Net increase (decrease) in net asset value $(0.14) $ 2.40 $ (5.24) $(3.56) $(3.18)
------ ------ ------- ------ ------
Net asset value, end of period $11.96 $12.10 $ 9.70 $14.94 $18.50
====== ====== ======= ====== ======
Total return* (1.16)% 24.74% (35.07)% 19.24% (6.36)%
Ratio of net expenses to average net assets+ 1.16%** 1.44% 1.63% 1.58% 1.03%**
Ratio of net investment income (loss) to average net assets+ (0.17)%** (0.40)% (0.64)% (0.61)% (0.33)%**
Portfolio turnover rate 208%** 58% 86% 111% 95%**
Net assets, end of period (in thousands) $5,592 $3,049 $ 263 $ 658 $ 203
Ratios with no waiver of management fees and assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 1.16%* * 1.44% 1.63% 1.58% 0.73%**
Net investment income (loss) (0.17)%** (0.40)% (0.64)% (0.61)% (0.11)%**
(a) Class 2 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.
The accompanying notes are an integral part of these financial statements. 7
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Growth
Shares
VCT Portfolio
ASSETS:
Investment in securities, at value (Cost $38,249,059) $ 38,392,430
Cash 166,266
Foreign currencies, at value --
Receivables --
Investment securities sold 350,395
Fund shares sold --
Variation margin --
Dividends, interest and foreign taxes withheld 44,334
Forward foreign currency settlement contracts, net --
Due from Pioneer Investment Management, Inc. --
Other 470
------------
Total assets $ 38,953,895
------------
LIABILITIES:
Payables --
Investment securities purchased $ 328,381
Fund shares repurchased 8,488
Dividends --
Upon return of securities loaned --
Forward foreign currency settlement contracts, net --
Reserve for repatriation taxes --
Due to bank --
Due to affiliates 27,887
Accrued expenses 27,509
------------
Total liabilities $ 392,265
------------
NET ASSETS:
Paid-in capital $ 78,004,905
Accumulated net investment income (loss) 2,672
Accumulated undistributed net realized gain (loss) (39,589,318)
Net unrealized gain (loss) on:
Investments 143,371
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $ 38,561,630
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 32,969,391
Shares outstanding 2,724,557
------------
Net asset value per share $ 12.10
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 5,592,239
Shares outstanding 467,443
------------
Net asset value per share $ 11.96
8 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Growth
Shares
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $1,046) $ 179,113
Interest 2,776
Income on securities loaned, net --
Other --
-----------
Total investment income $ 181,889
-----------
EXPENSES:
Management fees $ 135,655
Transfer agent fees 1,508
Distribution fees (Class II) 5,230
Administrative fees 9,250
Custodian fees 11,802
Professional fees 14,662
Printing 30
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,080
-----------
Total expenses $ 179,217
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
-----------
Net expenses $ 179,217
-----------
Net investment income (loss) $ 2,672
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 1,809,705
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$ 1,809,705
-----------
Change in net unrealized gain or loss from:
Investments $(2,214,548)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$(2,214,548)
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ (404,843)
===========
Net increase (decrease) in net assets resulting
from operations $ (402,171)
===========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Growth
Shares VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 2,672 $ (20,270)
Net realized gain (loss) on investments 1,809,705 (3,697,565)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (2,214,548) 11,680,101
----------- -----------
Net increase (decrease) in net assets
resulting from operations $ (402,171) $ 7,962,266
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ -- $ (4,477)
Class II -- --
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
----------- -----------
Total distributions to shareowners $ -- $ (4,477)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 3,453,095 $ 4,104,812
Reinvestment of distributions -- 4,477
Cost of shares repurchased (3,287,636) (8,277,302)
----------- -----------
Net increase (decrease) in net assets
resulting from fund share transactions $ 165,459 $(4,168,013)
----------- -----------
Net increase (decrease) in net assets $ (236,712) $ 3,789,776
----------- -----------
NET ASSETS:
Beginning of period $38,798,342 $35,008,566
----------- -----------
End of period $38,561,630 $38,798,342
=========== ===========
Accumulated/(distributions in excess of)
net investment income (loss) $ 2,672 $ --
=========== ===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Growth Shares 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 nineteen 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)
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 Growth Shares Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for the
portfolio are computed once daily, on each day the New York Stock Exchange is
open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
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. As of June 30, 2004 there were no securities fair valued.
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. Temporary
cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes in
interest rates, securities prices, and currency rates or to seek to increase
total
11
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
return. Upon entering into a futures contract, the Portfolio is required to
deposit with a broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the associated futures exchange. Subsequent
payments for futures contracts ("variation margin") are paid or received by
the Portfolio, depending on the daily fluctuation in the value of the
contracts, and are recorded by the Portfolio as unrealized gains or losses.
When the contract is closed, the Portfolio realize a gain or loss equal to
the difference between the opening and closing value of the contract. The use
of futures contracts involves, to varying degrees, elements of market risk
which may exceed the amounts recognized by the Portfolio. Changes in the
value of the contracts may not directly correlate to the changes in the value
of the underlying securities. These risks may decrease the effectiveness of
the Portfolio's hedging and trading strategies and potentially result in a
loss. As of June 30, 2004, Growth Shares Portfolio had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolio's
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of each Portfolio's distributions may be shown in the
accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Growth Shares VCT Portfolio had a capital loss
carryforward of $40,517,554, of which the following amounts will expire
between 2008 and 2011 if not utilized: $4,132,928 in 2008, $9,820,202 in
2009, $19,245,183 in 2010 and $7,319,241 in 2011.
The portfolio elected to defer $85,372 in capital losses recognized between
November 1, 2003 and December 31, 2003 to its fiscal year ending December 31,
2004.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the components
of distributable earnings (accumulated losses) as of December 31, 2003 and
the distributions paid during the year ended December 31, 2003 on a tax basis
as of December 31, 2003.
12
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer
Growth Shares
VCT Portfolio
2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 4,477
Long-Term capital gain --
------------
4,477
Return of Capital --
------------
Total distributions $ 4,477
============
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/
(Capital loss carryforward) (40,517,554)
Unrealized appreciation (depreciation) 1,561,822
------------
Total $(38,955,732)
============
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for
its services, which are allocated based on the number of accounts in each
class and the ratable allocation of related out-of-pocket expenses (see Note
3). Income, common expenses and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning of
the day. Distributions paid by the Portfolio with respect to each class of
shares are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day. Dividends and distributions to shareowners are recorded
on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Trust. The loans are secured by collateral of at least 102%,
at all times, of the fair value of the securities loaned. The fair value of
the collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand. The
Trust invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase. The
collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at least
equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.70% of the Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $26,397 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
13
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$1,232 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ---------------------------------------------------------------------------------------------------
Growth Shares Portfolio $39,045,156 $1,123,103 $(1,775,829) $(652,726)
=========== ========== =========== =========
- ---------------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $39,697,597 and $38,914,354, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- ---------------------------------------------------------------------------------------------------
Growth Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ---------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 50,359 $ 618,962 91,892 $ 1,012,931
Reinvestment of distributions -- -- 403 4,477
Shares repurchased (251,629) (3,068,841) (731,375) (7,757,809)
----------------------------------------------------------------
Net increase (201,270) $(2,449,879) (639,080) $(6,740,401)
================================================================
CLASS II:
Shares sold 233,502 $ 2,834,133 271,796 $ 3,091,881
Reinvestment of distributions -- -- -- --
Shares repurchased (18,080) (218,795) (46,885) (519,493)
----------------------------------------------------------------
Net increase 215,422 $ 2,615,338 224,911 $ 2,572,388
================================================================
- ---------------------------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16076-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer International Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer International Value VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 7
Notes to Financial Statements 11
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
Financials 25.0%
Consumer Discretionary 13.8%
Industrials 12.0%
Telecommunication Services 9.6%
Consumer Staples 9.4%
Materials 7.9%
Energy 6.8%
Health Care 6.6%
Information Technology 6.4%
Utilities 2.5%
Geographical Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
Japan 26.4%
United Kingdom 21.4%
France 14.6%
Switzerland 8.5%
Germany 5.7%
Netherlands 4.6%
Italy 4.2%
Spain 3.0%
South Korea 2.1%
Brazil 1.1%
Turkey 1.1%
Finland 1.0%
Belgium 1.0%
Russia 1.0%
Other (individually less than 1%) 4.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. BP Amoco Plc 3.17%
2. Vodafone Group Plc 2.76
3. Total SA 2.33
4. Mitsubishi Tokyo Financial
Group, Inc. 2.26
5. Toyota Motor Co. 2.23
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $10.33 $10.04
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.0431 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
International Value VCT Portfolio at net asset value, compared to that of the
Morgan Stanley Capital International (MSCI) All Country World Free (ACWF) ex.
U.S. Index. Portfolio returns are based on net asset value and do not reflect
any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.]
Date Pioneer International MSCI AC Wld
Value VCT Portfolio* Fr USA+
3/95 $10,000 $10,000
$10,945 $10,960
6/96 $11,819 $11,691
$12,227 $11,929
6/98 $11,012 $13,655
$15,859 $17,877
6/00 $12,260 $15,177
$ 9,325 $12,218
6/02 $ 8,064 $10,425
$10,675 $14,740
6/04 $11,029 $15,346
+ Index comparison begins on 2/28/95. The MSCI ACWF ex. U.S. Index is
composed of 46 markets - 21 developed countries and 25 emerging countries.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- ------------------------------------
Net Asset Value
- ------------------------------------
Life-of-Class 1.04%
(3/1/95)
5 Years -1.24%
1 Year 26.35%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
2
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
With the global recovery well under way, the six months ended June 30, 2004,
proved to be a positive environment for international stocks. As Stefano
Pregnolato, a member of the Portfolio's management team, highlights in this
report, different industries and companies within those sectors are benefiting
to a greater degree than others as the recovery solidifies.
Q: How did the Portfolio perform during the first half of fiscal 2004?
A: The market environment was generally favorable for international stocks. Low
interest rates, improving corporate fundamentals and consumer demand helped
drive stock prices higher. For the six months ended June 30, 2004, the
Portfolio's Class II shares rose 3.32% at net asset value. In comparison,
the Morgan Stanley Capital International (MSCI) All Country World Free
Index excluding the United States grew 4.10% for the same period. A handful
of stocks contributed to the Portfolio's underperformance relative to the
benchmark - most notably Nokia (Finland), which is encountering strong
competition in the communications equipment sector.
Q: What strategies or investments hurt performance most during the six months
under review?
A: Information technology was the biggest disappointment for the reporting
period. Even though the Portfolio's exposure to this sector was just below
that of the benchmark, our decision to maintain a large exposure to Nokia
(Finland) hurt performance. Nokia announced that profits later this year
might not be as robust as originally thought.
While the Portfolio's exposure to telecommunication services was in line
with that of the benchmark, it largely consisted of Vodafone Group (United
Kingdom) - one of the Portfolio's largest holdings on June 30. Vodafone
delivered positive performance for the six months, but underperformed the
sector overall. The stock came under pressure in late May, when Vodafone
announced that forecasted earnings might be less than previously
anticipated.
The Portfolio's greater-than-benchmark exposure to health care investments
did well but not as well as those constituting the benchmark. Finally,
investments in consumer staples did well, but the Portfolio's underweighted
position, relative to its benchmark, limited its participation in the rally
of those stocks.
Q: What strategies or investments helped performance most during the six months
under review?
A: The momentum for global economic growth shifted to Asia during the first
quarter of 2004, particularly to Japan, where its resurging economy and
reform efforts are being well received by investors. During the spring, we
increased investments there. By June 30, the Portfolio's exposure to Japan
was higher than that of the benchmark at 25.98% of total equity assets. The
increase was very positive for the Portfolio. In addition, the Japanese
market is less correlated to the U.S. economy than that of Europe or the
rest of Asia - creating a valuable diversifying effect for the Portfolio.
The sector allocation strategy also played a significant part in
performance. We'd chosen to keep the Portfolio's exposure to energy stocks
just below that of the benchmark, but our selection of companies, most
specifically ENI (Italy), significantly outperformed those constituting the
benchmark. Similarly, investments in utility holdings were below that of the
benchmark, but they outperformed those in the benchmark and represented some
of the strongest performers for the six-month period.
With the increased global economic activity, consumer-related companies also
outperformed during the six months ended June 30. Consumer discretionary
companies led this group. Effective stock selection and our decision to
overweight investments in this sector helped the Portfolio tremendously.
Finally, we deemphasized the materials sector relative to the benchmark on
account of our view that near-term fundamentals were weak. This strategy
proved to be the right decision.
Q: Europe still represents the majority of the Portfolio's holdings. How are
these investments faring?
A: European stocks generally moved in line with the benchmark. Stock price
valuations are fair and supported by strong dividend yields. Growth across
Europe is more moderate than outside the region, and that fact is
discounted in stock prices. The strength of the euro eased a bit during the
six months, but it continues to be a risk for European exporters.
Q: What is your outlook for the balance of the fiscal year?
A: We are cautious about the equity markets in an environment of rising
interest rates. However, we see some opportunity in Japan as the signs of
growth begin to build after essentially two decades of recession. We also
see opportunities in key emerging markets where stronger balance sheets,
domestic growth and political reform should provide the basis for good
returns - notably Brazil, Russia and Turkey.
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.
International investing may involve special risks, including differences in
accounting and currency, as well as economic instability.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCKS - 0.5%
Telecommunication Services - 0.5%
Integrated Telecommunication Services - 0.5%
10,100 Tele Norte Leste Participacoes (A.D.R) $ 128,573
-----------
Total Telecommunication Services $ 128,573
-----------
TOTAL PREFERRED STOCKS
(Cost $121,829) $ 128,573
-----------
COMMON STOCKS - 98.1%
Energy - 6.8%
Integrated Oil & Ga - 4.5%
84,110 BP Amoco Plc $ 746,617
16,000 Eni S.p.A. 318,934
-----------
$ 1,065,551
-----------
Oil & Gas Refining Marketing &
Transportation - 2.3%
2,870 Total SA $ 550,021
-----------
Total Energy $ 1,615,572
-----------
Materials - 7.8%
Commodity Chemicals - 1.0%
4,200 BASF India, Ltd. $ 226,172
-----------
Construction Materials - 2.2%
3,800 CRH Plc $ 80,693
6,200 Italcementi S.p.A.* 83,330
1,600 Lafarge BR 143,501
2,180 Vinci SA 220,516
-----------
$ 528,040
-----------
Diversified Metals & Mining - 2.2%
3,850 Freeport-McMoRan Copper & Gold, Inc.
(Class B) $ 127,628
2,100 Norilsk Nickel 115,763
6,090 Rio Tinto Plc 147,081
4,000 Sandvik AB 137,040
-----------
$ 527,512
-----------
Specialty Chemicals - 1.6%
23,400 Hitachi Chemical Company, Ltd. $ 388,026
-----------
Steel - 0.8%
23,102 Broken Hill Proprietary Co., Ltd. $ 202,242
-----------
Total Materials $ 1,871,992
-----------
Capital Goods - 9.2%
Aerospace & Defense - 0.7%
5,700 European Aeronautic Defence $ 159,747
-----------
Construction & Engineering - 3.2%
13,449 Actividades de Construccion y Servicios, SA $ 227,379
4,000 Compagnie de Saint Gobain (a) 200,702
93,000 Kajima Corp. 347,050
-----------
$ 775,131
-----------
Shares Value
Electrical Components & Equipment - 4.5%
86,000 Mitsubishi Electric Corp.* $ 427,269
7,900 NEC Electronics Corp (a)* 492,426
2,400 Schneider Electric SA 164,615
-----------
$ 1,084,310
-----------
Industrial Machinery - 0.8%
25,100 Scottish Power Plc $ 182,184
-----------
Total Capital Goods $ 2,201,372
-----------
Commercial Services & Supplies - 0.8%
Diversified Commercial Services - 0.8%
8,100 TNT Post Group N.V. $ 185,943
-----------
Total Commercial Services &
Supplies $ 185,943
-----------
Transportation - 1.8%
Railroads - 1.8%
78 East Japan Railway Co. $ 440,064
-----------
Total Transportation $ 440,064
-----------
Automobiles & Components - 4.1%
Auto Parts & Equipment - 0.3%
1,500 Compagnie Generale des
Etablissements Michelin $ 83,412
-----------
Automobile Manufacturers - 3.8%
3,000 Bayerische Motoren Werke AG $ 133,429
6,360 Hyundai Motor Co., Ltd. 124,680
27,216,000 Koc Holding AS* 122,855
12,900 Toyota Motor Co. 526,110
-----------
$ 907,074
-----------
Total Automobiles & Components $ 990,486
-----------
Consumer Durables & Apparel - 2.1%
Homebuilding - 2.1%
59,000 Sekisui Chemical Co., Ltd. $ 501,648
-----------
Total Consumer Durables & Apparel $ 501,648
-----------
Hotels, Restaurants & Leisure - 2.4%
Casinos & Gaming - 1.6%
8,200 Sammy Corp. $ 393,532
-----------
Restaurants - 0.8%
12,000 GUS Plc $ 185,407
-----------
Total Hotels, Restaurants & Leisure $ 578,939
-----------
Media - 2.1%
Advertising - 0.4%
3,000 Publics SA $ 89,380
-----------
Publishing - 1.7%
9,600 Vivendi Universal* $ 268,201
13,700 Reed Elsevier Plc 133,638
-----------
$ 401,839
-----------
Total Media $ 491,219
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Retailing - 2.9%
Distributors - 1.4%
34,000 Mitsubishi Corp. $ 332,179
-----------
General Merchandise Stores - 1.5%
6,900 Ryohin Keikaku Co., Ltd. $ 359,149
-----------
Total Retailing $ 691,328
-----------
Food & Drug Retailing - 5.0%
Drug Retail - 0.6%
12,200 Boots Co., Plc* $ 152,573
-----------
Food Retail - 4.4%
16,700 Koninklijke Ahold NV* $ 131,951
7,266 Koninklijke Ahold NV (144A)* 57,148
1,890 Nestle SA (Registered Shares) 505,706
74,200 Tesco Plc 360,356
-----------
$ 1,055,161
-----------
Total Food & Drug Retailing $ 1,207,734
-----------
Food, Beverage & Tobacco - 3.1%
Tobacco - 3.1%
19,820 British American Tobacco Plc $ 308,534
55 Japan Tobacco, Inc.* 429,378
-----------
$ 737,912
-----------
Total Food, Beverage & Tobacco $ 737,912
-----------
Household & Personal Products - 1.2%
Household Products - 1.1%
5,200 Uni-Charm Corp.* $ 260,449
-----------
Personal Products - 0.1%
480 Kose Corp. $ 18,533
-----------
Total Household & Personal
Products $ 278,982
-----------
Health Care Equipment & Services - 0.8%
Health Care Distributors - 0.4%
1,600 Celesio AG $ 95,902
-----------
Health Care Supplies - 0.4%
560 Nobel Biocare Holding AG $ 87,988
-----------
Total Health Care Equipment &
Services $ 183,890
-----------
Pharmaceuticals & Biotechnology - 5.8%
Pharmaceuticals - 5.8%
10,432 Astrazeneca Plc $ 470,123
9,590 GlaxoSmithKline Plc 195,658
3,788 Roche Holdings AG 376,498
3,800 Sanofi-Synthelabo SA 241,753
1,670 Schering AG 98,907
-----------
$ 1,382,939
-----------
Total Pharmaceuticals &
Biotechnology $ 1,382,939
-----------
Shares Value
Banks - 13.2%
Diversified Banks - 13.2%
7,400 Allied Irish Banks Plc $ 114,682
44,300 Banca Intesa S.p.A. 173,896
18,600 Banco Bilbao Vizcaya Argentaria SA 249,844
18,325 Barclays Plc 156,950
5,520 BNP Paribas SA (a) 341,393
10,345 Credit Agricole SA 253,013
6,830 CS Group* 243,845
18,000 Development Bank of Singapore, Ltd. 151,460
22,900 HSBC Holding Plc 343,363
2,300 Kookmin Bank (A.D.R.) (a)* 72,174
57 Mitsubishi Tokyo Financial Group, Inc.* 533,456
14,020 Royal Bank of Scotland Group Plc 406,589
6,100 Uniao de Bancos
Brasileiros SA (G.D.R.) (144A) 120,597
-----------
$ 3,161,262
-----------
Total Banks $ 3,161,262
-----------
Diversified Financials - 7.0%
Consumer Finance - 1.4%
3,100 Aiful Corp. $ 327,006
-----------
Diversified Financial Services - 4.8%
12,400 ING Groep NV $ 295,025
2,000 Lagardere SA 125,665
2,519 Societe Generale 215,363
7,150 UBS AG 506,374
-----------
$ 1,142,427
-----------
Specialized Finance - 0.8%
3,800 Deutsche Boerse AG $ 193,950
-----------
Total Diversified Financials $ 1,663,383
-----------
Insurance - 3.1%
Life & Health Insurance - 0.7%
6,100 Assicurazioni Generali $ 165,417
-----------
Multi-Line Insurance - 2.4%
12,500 AXA SA $ 277,313
1,860 Zurich Financial Services* 295,149
-----------
$ 572,462
-----------
Total Insurance $ 737,879
-----------
Real Estate - 1.4%
Real Estate Management & Development - 1.4%
27,000 Mitsui Fudosan Co. $ 326,878
-----------
Total Real Estate $ 326,878
-----------
Software & Services - 1.2%
IT Consulting & Other Services - 0.9%
1,700 Atos Origin* $ 109,984
27,900 LogicaCMG Plc 93,699
-----------
$ 203,683
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Software & Services - 0.3%
6,500 T-Online International AG* $ 74,140
-----------
Total Software & Services $ 277,823
-----------
Technology Hardware & Equipment - 4.0%
Semiconductors - 1.1%
9,500 Philips Electronics NV $ 257,838
-----------
Communications Equipment - 1.0%
17,031 Nokia Oyj $ 247,134
-----------
Computer Hardware - 0.5%
42,100 Dixons Group Plc $ 126,465
-----------
Electronic Equipment & Instruments - 1.4%
1,200 Nidec Corp. $ 123,877
2,790 Siemens 202,289
-----------
$ 326,166
-----------
Total Technology Hardware &
Equipment $ 957,603
-----------
Semiconductors - 1.2%
450 Samsung Electronics $ 187,303
21,400 United Microelectronics (A.D.R.) (a)* 92,234
-----------
$ 279,537
-----------
Total Semiconductors $ 279,537
-----------
Telecommunication Services - 8.9%
Alternate Carriers - 0.7%
6,200 France Telecom $ 162,653
-----------
Integrated Telecommunication Services - 4.0%
7,900 Belgacom SA* $ 241,431
9,500 British Sky Broadcasting Plc 108,058
17,100 Mahanagar Telephone Nigam, Ltd. 123,977
15,630 Telefonica SA 232,388
17,340 Telecom Italia Mobile S.p.A. 98,728
46,486 Telecom Italia S.p.A. 145,203
-----------
$ 949,785
-----------
Wireless Telecommunication Services - 4.2%
1,000 Mobile Telesystems* $ 122,000
5,700 SK Telecom Co., Ltd.* 119,643
4,100 Turkcell Iletism Hizmet (A.D.R.)* 125,870
295,011 Vodafone Group Plc 650,801
-----------
$ 1,018,314
-----------
Total Telecommunication Services $ 2,130,752
-----------
Shares Value
Utilities - 2.4%
Electric Utilities - 2.4%
4,433 E.On AG $ 321,491
31,100 National Grid Transco Plc 242,321
-----------
$ 563,812
-----------
Total Utilities $ 563,812
-----------
TOTAL COMMON STOCKS
(Cost $20,267,040) $23,458,949
-----------
TEMPORARY CASH INVESTMENT - 4.4%
Security Lending Collateral - 4.4%
1,038,146 Securities Lending
Investment Fund, 1.29% $ 1,038,146
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,038,146) $ 1,038,146
-----------
TOTAL INVESTMENT
IN SECURITIES - 103.0%
(Cost $21,427,015) (a)(b) $24,625,668
-----------
OTHER ASSETS
AND LIABILITIES - (3.0)% $ (709,954)
-----------
TOTAL NET ASSETS - 100.0% $23,915,714
===========
(A.D.R.) American Depositary Receipt
(G.D.R.) Global Depositary Receipt
* Non-income producing security.
144A Security is exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2004, the value of these securities amounted to $177,745 or 0.7% of
net assets.
(a) Distributions of investments by country of issue (excluding temporary
cash investments), as a percentage of total investment in equity
securities, is as follows:
Japan 26.4%
United Kingdom 21.4
France 14.6
Switzerland 8.5
Germany 5.7
Netherlands 4.6
Italy 4.2
Spain 3.0
South Korea 2.1
Brazil 1.1
Turkey 1.1
Finland 1.0
Belgium 1.0
Russia 1.0
Other (individually less than 1%) 4.3
-----
100.0%
=====
(b) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
4,985 BNP Paribas SA $309,856
3,800 Compagnie de Saint Gobain 190,433
1,825 Kookmin Bank (A.D.R.)* 57,269
5,400 NEC Electronics Corp.* 333,872
20,320 United Microelectronics (A.D.R.)* 86,157
--------
Total $977,587
========
6 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 5/1/03
6/30/04 to
Class II (a) (unaudited) 12/31/03
Net asset value, beginning of period $10.04 $ 7.76
------ ------
Increase (decrease) from investment operations:
Net investment income $ 0.01 $ 0.05
Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.32 2.29
------ ------
Net increase (decrease) from investment operations $ 0.33 $ 2.34
Distributions to shareowners:
Net investment income (0.04) (0.06)
Net realized gain -- --
------ ------
Net increase (decrease) in net asset value $ 0.29 $ 2.28
------ ------
Net asset value, end of period $10.33 $10.04
------ ------
Total return* 3.32%** 30.31%* *
Ratio of net expenses to average net assets+ 2.09%** 2.02%* *
Ratio of net investment income (loss) to average net assets+ 1.12%** (0.81)%**
Portfolio turnover rate 189%** 99%
Net assets, end of period (in thousands) $2,205 $1,081
Ratios with no waiver of management fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 2.09%** 2.02%* *
Net investment income (loss) 1.12%** (0.81)%**
(a) Class 2 shares were first publicly offered on May 1, 2003.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 7
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
International
Value
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $977,587)
(Cost $21,427,015) $ 24,625,668
Cash 343,632
Foreign currencies, at value --
Receivables --
Investment securities sold 945,383
Fund shares sold --
Variation margin --
Dividends, interest and foreign taxes withheld 43,287
Forward foreign currency settlement contracts, net --
Due from Pioneer Investment Management, Inc. --
Other 338
------------
Total assets $ 25,958,308
------------
LIABILITIES:
Payables --
Investment securities purchased $ 896,946
Fund shares repurchased 50,440
Dividends --
Upon return of securities loaned 1,038,146
Forward foreign currency settlement contracts, net 3,112
Reserve for repatriation taxes --
Due to bank 584
Due to affiliates 24,038
Accrued expenses 29,328
------------
Total liabilities $ 2,042,594
------------
NET ASSETS:
Paid-in capital $ 35,249,709
Accumulated net investment income (loss) 148,255
Accumulated undistributed net realized gain (loss) (14,677,563)
Net unrealized gain (loss) on:
Investments 3,198,653
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (3,340)
------------
Total net assets $ 23,915,714
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 21,710,796
Shares outstanding 2,096,193
------------
Net asset value per share $ 10.36
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 2,204,918
Shares outstanding 213,362
------------
Net asset value per share $ 10.33
8 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
International Value
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $37,883) $ 341,167
Interest 910
Income on securities loaned, net 5,408
Other --
-----------
Total investment income $ 347,485
-----------
EXPENSES:
Management fees $ 116,707
Transfer agent fees 1,458
Distribution fees (Class II) 1,882
Administrative fees 9,250
Custodian fees 27,002
Professional fees 36,283
Printing 5,128
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,425
-----------
Total expenses $ 199,135
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
-----------
Net expenses $ 199,135
-----------
Net investment income (loss) $ 148,350
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 2,344,688
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (40,661)
-----------
$ 2,304,027
-----------
Change in net unrealized gain or loss from:
Investments $(1,630,701)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (13,527)
-----------
$(1,644,228)
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ 659,799
===========
Net increase (decrease) in net assets resulting
from operations $ 808,149
===========
The accompanying notes are an integral part of these financial statements. 9
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer International
Value VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 148,350 $ 136,624
Net realized gain (loss) on investments 2,304,027 (857,791)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (1,644,228) 6,236,488
----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 808,149 $ 5,515,321
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (113,572) $ (146,246)
Class II (8,890) (4)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
----------- -----------
Total distributions to shareowners $ (122,462) $ (146,250)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 2,046,605 $39,187,523
Reinvestment of distributions 122,459 146,246
Cost of shares repurchased (2,526,547) 42,386,651)
----------- -----------
Net increase (decrease) in net assets
resulting from fund share transactions $ (357,483) $(3,052,882)
----------- -----------
Net increase (decrease) in net assets $ 328,204 $ 2,316,189
----------- -----------
NET ASSETS:
Beginning of period $23,587,510 $21,271,321
----------- -----------
End of period $23,915,714 $23,587,510
=========== ===========
Accumulated/(distributions in excess of)
net investment income (loss) $ 148,255 $ 122,367
=========== ===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer International Value Portfolio (the 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 nineteen 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)
The Portfolio commenced operations on May 1, 2003. Portfolio shares may only be
purchased by insurance companies for the purpose of funding variable annuity or
variable life insurance contracts, and may also be purchased by qualified
pension and retirement plans.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objective of International Value VCT Portfolio is to seek
long-term capital growth.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting years. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolios are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Trading in foreign equity securities is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The value of such securities used in computing the net
asset value of the Portfolio's shares, based on the last sale price on the
principal exchange where they traded, are determined as of such times. At
June 30, 2004, there were no fair valued securities except as follows. All
securities that trade in foreign markets whose closing prices are as of
times prior to the close of the New York Stock Exchange ("NYSE") and that
are held by International Value Portfolio are fair valued using
vendor-supplied pricing updates for each security to the time of the close
of the NYSE.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable diligence. Interest income,
including interest on income bearing cash accounts, is recorded on the
accrual basis, net of unrecoverable foreign taxes withheld at
11
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
the applicable country rates. All discounts/premiums are accreted/amortized
for financial reporting purposes.
The Portfolio's investments in emerging markets or countries with limited
or developing markets may subject the Portfolio to a greater degree of risk
than in a developed market. Risks associated with these developing markets
include political, social or economic factors and may affect the price of
the Portfolio's investments and income generated by these investments, as
well as the Portfolio's ability to repatriate such amounts.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
D. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
In addition to the requirements of the Internal Revenue Code, the Portfolio
may also be required to pay local taxes on the recognition of capital gains
and/or the repatriation of foreign currencies in certain countries. During
the six months ended June 30, 2004, no such taxes were paid.
In determining the daily net asset value, the Portfolio estimates the
reserve for such taxes, if any, associated with investments in certain
countries. The estimated reserve for taxes on capital gains is based on the
net unrealized appreciation on certain portfolio securities, the holding
year of such securities and the related tax rates, tax loss carryforward
(if applicable) and other such factors. The estimated reserve for taxes on
repatriation of foreign currencies is based on principal balances and/or
unrealized appreciation of applicable securities, the holding year of such
investments and the related tax rates and other such factors. As of June
30, 2004, the Portfolio had no reserves related to taxes on the
repatriation of foreign currencies.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, International Value VCT Portfolio had a
capital loss carryforward of $16,962,967 of which the following amounts
will expire between 2007 and 2010 if not utilized: $2,465,434 in 2007,
$7,057,019 in 2009, $5,309,516 in 2010 and $2,130,998 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
12
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer
International Value
VCT Portfolio
2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 146,250
Long-Term capital gain --
------------
$ 146,250
Return of Capital --
------------
Total distributions $ 146,250
============
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 122,367
Undistributed long-term gain/
(Capital loss carryforward) (16,692,967)
Unrealized appreciation (depreciation) 4,820,918
------------
Total $(12,019,682)
============
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
E. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively. Shareowners of each class share all expenses and
fees paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3). Income, common expenses and realized
and unrealized gains and losses are calculated at the Portfolio level and
allocated daily to each class of shares based on the respective percentage
of adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
Distributions paid by the Portfolio with respect to each class of shares
are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day.
F. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
G. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 1.00% of the Portfolio's average daily net assets.
In addition, under the management and administration agreement, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $23,315 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and
13
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
shareowner services to the Trust at negotiated rates. Included in due to
affiliates is $259 in transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$464 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -----------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -----------------------------------------------------------------------------------------------------
International Value Portfolio $21,445,638 $3,451,463 $(271,433) $3,180,030
=========== ========== ========= ==========
- -----------------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $21,825,171 and $21,914,026, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- ------------------------------------------------------------------------------------------------------
International Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ------------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 82,417 $ 841,974 148,266 $ 1,260,116
Reinvestment of distributions 10,994 113,572 17,452 146,246
Shares repurchased (234,008) (2,386,367) (658,580) (5,442,461)
-------------------------------------------------------------------
Net increase (decrease) (140,597) $(1,430,821) (492,862) $(4,036,099)
===================================================================
CLASS II:
Shares sold 118,388 $ 1,204,631 108,723 $ 993,224
Reinvestment of distributions 862 8,887 -- --
Shares repurchased (13,519) (140,180) (1,092) (10,077)
-------------------------------------------------------------------
Net increase (decrease) 105,731 $ 1,073,338 107,631 $ 983,217
===================================================================
- ------------------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts
During the six months ended June 30, 2004, certain Portfolios had entered into
various contracts that obligate the Portfolios to deliver currencies at
specified future dates. At the maturity of a contract, the Portfolios must make
delivery of the foreign currency. Alternatively, prior to the settlement date of
a portfolio hedge, the Portfolio may close out such contracts by entering into
an offsetting hedge contract. As of June 30, 2004, the Portfolio had no
outstanding portfolio hedges.
Outstanding forward currency settlement contracts were as follows:
- ---------------------------------------------------------------------------------------------
Net
Gross Settlement Gross Receivable/
Portfolio Receivable Date Payable (Payable)
- ---------------------------------------------------------------------------------------------
International Value Portfolio $(215,870) 7/1/04 $(218,202) $(2,332)
International Value Portfolio $ (61,833) 7/1/04 $ (61,783) $ 50
International Value Portfolio $ 150,662 7/1/04 $ 151,021 $ (359)
International Value Portfolio $(177,285) 7/1/04 $(178,089) $ (804)
International Value Portfolio $ (28,328) 7/1/04 $ (28,528) $ (200)
International Value Portfolio $ 104,214 7/1/04 $ 103,313 $ 901
International Value Portfolio $(220,184) 7/1/04 $(220,185) $ (1)
International Value Portfolio $ 121,036 7/1/04 $ 121,403 $ (367)
- ---------------------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16072-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Real Estate Shares VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 5
Notes to Financial Statements 9
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE PRINTED DOCUMENT.]
U.S. Common Stocks 100%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE PRINTED DOCUMENT.]
Office 17.4%
Apartment 16.8%
Regional Mall 15.0%
Industrial 12.7%
Shopping Center 10.4%
Hotel 8.7%
Diversified 8.5%
Self Storage 4.1%
Cash 3.0%
Factory Outlet 2.1%
Manufactured Homes 1.0%
Health Care 0.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. Simon DeBartolo Group, Inc. 6.00%
2. Boston Properties, Inc. 5.02
3. Equity Residential Property Trust 4.36
4. ProLogis Trust 3.97
5. Catellus Development Corp. 3.91
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $19.52 $18.55
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$0.380 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Real Estate Shares VCT Portfolio at net asset value, compared to that of the
Wilshire Real Estate Securities Index. Portfolio returns are based on net asset
value and do not reflect applicable insurance fees and surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE PRINTED DOCUMENT.]
Date Pioneer Real Estate Wilshire Real
Shares VCT Portfolio Estate Securities Index
3/31/1995 $10,000 $10,000
$11,674 $11,322
12/31/1996 $15,680 $15,497
$18,919 $18,565
12/31/1998 $15,259 $15,330
$14,460 $14,841
12/31/2000 $18,905 $19,403
$20,327 $21,431
12/31/2002 $20,789 $21,983
$27,952 $30,133
6/30/2004 $29,978 $32,226
+ Index comparison begins on 2/28/95. The Wilshire Real Estate Securities
Index is a market-capitalization weighted measure of the performance of
real estate investment trusts (equity and hybrid) and real estate operating
companies. Index returns are calculated monthly, assume reinvestment of
dividends and, unlike Portfolio returns, do not reflect any fees, expenses
or sales charges. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 12.47%
(3/1/95)
5 Years 13.57%
1 Year 28.59%
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
Fear of higher interest rates, rising oil prices and the ongoing turmoil in Iraq
contributed to volatile markets for the six months ended June 30, which made up
the first half or your Portfolio's fiscal year. In this report, Mathew Troxell,
a member of the Portfolio's management team, discusses the sector's positive
returns amidst the shifting economic landscape and his expectations for 2004.
Q: Was the market and economic environment favorable for the Portfolio's
investment strategy?
A: Real estate stocks, like most asset classes, experienced great volatility
during the reporting period.
With evidence suggesting that the U.S. economy was on its way to recovery,
the real estate market rose strongly during the first quarter of 2004.
However, in early April, the jobs report for March was surprisingly strong
and sparked a sell-off in the bond market. Bond investors feared that the
economy might be growing too fast and would ignite inflation. Interest
rates began to rise, pushing bond prices down. Prices of real estate stocks
also fell sharply even though historically they have exhibited a low
correlation to bond prices. Rising oil prices and political uncertainty in
Iraq further heightened investor concerns. During May and June, real estate
investment trusts began to recover and picked up enough positive momentum
to regain much of the ground lost in April - ending the six months with
relatively strong performance gains.
For the six months ended June 30, 2004, the Portfolio's Class II shares rose
7.24% at net asset value. In comparison, the Wilshire Real Estate Securities
Index increased 6.96% for the same period.
Q: What investments helped performance during the six months?
A: Several holdings contributed positively to the Portfolio's returns. AvalonBay
Communities, one of the Portfolio's largest holdings, is an
apartment/multi-family real estate investment trust (REIT) that has benefited
from the expectation of improving fundamentals for apartments. Job growth has
been very positive for household formations, especially for young adults who
are leaving home for the first time. This demographic group has the highest
propensity to rent rather than buy. This stronger renter demand is giving
apartment REIT managers, such as AvalonBay, greater pricing flexibility. In
addition, rising interest rates should contribute to higher renter demand,
because buying a home becomes a more expensive option.
In the lodging sector, Starwood Hotels and Resorts performed well,
particularly in the final two months of the reporting period. Starwood, as
well as the sector in general, are benefiting from a recovery in lodging
demand, which is directly correlated to the improving economy. Catellus
Development, a real estate management and development company, holds a
portfolio of high-quality predominately industrial properties generating
strong cash flow. This REIT's positive performance was driven, in part, by
management's decision to convert to REIT status early in 2004. The heightened
investor interest helped it to outperform the benchmark during the six
months.
Q: What investments hurt performance during the six months?
A: We believe that Simon Property Group is a solid company, but after
consistently outperforming the real estate market during the multi-year rally
through the first quarter of 2004, it, along with other retail names, lagged
in the final months of the reporting period. Following the market correction
this spring, it began to recover. However, when management announced in late
June that it was acquiring Chelsea Property Group (also held by the
Portfolio), investors reacted negatively. We view the proposed merger very
positively, because we think Chelsea Property Group, which owns factory
outlet shopping centers in Japan as well as in the United States, would add
international diversity and a new retail focus to Simon's current portfolio.
Following disappointing performance last year, Apartment Investment and
Management continued to lag the benchmark. This REIT, which owns a diverse
portfolio of multi-family apartment complexes, suffered more than its peers
as apartment fundamentals proved challenging last year and experienced
lower-than-expected fee income and higher-than-expected
apartment-turnover-related expenses last year - resulting in a reduced
dividend. Even with the greater promise for improving fundamentals, we
reduced the position this spring, because we tempered our view of its total
return potential.
Q: What is your outlook for the balance of 2004?
A: We think that the various property types making up the real estate market are
generally experiencing improving fundamentals. While real estate earnings
typically lag an improvement in fundamentals, hotel and apartment landlords
can respond fairly quickly. Should economic growth continue, however, we
believe retail landlords will begin to lose the relative advantage they have
previously enjoyed. We believe that it will fall to astute stock selection to
separate the wheat from the chafe.
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.
Real estate investments may be subject to special risks, including risks related
to general and local economic conditions and risks related to an individual
property.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.4%
Hotels, Restaurants & Leisure - 5.3%
Hotels, Resorts & Cruise Lines - 5.3%
75,000 Hilton Hotels Corp.* $ 1,399,500
58,000 Starwood Hotels & Resorts 2,601,300
-----------
$ 4,000,800
-----------
Total Hotels, Restaurants & Leisure $ 4,000,800
-----------
Diversified Financials - 3.0%
Diversified Financial Services - 3.0%
77,000 Brookfield Properties Corp. $ 2,213,750
-----------
Total Diversified Financials $ 2,213,750
-----------
Real Estate - 89.1%
Real Estate Management & Development - 4.0%
115,500 Catellus Development Corp. $ 2,847,075
8,200 Inland Real Estate Corp.* 106,682
-----------
$ 2,953,757
-----------
Real Estate Investment Trusts - 85.1%
38,500 Apartment Investment & Management Co. $ 1,198,505
46,200 AMB Property Corp. 1,599,906
22,400 Affordable Residential Communities* 371,840
16,500 Alexandria Real Estate Equities, Inc. 936,870
44,000 Arden Realty Group, Inc. 1,294,040
92,500 Archstone Communities Trust 2,713,025
50,000 AvalonBay Communities, Inc.* 2,826,000
73,100 Boston Properties, Inc. 3,660,848
17,500 Chelsea Property Group, Inc. 1,141,350
30,000 Camden Property Trust 1,374,000
10,000 Carramerica Realty Corp. 302,300
61,000 Developers Diversifies Realty Corp. 2,157,570
57,000 Duke Realty Investments, Inc. 1,813,170
79,000 Equity Office Properties Trust 2,148,800
107,000 Equity Residential Property Trust 3,181,110
5,800 First Potomac Realty Trust* 111,186
36,000 Federal Realty Investment Trust 1,497,240
79,500 General Growth Properties, Inc. 2,350,815
25,500 Highwoods Properties, Inc.* 599,250
Shares Value
189,000 Host Marriott Corp.* $ 2,336,040
6,000 Healthcare Realty Trust, Inc. 224,880
2,500 Kilroy Realty Corp. 85,250
53,000 Liberty Property Trust 2,131,130
35,500 The Macerich Co. 1,699,385
11,300 Manufactured Home Communities, Inc. 375,047
9,100 Mills Corp. 424,970
10,500 Corporate Office Properties 260,925
88,000 ProLogis Trust 2,896,960
29,300 Pan Pacific Retail Properties, Inc. 1,480,236
55,000 Prentiss Properties Trust 1,843,600
45,206 Public Storage, Inc. 2,079,928
25,500 PS Business Parks Inc* 1,026,120
48,000 Regency Centers Corp. 2,059,200
35,000 The Rouse Co.* 1,662,500
9,500 iStar Financial, Inc.* 380,000
27,500 Shurgard Storage Centers, Inc. 1,028,500
15,800 Strategic Hotel Capital, Inc.* 232,260
85,000 Simon DeBartolo Group, Inc. 4,370,700
51,000 Taubman Centers, Inc. 1,167,390
37,600 Trizec Properties Inc. 611,376
47,200 United Dominion Realty Trust 933,616
46,000 Vornado Realty Trust 2,627,060
16,500 Western Resources, Inc. 516,120
-----------
$63,731,018
-----------
Total Real Estate $66,684,775
-----------
TOTAL COMMON STOCKS
(Cost $55,838,852) $72,899,325
-----------
TOTAL INVESTMENT
IN SECURITIES - 97.4%
(Cost $55,838,852) $72,899,325
-----------
OTHER ASSETS AND
LIABILITIES - 2.6% $ 1,967,974
-----------
TOTAL NET ASSETS - 100.0% $74,867,299
===========
* Non-income producing security.
4 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Year Year Year 8/1/00
Ended Ended Ended Ended to
Class II (a) 6/30/04 12/31/03 12/31/02 12/31/01 12/31/00
Net asset value, beginning of period $ 18.55 $ 14.45 $ 14.75 $ 14.40 $14.55
------- ------- ------- ------- ------
Increase (decrease) from investment operations:
Net investment income $ 0.38 $ 0.68 $ 0.55 $ 0.41 $ 0.32
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.97 4.18 (0.20) 0.63 (0.28)
------- ------- ------- ------- ------
Net increase (decrease) from investment operations $ 1.35 $ 4.86 $ 0.35 $ 1.04 $ 0.04
Distributions to shareowners:
Net investment income (0.38) (0.56) (0.65) (0.52) (0.09)
Tax Return of Capital -- (0.20) -- (0.17) (0.10)
------- ------- ------- ------- ------
Net increase (decrease) in net asset value $ 0.97 $ 4.10 $ (0.30) $ 0.35 $(0.15)
------- ------- ------- ------- ------
Net asset value, end of period $ 19.52 $ 18.55 $ 14.45 $ 14.75 $14.40
======= ======= ======= ======= ======
Total return* 7.24% 34.45% 2.28% 7.52% 1.32 %
Ratio of net expenses to average net assets+ 1.19%** 1.28% 1.32% 1.52% 1.63%**
Ratio of net investment income (loss) to average net assets+ 4.00%** 4.26% 4.21% 4.36% 7.54%**
Portfolio turnover rate 43%** 20% 29% 34% 31%**
Net assets, end of period (in thousands) $44,570 $39,892 $31,985 $11,972 $1,770
Ratios with no waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 1.19%** 1.28% 1.32% 1.52% 1.63%**
Net investment income (loss) 4.00%** 4.26% 4.21% 4.36% 7.54%**
(a) Class 2 shares were first publicly offered on August 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.
The accompanying notes are an integral part of these financial statements. 5
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Real Estate
Shares
VCT Portfolio
ASSETS:
Investment in securities, at value
(Cost $55,838,852) $72,899,325
Cash 1,906,225
Foreign currencies, at value --
Receivables --
Investment securities sold 2,124,520
Fund shares sold 181,129
Dividends, interest and foreign taxes withheld 428,504
Other 354
-----------
Total assets $77,540,057
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 2,208,201
Fund shares repurchased 378,282
Dividends --
Upon return for securities loaned --
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 66,321
Accrued expenses 19,954
Other --
-----------
Total liabilities $ 2,672,758
-----------
NET ASSETS:
Paid-in capital $57,527,714
Accumulated net investment income (loss) 160,542
Accumulated undistributed net realized gain (loss) 118,570
Net unrealized gain (loss) on:
Investments 17,060,473
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
Total net assets $74,867,299
-----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $30,296,916
Shares outstanding 1,549,560
-----------
Net asset value per share $ 19.55
Class II:
No par value (unlimited number of shares authorized)
Net assets $44,570,383
Shares outstanding 2,283,389
-----------
Net asset value per share $ 19.52
6 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Real Estate Shares
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $1,676) $1,885,996
Interest 18,128
Income on securities loaned, net 535
Other --
----------
Total investment income $1,904,659
----------
EXPENSES:
Management fees $ 294,190
Transfer agent fees 1,494
Distribution fees (Class II) 53,188
Administrative fees 9,250
Custodian fees 13,052
Professional fees 19,250
Printing 8,855
Fees and expenses of nonaffiliated trustees --
Miscellaneous 899
----------
Total expenses $ 400,178
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
----------
Net expenses $ 400,178
----------
Net investment income (loss) $1,504,481
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $3,075,780
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$3,075,780
----------
Change in net unrealized gain or loss from:
Investments $ 359,869
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ 359,869
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $3,435,649
==========
Net increase (decrease) in net assets resulting
from operations $4,940,130
==========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Real Estate
Shares VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 1,504,481 $ 3,062,870
Net realized gain (loss) on investments 3,075,780 (474,302)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 359,869 15,553,008
----------- ------------
Net increase (decrease) in net assets
resulting from operations $ 4,940,130 $ 18,141,576
----------- ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (637,400) $ (1,422,912)
Class II (859,854) (1,519,594)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
----------- ------------
Total distributions to shareowners $(1,497,254) $ (2,942,506)
----------- ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 7,974,724 $ 9,753,610
Reinvestment of distributions 1,497,254 2,942,506
Cost of shares repurchased (9,831,522) (17,969,003)
----------- ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ (359,544) $ (5,272,887)
----------- ------------
Net increase (decrease) in net assets $ 3,083,332 $ 9,926,183
----------- ------------
NET ASSETS:
Beginning of period $71,783,967 $ 61,857,784
----------- ------------
End of period $78,867,299 $ 71,783,967
=========== ============
Accumulated/(distributions in excess of)
net investment income (loss) $ 160,542 $ 153,315
=========== ============
8 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Real Estate Shares 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 nineteen 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)
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 Real Estate Shares Portfolio pursues long-term
capital growth, with current income as a secondary objective.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for the
portfolio are computed once daily, on each day the New York Stock Exchange is
open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
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. As of June 30, 2004, there were no securities fair valued.
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. Temporary
cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicable country rates.
Because Real Estate Shares Portfolio invests a substantial portion of its
assets in real estate
9
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
investment trusts (REITs), the Portfolio may be subject to certain risks
associated with direct investments in REITs. REITs may be affected by changes
in the value of their underlying properties and by defaults by borrowers or
tenants. REITs depend generally on their ability to generate cash flow to
make distributions to shareowners, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time. In addition, the performance of a
REIT may be affected by its failure to qualify for tax-free pass-through of
income under the Internal Revenue Code or its failure to maintain exemption
from registration under the Investment Company Act of 1940.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes in
interest rates, securities prices, and currency rates or to seek to increase
total return. Upon entering into a futures contract, the Portfolio is
required to deposit with a broker an amount of cash or securities equal to
the minimum "initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value of
the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees, elements
of market risk which may exceed the amounts recognized by the Portfolio.
Changes in the value of the contracts may not directly correlate to the
changes in the value of the underlying securities. These risks may decrease
the effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, Real Estate Shares had no
open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolio's
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of each Portfolio's distributions may be shown in the
accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
A portion of the dividend income recorded by Real Estate Shares Portfolio is
from distributions by publicly traded REITs, and such distributions for tax
purposes may also consist of capital gains and return of capital. The actual
return of capital and capital gains portions of such distributions will be
determined by formal notifications from the REITs subsequent to the calendar
year-end. Distributions received from the REITs that are determined to be a
return of capital are recorded by the Trust as a reduction of the cost basis
of the securities held.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003,
10
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Real Estate Shares VCT Portfolio had a capital loss carryforward of
$3,310,843, of which the following amounts will expire between 2007 and 2011
if not utilized: $2,238,450 in 2007, $619,294 in 2008 and $453,069 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the components
of distributable earnings (accumulated losses) as of December 31, 2003 and
the distributions paid during the year ended December 31, 2003 on a tax basis
as of December 31, 2003.
- --------------------------------------------------------------------------------
Pioneer
Real Estate
Shares
VCT Portfolio
2003
--------------
Distributions paid from:
Ordinary Income* $ 2,171,485
Long-Term capital gain --
-----------
2,171,485
Return of Capital --
-----------
Total distributions $ 2,171,485
===========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/
(Capital loss carryforward) (2,665,210)
Unrealized appreciation (depreciation) 16,408,604
-----------
Total $13,743,394
===========
- --------------------------------------------------------------------------------
* Included in the Portfolio's distributions from 2003 ordinary income is
$192,564 in excess of investment company taxable income, which, in
accordance with U.S. tax law, is taxable to shareowners as ordinary income
distributions.
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on wash
sales, returns of capital on REITs, and the recognition of unrealized gains or
losses on certain futures contracts.
Prior to June 30, 2004, the Portfolio has reclassified $21,639 to decrease net
unrealized gain on investments, $6,268 to decrease accumulated undistributed net
realized gain on investments and $27,907 to increase paid-in capital. The
reclassification has no impact on the net assets of the Portfolio and presents
the Portfolio's capital accounts on a tax basis.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for
its services, which are allocated based on the number of accounts in each
class and the ratable allocation of related out-of-pocket expenses (see Note
3). Income, common expenses and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning of
the day. Distributions paid by the Portfolio with respect to each class of
shares are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day. Dividends and distributions to shareowners are recorded
on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Trust. The loans are secured by collateral of at least 102%,
at all times, of the fair value of the securities loaned. The fair value of
the collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand. The
Trust invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities
11
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
(collateral), including accrued interest received from counterparties, is
required to be at least equal to or in excess of the value of the repurchase
agreement at the time of purchase. The collateral for all repurchase
agreements is held in safekeeping in the customer-only account of the
Portfolio's custodian, or subcustodian. The Trust's investment adviser,
Pioneer Investment Management, Inc. (PIM), is responsible for determining
that the value of the collateral remains at least equal to the repurchase
price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.80% of the Portfolio's average daily net assets. In addition,
under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $55,958 was payable to PIM related to
management fees, administrative fees and certain other services, and is included
in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$10,106 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
-------------- -------------- -------------- ---------------
Real Estate Shares Portfolio $56,411,455 $16,815,051 $(327,181) $16,487,870
----------- ----------- ---------- -----------
- ----------------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $17,444,652 and $15,240,948, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- ----------------------------------------------------------------------------------------------------
Real Estate Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ----------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 46,990 $ 914,044 153,884 $ 2,545,266
Reinvestment of distributions 31,935 637,400 87,137 1,422,912
Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017)
-----------------------------------------------------------------
Net increase (167,581) $(3,090,354) (347,178) $(5,232,839)
=================================================================
CLASS II:
Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344
Reinvestment of distributions 43,174 859,854 92,474 1,519,594
Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986)
-----------------------------------------------------------------
Net increase 132,798 $ 2,730,810 (62,278) $ (40,048)
-----------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
12
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
13
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16077-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Equity Income VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Equity Income VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 7
Notes to Financial Statements 11
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[The following table was depicted as a pie chart in the printed material.]
U.S. Common Stocks 94.2%
Temporary Cash Investment 4.4%
Convertible Preferred Stocks 1.3%
Convertible Corporate Bonds 0.1%
Sector Distribution
(As a percentage of equity holdings)
[The following table was depicted as a pie chart in the printed material.]
Financials 22.4%
Utilities 16.1%
Energy 12.0%
Consumer Discretionary 10.9%
Industrials 9.3%
Health Care 7.5%
Consumer Staples 7.1%
Telecommunication Services 6.9%
Materials 5.3%
Information Technology 2.5%
Five Largest Holdings
(As a percentage of equity holdings)
1. ChevronTexaco Corp. 4.15%
2. ConocoPhillips 3.93
3. PACCAR, Inc. 3.78
4. Exxon Mobil Corp. 3.21
5. Charter One Financial, Inc. 3.07
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 18.62 $ 18.09
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.180 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Equity Income VCT Portfolio at net asset value, compared to that of the Russell
1000 Value Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[The following table was depicted as a line chart in the printed material.]
Russell 1000 Value Index Pioneer Equity Income VCT Portfolio*
------------------------ ------------------------------------
3/95 10000 10000
12632 12025
12/96 15366 13852
20773 18732
12/98 24021 22816
25787 23092
12/00 27597 26522
26054 24673
12/02 22010 20770
28620 25466
12/04 29745 26470
Index comparison begins 2/28/95. The Russell 1000 Value Index measures the
performance of those Russell 1000 companies with lower price-to-book ratios and
lower forecasted growth values. Index returns assume reinvestment of dividends
and, unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. Portfolio returns are based on net asset value and do not reflect any
annuity-related costs. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 11.31%
(3/1/95)
5 Years 1.54%
1 Year 17.83%
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
2
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 (UNAUDITED)
In the following discussion, portfolio manager John Carey reviews the
performance of Pioneer Equity Income VCT Portfolio over the six months ended
June 30, 2004.
Q: How did the portfolio fare over the past six months?
A: Stock prices generally showed gains during the period. The Russell 1000 Value
Index rose by 3.94%, and Pioneer Equity Income VCT Portfolio rose by exactly
the same amount, 3.94% at net asset value. After the market of 2003, when the
prices of many highly cyclical stocks moved dramatically, the first six
months of 2004 saw investors return to steadier companies. Information
technology, which had been the strongest performing sector in 2003 with the
sharp recovery of many deeply depressed stocks, was one of the weakest areas
of the market through June of this year. On the other hand, consumer staples,
energy, and industrials all performed above the benchmark average as
investors looked more favorably on companies with substantial earnings and
also dividends.
While financials actually underperformed the benchmark Russell 1000 Value
Index, our Portfolio experienced the largest contribution to total return
from our investments there. Two of our holdings, Charter One Financial and
South Trust, received take-over bids from other banks at substantial premiums
to their current share prices (and also to our average cost on the shares),
producing sharp gains in the market value of those positions. We also did not
own any shares of the lackluster performer Citigroup, a major component of
the Russell index.
Offsetting results came from our weightings and stock selection in
telecommunications services and utilities. In telecomm, our AT&T stock
declined as investors worried about mounting price competition amid slower
growth. Further affecting our relative performance in that sector was our
lack of ownership of AT&T Wireless, the cellular provider operating
independently of its former parent since late 2001. That company received an
acquisition offer from Cingular, a joint venture between two companies that
we did own, BellSouth and SBC Communications. The stocks of those companies
fell on concerns about the acquisition price, while stock in AT&T Wireless
rose in recognition of the premium price to be paid.
With regard to our holdings in the utilities sector, we have continued to
favor the strong utilities with well-supported and consistent dividend-paying
records. It so happened that some of the best-performing utility stocks
during the period were the so-called turnaround stories, some of which had
even sharply reduced or eliminated their dividends. We shall stick with our
long-term strategy and emphasis on financial strength and business stability.
Q: What changes did you make to the Portfolio in the first half of the period?
A: Overall we added seven positions and liquidated nine. With the high oil
prices and positive outlook for energy, we thought it reasonable to enlarge
our exposure somewhat in that sector and added Occidental Petroleum. A
specialist in coatings and other chemical products, Valspar shows good
earnings potential as the economy improves. J. C. Penney has re-focused on
its department stores after negotiating the sale of its sagging drugstore
operation, and the results show it. Clorox, is benefiting from better
management. Ameren and Equitable Resources were two additions in utilities,
and U. S. Bancorp is a strong regional bank headquartered in Minneapolis.
Little bespeaks quality and reliability better than a long dividend-paying
record, and here is how our new holdings compare in that regard: Occidental
Petroleum, payments every year since 1975; Valspar, each year since 1964; J.
C. Penney, continuous payments starting in 1922; Clorox, without interruption
since 1968; Ameren and Equitable Resources, since 1906 and 1950,
respectively; and U. S. Bancorp, through its predecessor companies, an
unbroken record going back all the way to the year of the Battle of
Gettysburg, 1863.
The list of names leaving the Portfolio in the period included Deere,
Illinois Tool Works, Norfolk Southern, Tribune, Biomet, Bank of America,
Merrill Lynch, Equity Office Properties, and Electronic Data Systems.
Q: What is your outlook on the stock market and the economy for the remainder of
2004?
A: At the midpoint of 2004, the market appears in disarray. Truth be told,
interest rates have not really moved very much at all, but there appears
great anxiety about greater moves to come. Inflation is not a current
problem, yet the high oil prices provide the worriers a reason to focus on
the risk of inflation. Corporate earnings are generally very strong and also
strongly up from last year, but the expressed concern is with respect to
slowing of the wonderful comparisons. And so it goes as well when it comes to
discussion of international events and corporate-governance issues and much
else: the glass is half empty, not half full, as the common expression goes.
From our point of view, the market remains quite attractive, and especially
the good companies with good records. Betting which way the market might go
on a short-term basis has never seemed to us like a particularly fruitful
endeavor. So our intention is to stay invested over the coming months, and to
stay invested in the solid kinds of companies we always aim to own. Thank you
for your support.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
Shares Value
CONVERTIBLE PREFERRED STOCKS - 1.4%
Automobiles & Components - 1.4%
Automobile Manufacturers - 1.4%
2,600 General Motors, 5.25%, 3/6/32 $ 64,025
55,600 Ford Capital Trust, 6.5%, 1/15/32 3,033,536
------------
$ 3,097,561
------------
Total Automobiles & Components $ 3,097,561
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $2,691,323) $ 3,097,561
------------
Principal
Amount
CONVERTIBLE CORPORATE BOND - 0.0%
Retailing - 0.0%
Apparel Retail - 0.0%
$200,000 Gap Inc., 5.75%, 3/15/09 $ 311,000
------------
Total Retailing $ 311,000
------------
TOTAL CONVERTIBLE CORPORATE BOND
(Cost $200,000) $ 311,000
------------
Shares
COMMON STOCKS - 95.5%
Energy - 11.7%
Integrated Oil & Gas - 11.7%
98,300 ChevronTexaco Corp. $ 9,251,013
114,865 ConocoPhillips 8,763,051
161,066 Exxon Mobil Corp. 7,152,941
35,000 Occidental Petroleum Corp. 1,694,350
------------
$ 26,861,355
------------
Total Energy $ 26,861,355
------------
Materials - 5.2%
Commodity Chemicals - 1.7%
50,300 Air Products & Chemicals, Inc. $ 2,638,235
27,341 E.I. du Pont de Nemours and Co. 1,214,487
------------
$ 3,852,722
------------
Construction Materials - 0.7%
35,000 Vulcan Materials Co. $ 1,664,250
------------
Diversified Chemical - 0.7%
25,300 PPG Industries, Inc. $ 1,580,997
------------
Paper Products - 0.8%
62,400 Meadwestvaco Corp. $ 1,833,936
------------
Specialty Chemicals - 0.3%
15,000 Valspar Corp. $ 755,850
------------
Steel - 1.0%
24,700 Nucor Corp. $ 1,895,972
20,050 Roanoke Electric Steel Corp. 272,680
------------
$ 2,168,652
------------
Total Materials $ 11,856,407
------------
Shares Value
Capital Goods - 8.6%
Aerospace & Defense - 3.0%
51,600 Boeing Co. $ 2,636,244
43,200 General Dynamics Corp. 4,289,760
------------
$ 6,926,004
------------
Electrical Components & Equipment - 1.6%
59,000 Emerson Electric Co. $ 3,749,450
------------
Industrial Conglomerates - 2.7%
58,100 Johnson Controls, Inc. $ 3,101,378
32,700 United Technologies Corp. 2,991,396
------------
$ 6,092,774
------------
Industrial Machinery - 1.3%
22,000 Gorman-Rupp Co. $ 597,740
92,200 The Timken Co. 2,442,378
------------
$ 3,040,118
------------
Total Capital Goods $ 19,808,346
------------
Transportation - 0.4%
Railroads - 0.4%
26,500 Burlington Northern, Inc. $ 929,355
------------
Total Transportation $ 929,355
------------
Automobiles & Components - 3.7%
Automobile Manufacturers - 3.7%
145,175 PACCAR, Inc. $ 8,418,698
------------
Total Automobiles & Components $ 8,418,698
------------
Media - 3.2%
Movies & Entertainment - 1.8%
132,400 Cedar Fair, L.P. (a) $ 4,177,220
------------
Publishing - 1.4%
40,500 McGraw-Hill Co., Inc. $ 3,101,085
------------
Total Media $ 7,278,305
------------
Retailing - 2.3%
Department Stores - 1.6%
30,000 J.C. Penney Co., Inc. $ 1,132,800
92,825 May Department Stores Co. 2,551,759
------------
$ 3,684,559
------------
General Merchandise Stores - 0.7%
40,300 Sears, Roebuck and Co. $ 1,521,728
------------
Total Retailing $ 5,206,287
------------
Food, Beverage & Tobacco - 5.4%
Packaged Foods & Meats - 4.4%
147,500 Campbell Soup Co. $ 3,964,800
47,300 General Mills, Inc. 2,248,169
73,700 H.J. Heinz Co., Inc. 2,889,040
46,900 Sara Lee Corp. 1,078,231
------------
$ 10,180,240
------------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
Shares Value
Soft Drinks - 1.0%
12,900 The Coca-Cola Co. $ 651,192
28,600 PepsiCo, Inc. 1,540,968
------------
$ 2,192,160
------------
Total Food, Beverage & Tobacco $ 12,372,400
------------
Household & Personal Products - 1.5%
Household Products - 1.5%
20,000 Clorox Co. $ 1,075,600
39,200 Colgate-Palmolive Co. 2,291,240
------------
$ 3,366,840
------------
Total Household & Personal
Products $ 3,366,840
------------
Health Care Equipment & Services - 3.7%
Health Care Distributors - 2.8%
88,900 Abbott Laboratories $ 3,623,564
50,600 Johnson & Johnson 2,818,420
------------
$ 6,441,984
------------
Health Care Equipment - 0.9%
38,200 Becton, Dickinson & Co. $ 1,978,760
------------
Total Health Care Equipment &
Services $ 8,420,744
------------
Pharmaceuticals & Biotechnology - 3.6%
Pharmaceuticals - 3.6%
57,900 Eli Lilly & Co. $ 4,047,789
74,300 Merck & Co., Inc. 3,529,250
20,000 Pfizer, Inc. 685,600
------------
$ 8,262,639
------------
Total Pharmaceuticals &
Biotechnology $ 8,262,639
------------
Banks - 12.6%
Diversified Banks - 5.4%
154,900 Charter One Financial, Inc. $ 6,845,031
86,100 U.S. Bancorp 2,372,916
53,700 Wells Fargo & Co. 3,073,251
------------
$ 12,291,198
------------
Regional Banks - 5.8%
62,200 First Horizon National Corp. $ 2,828,234
96,900 National City Corp. 3,392,469
79,600 SouthTrust Corp. 3,089,276
63,000 SunTrust Banks, Inc. 4,094,370
------------
$ 13,404,349
------------
Thrifts & Mortgage Finance - 1.4%
85,400 Washington Mutual, Inc. $ 3,299,856
------------
Total Banks $ 28,995,403
------------
Shares Value
Diversified Financials - 3.5%
Asset Management & Custody Banks - 2.9%
45,100 Eaton Vance Corp. $ 1,723,271
98,600 T. Rowe Price Associates, Inc. 4,969,440
------------
$ 6,692,711
------------
Investment Banking & Brokerage - 0.6%
43,100 A.G. Edwards, Inc. $ 1,466,693
------------
Total Diversified Financials $ 8,159,404
------------
Insurance - 4.4%
Property & Casualty Insurance - 4.4%
51,600 Chubb Corp. $ 3,518,088
86,800 Safeco Corp. 3,819,200
68,900 St. Paul Travelers Companies, Inc. 2,793,206
------------
$ 10,130,494
------------
Total Insurance $ 10,130,494
------------
Real Estate - 1.1%
Real Estate Investment Trusts - 1.1%
51,600 Simon DeBartolo Group, Inc. $ 2,653,272
------------
Total Real Estate $ 2,653,272
------------
Software & Services - 0.8%
Application Software - 0.4%
31,000 Microsoft Corp. $ 885,360
------------
Data Processing & Outsourced Services - 0.4%
25,000 Automatic Data Processing, Inc. $ 1,047,000
------------
Total Software & Services $ 1,932,360
------------
Technology Hardware & Equipment - 1.6%
Computer Hardware - 1.6%
44,300 Diebold, Inc. $ 2,342,141
40,000 Hewlett-Packard Co. 844,000
6,200 IBM Corp.* 546,530
------------
$ 3,732,671
------------
Total Technology Hardware &
Equipment $ 3,732,671
------------
Telecommunication Services - 6.6%
Integrated Telecommunication Services - 6.6%
41,800 Alltel Corp. $ 2,115,916
170,000 AT&T Corp. 2,487,100
98,500 BellSouth Corp. 2,582,670
169,800 SBC Communications, Inc. 4,117,650
110,000 Verizon Communications, Inc. 3,980,900
------------
$ 15,284,236
------------
Total Telecommunication Services $ 15,284,236
------------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Utilities - 15.6%
Electric Utilities - 10.1%
60,000 Ameren Corp. $ 2,577,600
55,800 American Electric Power Co., Inc. 1,785,600
56,300 Consolidated Edison, Inc. 2,238,488
153,500 Constellation Energy Group 5,817,650
33,000 FPL Group, Inc. 2,110,350
94,900 Great Plains Energy, Inc. 2,818,530
64,000 NSTAR 3,064,320
98,700 Southern Co. 2,877,105
------------
$ 23,289,643
------------
Gas Utilities - 4.3%
111,700 KeySpan Energy Corp. (a) $ 4,099,390
110,300 Questar Corp. 4,261,992
61,100 Vectren Corp. 1,532,999
------------
$ 9,894,381
------------
Multi-Utilities & Unregulated Power - 0.6%
24,000 Equitable Resources, Inc. $ 1,241,040
------------
Water Utilities - 0.6%
71,000 Aqua America, Inc. $ 1,423,550
------------
Total Utilities $ 35,848,614
------------
TOTAL COMMON STOCKS
(Cost $178,138,936) $219,517,830
------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 4.5%
Repurchase Agreement - 2.9%
$ 6,700,000 UBS Warburg, Inc., 1.25%, dated 6/30/04,
repurchase price of $6,700,000 plus
accrued interest on 7/1/04
collateralized by $6,540,000 U.S.
Treasury Bill, 2.125%, 10/31/04 $ 6,700,000
------------
Shares
Security Lending Collateral - 1.6%
3,514,541 Securities Lending Investment
Fund, 1.29% $ 3,514,541
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $10,214,541) $ 10,214,541
------------
TOTAL INVESTMENT IN
SECURITIES - 101.4%
(Cost $191,244,800) (a) $233,140,932
------------
OTHER ASSETS AND
LIABILITIES - (1.4)% $ (3,183,134)
------------
TOTAL NET ASSETS - 100.0% $229,957,798
============
* Non-income producing security.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
40,000 Cedar Fair, L.P. $1,235,200
60,393 KeySpan Energy Corp. 2,190,454
----------
Total $3,425,654
==========
6 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year
6/30/04 Ended Ended
Class I (unaudited) 12/31/03 12/31/02
Net asset value, beginning of period $ 18.09 $ 15.11 $ 18.40
-------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.22 $ 0.41 $ 0.42
Net realized and unrealized gain (loss) on investments 0.49 2.96 (3.30)
-------- -------- --------
Net increase (decrease) from investment operations $ 0.71 $ 3.37 $ (2.88)
Distributions to shareowners:
Net investment income (0.18) (0.39) (0.41)
Net realized gain -- -- --
-------- -------- --------
Net increase (decrease) in net asset value $ 0.53 $ 2.98 $ (3.29)
-------- -------- --------
Net asset value, end of period $ 18.62 $ 18.09 $ 15.11
======== ======== ========
Total return* 3.94% 22.61% (15.82)%
Ratio of net expenses to average net assets+ 0.72%** 0.78% 0.80%
Ratio of net investment income (loss) to average net assets+ 2.34%** 2.55% 2.48%
Portfolio turnover rate 18%** 12% 12%
Net assets, end of period (in thousands) $158,805 $155,634 $133,258
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.72%** 0.78% 0.80%
Net investment income (loss) 2.34%** 2.55% 2.48%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.72%** 0.78% 0.80%
Net investment income (loss) 2.34%** 2.55% 2.48%
Year Year Year
Ended Ended Ended
Class I 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 21.28 $ 20.72 $ 21.44
-------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.40 $ 0.51 $ 0.42
Net realized and unrealized gain (loss) on investments (1.86) 2.28 (0.15)
-------- -------- --------
Net increase (decrease) from investment operations $ (1.46) $ 2.79 $ 0.27
Distributions to shareowners:
Net investment income (0.36) (0.49) (0.41)
Net realized gain (1.06) (1.74) (0.58)
-------- -------- --------
Net increase (decrease) in net asset value $ (2.88) $ 0.56 $ (0.72)
-------- -------- --------
Net asset value, end of period $ 18.40 $ 21.28 $ 20.72
======== ======== ========
Total return* (6.97)% 14.85% 1.21%
Ratio of net expenses to average net assets+ 0.75% 0.71% 0.70%
Ratio of net investment income (loss) to average net assets+ 2.07% 2.40% 1.97%
Portfolio turnover rate 13% 13% 23%
Net assets, end of period (in thousands) $164,019 $181,920 $226,379
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.75% 0.71% 0.70%
Net investment income (loss) 2.07% 2.40% 1.97%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.75% 0.71% 0.70%
Net investment income (loss) 2.07% 2.40% 1.97%
* 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.
The accompanying notes are an integral part of these financial statements. 7
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
Pioneer
Equity
Income
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $3,425,654)
(Cost $191,244,800) $233,140,932
Cash 165,432
Foreign currencies, at value --
Receivables --
Investment securities sold --
Fund shares sold 107,679
Dividends, interest and foreign taxes withheld 386,897
Other 272
------------
Total assets $233,801,212
------------
LIABILITIES:
Payables --
Investment securities purchased $ --
Fund shares repurchased 129,721
Dividends --
Upon return for securities loaned 3,514,541
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 157,442
Accrued expenses 41,710
Other --
------------
Total liabilities $ 3,843,414
------------
NET ASSETS:
Paid-in capital $202,494,815
Accumulated net investment income (loss) 1,549,361
Accumulated undistributed net realized gain (loss) (15,982,510)
Net unrealized gain (loss) on:
Investments 41,896,132
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $229,957,798
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $158,805,031
Shares outstanding 8,530,519
------------
Net asset value per share $ 18.62
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 71,152,767
Shares outstanding 3,801,847
------------
Net asset value per share $ 18.72
8 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
Pioneer
Equity Income
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends $3,355,605
Interest (net of foreign taxes withheld of $94) 44,410
Income on securities loaned, net 5,416
Other --
----------
Total investment income $3,405,431
----------
EXPENSES:
Management fees $ 723,317
Transfer agent fees 1,488
Distribution fees (Class II) 81,276
Administrative fees 22,108
Custodian fees 20,776
Professional fees 24,135
Printing 6,146
Fees and expenses of nonaffiliated trustees 1,681
Miscellaneous 5,460
----------
Total expenses $ 886,387
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
----------
Net expenses $ 886,387
----------
Net investment income (loss) $2,519,044
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ (626,853)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ (626,853)
----------
Change in net unrealized gain or loss from:
Investments $6,585,509
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$6,585,509
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $5,958,656
==========
Net increase (decrease) in net assets resulting
from operations $8,477,700
==========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
Pioneer Equity
Income VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 2,519,044 $ 4,413,641
Net realized gain (loss) on investments (626,853) (634,370)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 6,585,509 34,115,732
------------- -------------
Net increase (decrease) in net assets
resulting from operations $ 8,477,700 $ 37,895,003
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (1,543,147) $ (3,313,897)
Class II (583,520) (860,942)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
------------- -------------
Total distributions to shareowners $ (2,126,667) $ (4,174,839)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 23,048,590 $ 52,433,019
Reinvestment of distributions 2,126,667 4,174,840
Cost of shares repurchased (17,557,375) (34,680,633)
------------- -------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 7,617,882 $ 21,927,226
------------- -------------
Net increase (decrease) in net assets $ 13,968,915 $ 55,647,390
------------- -------------
NET ASSETS:
Beginning of period $ 215,988,883 $ 160,341,493
------------- -------------
End of period $ 229,957,798 $ 215,988,883
============= =============
Accumulated/(distributions in excess of)
net investment income (loss) $ 1,549,361 $ 1,156,984
============= =============
10 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
1. Organization and Significant Accounting Policies
The Pioneer Equity Income 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 nineteen 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)
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 financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objective of Equity Income Portfolio is to seek capital
appreciation.
Trust's financial statements have been prepared in conformity with accounting
principles generally accepted in the United States of America that require the
management of the Trust to, among other things, make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of income, expenses, gains and losses during the reporting
years. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the Trust,
which are in conformity with those generally accepted in the investment company
industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset value for
the portfolio is computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Trading in foreign equity securities is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The value of such securities used in computing the net
asset value of the Portfolio's shares, based on the last sale price on the
principal exchange where they traded, are determined as of such times. As
of June 30, 2004, there were no fair valued securities.
Fixed income securities are valued at prices supplied by independent
pricing services, which consider such factors as Treasury spreads, yields,
maturities and ratings. Valuations may be supplemented by dealers and other
sources, as required. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the Board of Trustees.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable diligence. Interest income,
including interest on income bearing cash accounts, is recorded on the
accrual
11
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
basis, net of unrecoverable foreign taxes withheld at the applicable
country rates. All discounts/premiums are accreted/amortized for financial
reporting purposes. Temporary cash investments are valued at amortized
cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. Upon entering into a futures contract, the Portfolio
is required to deposit with a broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the associated futures
exchange. Subsequent payments for futures contracts ("variation margin")
are paid or received by the Portfolio, depending on the daily fluctuation
in the value of the contracts, and are recorded by the Portfolio as
unrealized gains or losses. When the contract is closed, the Portfolio
realizes a gain or loss equal to the difference between the opening and
closing value of the contract. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio. Changes in the value of the contracts may not
directly correlate to the changes in the value of the underlying
securities. These risks may decrease the effectiveness of the Portfolio's
hedging and trading strategies and potentially result in a loss. As of June
30, 2004, the portfolio had no open futures contracts.
C. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Equity Income VCT Portfolio had a capital loss
carryforward of $15,355,657, of which will the following amounts expire
between 2009 and 2011 if not utilized: $6,328,025 in 2009, $6,407,206 in
2010, and $2,620,426 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
- ------------------------------------------------------------
Pioneer
Equity Income
VCT Portfolio
2003
- ------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 4,174,839
Long-Term capital gain --
------------
$ 4,174,839
Return of Capital --
------------
Total distributions $ 4,174,839
============
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 82,058
Undistributed long-term gain/
(capital loss carryforward) (15,355,657)
Unrealized appreciation/(depreciation) 36,385,549
------------
Total $ 21,111,950
============
- ------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on wash
sales, returns of capital on REITs, and the recognition of unrealized gains or
losses on certain futures contracts.
D. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively. Shareowners of each class share all expenses and
fees paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number
12
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3). Income, common expenses and realized
and unrealized gains and losses are calculated at the Portfolio level and
allocated daily to each class of shares based on the respective percentage
of adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
Distributions paid by the Portfolio with respect to each class of shares
are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day.
E. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase. The
collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at least
equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets. In addition,
under the management and administration agreement, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $141,022 was payable to PIM related to
management fees, administrative fees and certain other services, and is
included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $258 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$16,162 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Portfolio Tax Cost Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------------------------
Equity Income Portfolio $190,169,874 $47,191,020 $ (4,219,962) $42,971,058
- --------------------------------------------------------------------------------------------------
13
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $27,101,040 and $19,453,205, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- ------------------------------------------------------------------------------------------------
Equity Income Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 537,739 $ 9,891,118 1,544,529 $ 24,668,979
Reinvestment of distributions 84,147 1,543,147 204,954 3,313,898
Shares repurchased (694,977) (12,774,712) (1,964,325) (30,892,038)
---------------------------------------------------------------
Net increase (decrease) (73,091) $ (1,340,447) (214,842) $ (2,909,161)
===============================================================
CLASS II:
Shares sold 712,923 $ 13,157,472 1,723,515 $ 27,764,040
Reinvestment of distributions 31,627 583,520 54,432 860,942
Shares repurchased (261,146) (4,782,663) (242,114) (3,788,595)
---------------------------------------------------------------
Net increase 483,404 $ 8,958,329 1,533,833 $ 24,836,387
===============================================================
- ------------------------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------
This page for your notes.
15
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16063-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Real Estate Shares VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 5
Notes to Financial Statements 9
Trustees, Officers and Service Providers 14
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stock 100.0%
Sector Distribution
(As a percentage of equity holdings)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Office 17.4%
Apartment 16.8%
Regional Mail 15.0%
Industrial 12.7%
Shopping Center 10.4%
Hotel 8.7%
Diversified 8.5%
Self Storage 4.1%
Cash 3.0%
Factory Outlet 2.1%
Manufactured Homes 1.0%
Health Care 0.3%
Five Largest Holdings
(As a percentage of equity holdings)
- -----------------------------------------------
1. Simon DeBartolo Group, Inc. 6.00%
- -----------------------------------------------
2. Boston Properties, Inc. 5.02
- -----------------------------------------------
3. Equity Residential Property Trust 4.36
- -----------------------------------------------
4. ProLogis Trust 3.97
- -----------------------------------------------
5. Catellus Development Corp. 3.91
- -----------------------------------------------
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 19.55 $ 18.57
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.400 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Real Estate Shares VCT Portfolio at net asset value, compared to that of the
Wilshire Real Estate Securities Index. Portfolio returns are based on net asset
value and do not reflect applicable insurance fees and surrender charges.
[DATA BELOW IS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Wilshire Pioneer
Real Estate Real Estate
Securities Index+ Shares VCT Portfolio
3/95 10,000 10,000
11,322 11,696
6/96 15,497 15,875
18,565 19,235
6/98 15,330 15,629
14,841 14,977
6/00 19,403 19,397
21,431 20,911
6/02 21,983 21,440
30,133 28,890
6/04 32,226 31,028
+ Index comparison begins on 2/28/95. The Wilshire Real Estate Securities Index
is a market-capitalization weighted measure of the performance of real estate
investment trusts (equity and hybrid) and real estate operating companies.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Portfolio returns, do not reflect any fees, expenses or sales charges.
You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 12.89%
(3/1/95)
5 Years 13.58%
1 Year 28.90%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
Fear of higher interest rates, rising oil prices and the ongoing turmoil in Iraq
contributed to volatile markets for the six months ended June 30, which made up
the first half or your Portfolio's fiscal year. In this report, Mathew Troxell,
a member of the Portfolio's investment management team, discusses the sector's
positive returns amidst the shifting economic landscape and his expectations for
2004.
Q: Was the market and economic environment favorable for the Portfolio's
investment strategy?
A: Real estate stocks, like most asset classes, experienced great volatility
during the reporting period.
With evidence suggesting that the U.S. economy was on its way to recovery,
the real estate market rose strongly during the first quarter of 2004.
However, in early April, the jobs report for March was surprisingly strong
and sparked a sell-off in the bond market. Bond investors feared that the
economy might be growing too fast and would ignite inflation. Interest rates
began to rise, pushing bond prices down. Prices of real estate stocks also
fell sharply even though historically they have exhibited a low correlation
to bond prices. Rising oil prices and political uncertainty in Iraq further
heightened investor concerns. During May and June, real estate investment
trusts began to recover and picked up enough positive momentum to regain much
of the ground lost in April -- ending the six months with relatively strong
performance gains.
For the six months ended June 30, 2004, the Portfolio's Class I shares rose
7.4% at net asset value. In comparison, the Wilshire Real Estate Securities
Index increased 6.96% for the same period.
Q: What investments helped performance during the six months?
A: Several holdings contributed positively to the Portfolio's returns. AvalonBay
Communities, one of the Portfolio's largest holdings, is an
apartment/multi-family real estate investment trust (REIT) that has benefited
from the expectation of improving fundamentals for apartments. Job growth has
been very positive for household formations, especially for young adults who
are leaving home for the first time. This demographic group has the highest
propensity to rent rather than buy. This stronger renter demand is giving
apartment REIT managers, such as AvalonBay, greater pricing flexibility. In
addition, rising interest rates should contribute to higher renter demand,
because buying a home becomes a more expensive option.
In the lodging sector, Starwood Hotels and Resorts performed well,
particularly in the final two months of the reporting period. Starwood, as
well as the sector in general, are benefiting from a recovery in lodging
demand, which is directly correlated to the improving economy. Catellus
Development, a real estate management and development company, holds a
portfolio of high-quality predominately industrial properties generating
strong cash flow. This REIT's positive performance was driven, in part, by
management's decision to convert to REIT status early in 2004. The heightened
investor interest helped it to outperform the benchmark during the six
months.
Q: What investments hurt performance during the six months?
A: We believe that Simon Property Group is a solid company, but after
consistently outperforming the real estate market during the multi-year rally
through the first quarter of 2004, it, along with other retail names, lagged
in the final months of the reporting period. Following the market correction
this spring, it began to recover. However, when management announced in late
June that it was acquiring Chelsea Property Group (also held by the
Portfolio), investors reacted negatively. We view the proposed merger very
positively, because we think Chelsea Property Group, which owns factory
outlet shopping centers in Japan as well as in the United States, would add
international diversity and a new retail focus to Simon's current portfolio.
Following disappointing performance last year, Apartment Investment and
Management continued to lag the benchmark. This REIT, which owns a diverse
portfolio of multi-family apartment complexes, suffered more than its peers
as apartment fundamentals proved challenging last year and experienced
lower-than-expected fee income and higher-than-expected
apartment-turnover-related expenses last year -- resulting in a reduced
dividend. Even with the greater promise for improving fundamentals, we
reduced the position this spring, because we tempered our view of its total
return potential.
Q: What is your outlook for the balance of 2004?
A: We think that the various property types making up the real estate market are
generally experiencing improving fundamentals. While real estate earnings
typically lag an improvement in fundamentals, hotel and apartment landlords
can respond fairly quickly. Should economic growth continue, however, we
believe retail landlords will begin to lose the relative advantage they have
previously enjoyed. We believe that it will fall to astute stock selection to
separate the wheat from the chafe.
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.
- --------------------------------------------------------------------------------
Real estate investments may be subject to special risks, including risks related
to general and local economic conditions and risks related to an individual
property.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.4%
Hotels, Restaurants & Leisure - 5.3%
Hotels, Resorts & Cruise Lines - 5.3%
75,000 Hilton Hotels Corp.* $ 1,399,500
58,000 Starwood Hotels & Resorts 2,601,300
-----------
$ 4,000,800
-----------
Total Hotels, Restaurants & Leisure $ 4,000,800
-----------
Diversified Financials - 3.0%
Diversified Financial Services - 3.0%
77,000 Brookfield Properties Corp. $ 2,213,750
-----------
Total Diversified Financials $ 2,213,750
-----------
Real Estate - 89.1%
Real Estate Management & Development - 4.0%
115,500 Catellus Development Corp. $ 2,847,075
8,200 Inland Real Estate Corp.* 106,682
-----------
$ 2,953,757
-----------
Real Estate Investment Trusts - 85.1%
38,500 Apartment Investment & Management Co. $ 1,198,505
46,200 AMB Property Corp. 1,599,906
22,400 Affordable Residential Communities* 371,840
16,500 Alexandria Real Estate Equities, Inc. 936,870
44,000 Arden Realty Group, Inc. 1,294,040
92,500 Archstone Communities Trust 2,713,025
50,000 AvalonBay Communities, Inc.* 2,826,000
73,100 Boston Properties, Inc. 3,660,848
17,500 Chelsea Property Group, Inc. 1,141,350
30,000 Camden Property Trust 1,374,000
10,000 Carramerica Realty Corp. 302,300
61,000 Developers Diversifies Realty Corp. 2,157,570
57,000 Duke Realty Investments, Inc. 1,813,170
79,000 Equity Office Properties Trust 2,148,800
107,000 Equity Residential Property Trust 3,181,110
5,800 First Potomac Realty Trust* 111,186
36,000 Federal Realty Investment Trust 1,497,240
79,500 General Growth Properties, Inc. 2,350,815
25,500 Highwoods Properties, Inc.* 599,250
Shares Value
189,000 Host Marriott Corp.* $ 2,336,040
6,000 Healthcare Realty Trust, Inc. 224,880
2,500 Kilroy Realty Corp. 85,250
53,000 Liberty Property Trust 2,131,130
35,500 The Macerich Co. 1,699,385
11,300 Manufactured Home Communities, Inc. 375,047
9,100 Mills Corp. 424,970
10,500 Corporate Office Properties 260,925
88,000 ProLogis Trust 2,896,960
29,300 Pan Pacific Retail Properties, Inc. 1,480,236
55,000 Prentiss Properties Trust 1,843,600
45,206 Public Storage, Inc. 2,079,928
25,500 PS Business Parks Inc* 1,026,120
48,000 Regency Centers Corp. 2,059,200
35,000 The Rouse Co.* 1,662,500
9,500 iStar Financial, Inc.* 380,000
27,500 Shurgard Storage Centers, Inc. 1,028,500
15,800 Strategic Hotel Capital, Inc.* 232,260
85,000 Simon DeBartolo Group, Inc. 4,370,700
51,000 Taubman Centers, Inc. 1,167,390
37,600 Trizec Properties Inc. 611,376
47,200 United Dominion Realty Trust 933,616
46,000 Vornado Realty Trust 2,627,060
16,500 Western Resources, Inc. 516,120
-----------
$63,731,018
-----------
Total Real Estate $66,684,775
-----------
TOTAL COMMON STOCKS
(Cost $55,838,852) $72,899,325
-----------
TOTAL INVESTMENT
IN SECURITIES - 97.4%
(Cost $55,838,852) $72,899,325
-----------
OTHER ASSETS AND
LIABILITIES - 2.6% $ 1,967,974
-----------
TOTAL NET ASSETS - 100.0% $74,867,299
===========
* Non-income producing security.
4 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 $ 13.07
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.42 $ 0.74 $ 0.62 $ 0.68 $ 0.71 $ 0.66
Net realized and unrealized gain (loss) on investments 0.96 4.16 (0.23) 0.40 2.67 (1.20)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 1.38 $ 4.90 $ 0.39 $ 1.08 $ 3.38 $ (0.54)
Distributions to shareowners:
Net investment income (0.40) (0.64) (0.69) (0.56) (0.59) (0.60)
Net realized gain -- -- -- -- -- (0.12)
Tax return of capital -- (0.16) -- (0.17) (0.10) (0.08)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.98 $ 4.10 $ (0.30) $ 0.35 $ 2.69 $ (1.34)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 19.55 $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73
======= ======= ======= ======= ======= =======
Total return* 7.40% 34.75% (2.53)% 7.80% 29.51% (4.17)%
Ratio of net expenses to average net assets+ 0.94%** 1.03% 1.07% 1.16% 1.10% 1.15%
Ratio of net investment income (loss) to average net assets+ 4.22%** 4.49% 4.76% 4.71% 5.02% 5.07%
Portfolio turnover rate 43%** 20% 29% 34% 31% 54%
Net assets, end of period (in thousands) $30,297 $31,891 $29,873 $33,026 $32,982 $28,318
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.30%
Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 4.92%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.14%
Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 5.08%
(a) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 5
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Real Estate
Shares
VCT Portfolio
ASSETS:
Investment in securities, at value
(Cost $55,838,852) $ 72,899,325
Cash 1,906,225
Foreign currencies, at value --
Receivables --
Investment securities sold 2,124,520
Fund shares sold 181,129
Dividends, interest and foreign taxes withheld 428,504
Other 354
------------
Total assets $ 77,540,057
------------
LIABILITIES:
Payables --
Investment securities purchased $ 2,208,201
Fund shares repurchased 378,282
Dividends --
Upon return for securities loaned --
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 66,321
Accrued expenses 19,954
Other --
------------
Total liabilities $ 2,672,758
------------
NET ASSETS:
Paid-in capital $ 57,527,714
Accumulated net investment income (loss) 160,542
Accumulated undistributed net realized gain (loss) 118,570
Net unrealized gain (loss) on:
Investments 17,060,473
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $ 74,867,299
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 30,296,916
Shares outstanding 1,549,560
------------
Net asset value per share $ 19.55
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 44,570,383
Shares outstanding 2,283,389
------------
Net asset value per share $ 19.52
6 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Real Estate Shares
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $1,676) $1,885,996
Interest 18,128
Income on securities loaned, net 535
Other --
----------
Total investment income $1,904,659
----------
EXPENSES:
Management fees $ 294,190
Transfer agent fees 1,494
Distribution fees (Class II) 53,188
Administrative fees 9,250
Custodian fees 13,052
Professional fees 19,250
Printing 8,855
Fees and expenses of nonaffiliated trustees --
Miscellaneous 899
----------
Total expenses $ 400,178
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
----------
Net expenses $ 400,178
----------
Net investment income (loss) $1,504,481
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $3,075,780
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$3,075,780
----------
Change in net unrealized gain or loss from:
Investments $ 359,869
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ 359,869
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $3,435,649
----------
Net increase (decrease) in net assets resulting
from operations $4,940,130
----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Real Estate
Shares VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 1,504,481 $ 3,062,870
Net realized gain (loss) on investments 3,075,780 (474,302)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 359,869 15,553,008
------------ -------------
Net increase (decrease) in net assets
resulting from operations $ 4,940,130 $ 18,141,576
------------ -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (637,400) $ (1,422,912)
Class II (859,854) (1,519,594)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
------------ -------------
Total distributions to shareowners $ (1,497,254) $ (2,942,506)
------------ -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 7,974,724 $ 9,753,610
Reinvestment of distributions 1,497,254 2,942,506
Cost of shares repurchased (9,831,522) (17,969,003)
------------ -------------
Net increase (decrease) in net assets
resulting from fund share transactions $ (359,544) $ (5,272,887)
------------ -------------
Net increase (decrease) in net assets $ 3,083,332 $ 9,926,183
------------ -------------
NET ASSETS:
Beginning of period $ 71,783,967 $ 61,857,784
------------ -------------
End of period $ 78,867,299 $ 71,783,967
============ =============
Accumulated/(distributions in excess of)
net investment income (loss) $ 160,542 $ 153,315
============ =============
8 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Real Estate Shares 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 nineteen 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)
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 Real Estate Shares Portfolio pursues long-term
capital growth, with current income as a secondary objective.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for the
portfolio are computed once daily, on each day the New York Stock Exchange is
open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
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. As of June 30, 2004, there were no fair valued securities.
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. Temporary
cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicable country rates.
Because Real Estate Shares Portfolio invests a substantial portion of its
assets in real estate
9
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
investment trusts (REITs), the Portfolio may be subject to certain risks
associated with direct investments in REITs. REITs may be affected by changes
in the value of their underlying properties and by defaults by borrowers or
tenants. REITs depend generally on their ability to generate cash flow to
make distributions to shareowners, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time. In addition, the performance of a
REIT may be affected by its failure to qualify for tax-free pass-through of
income under the Internal Revenue Code or its failure to maintain exemption
from registration under the Investment Company Act of 1940.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes in
interest rates, securities prices, and currency rates or to seek to increase
total return. Upon entering into a futures contract, the Portfolio is
required to deposit with a broker an amount of cash or securities equal to
the minimum "initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value of
the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees, elements
of market risk which may exceed the amounts recognized by the Portfolio.
Changes in the value of the contracts may not directly correlate to the
changes in the value of the underlying securities. These risks may decrease
the effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, Real Estate Shares had no
open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolio's
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of each Portfolio's distributions may be shown in the
accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
A portion of the dividend income recorded by Real Estate Shares Portfolio is
from distributions by publicly traded REITs, and such distributions for tax
purposes may also consist of capital gains and return of capital. The actual
return of capital and capital gains portions of such distributions will be
determined by formal notifications from the REITs subsequent to the calendar
year-end. Distributions received from the REITs that are determined to be a
return of capital are recorded by the Trust as a reduction of the cost basis
of the securities held.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003,
10
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Real Estate Shares VCT Portfolio had a capital loss carryforward of
$3,310,843, of which the following amounts will expire between 2007 and 2011
if not utilized: $2,238,450 in 2007, $619,294 in 2008 and $453,069 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the components
of distributable earnings (accumulated losses) as of December 31, 2003 and
the distributions paid during the year ended December 31, 2003 on a tax basis
as of December 31, 2003.
- --------------------------------------------------------------------------------
Pioneer
Real Estate
Shares
VCT Portfolio
2003
- ---------------------------------------------------------
Distributions paid from:
Ordinary Income* $ 2,171,485
Long-Term capital gain --
-----------
2,171,485
Return of Capital --
-----------
Total distributions $ 2,171,485
-----------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/
(Capital loss carryforward) (2,665,210)
Unrealized appreciation (depreciation) 16,408,604
-----------
Total $13,743,394
-----------
- --------------------------------------------------------------------------------
* Included in the Portfolio's distributions from 2003 ordinary income is
$192,564 in excess of investment company taxable income, which, in accordance
with U.S. tax law, is taxable to shareowners as ordinary income
distributions.
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on wash
sales, returns of capital on REITs, and the recognition of unrealized gains or
losses on certain futures contracts.
Prior to June 30, 2004, the Portfolio has reclassified $21,639 to decrease net
unrealized gain on investments, $6,268 to decrease accumulated undistributed net
realized gain on investments and $27,907 to increase paid-in capital. The
reclassification has no impact on the net assets of the Portfolio and presents
the Portfolio's capital accounts on a tax basis.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for
its services, which are allocated based on the number of accounts in each
class and the ratable allocation of related out-of-pocket expenses (see Note
3). Income, common expenses and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning of
the day. Distributions paid by the Portfolio with respect to each class of
shares are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day. Dividends and distributions to shareowners are recorded
on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Trust. The loans are secured by collateral of at least 102%,
at all times, of the fair value of the securities loaned. The fair value of
the collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand. The
Trust invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities
11
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
(collateral), including accrued interest received from counterparties, is
required to be at least equal to or in excess of the value of the repurchase
agreement at the time of purchase. The collateral for all repurchase
agreements is held in safekeeping in the customer-only account of the
Portfolio's custodian, or subcustodian. The Trust's investment adviser,
Pioneer Investment Management, Inc. (PIM), is responsible for determining
that the value of the collateral remains at least equal to the repurchase
price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.80% of the Portfolio's average daily net assets. In addition,
under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $55,958 was payable to PIM related to
management fees, administrative fees and certain other services, and is included
in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$10,106 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------------
Real Estate Shares Portfolio $56,411,455 $16,815,051 $ (327,181) $16,487,870
----------- ----------- ---------- -----------
- --------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $17,444,652 and $15,240,948, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------
Real Estate Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -----------------------------------------------------------------------------------------
CLASS II:
Shares sold 46,990 $ 914,044 153,884 $ 2,545,266
Reinvestment of distributions 31,935 637,400 87,137 1,422,912
Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017)
-------- ------------ -------- ------------
Net increase (167,581) $ (3,090,354) (347,178) $ (5,232,839)
======== ============ ======== ============
CLASS II:
Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344
Reinvestment of distributions 43,174 859,854 92,474 1,519,594
Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986)
-------- ------------ -------- ------------
Net increase 132,798 $ 2,730,810 (62,278) $ (40,048)
-------- ------------ -------- ------------
- --------------------------------------------------------------------------------
12
- --------------------------------------------------------------------------------
This page for your notes.
13
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16066-00-0804
[logo] Pioneer
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer High Yield VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer High Yield VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 10
Notes to Financial Statements 14
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment in securities)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Corporate Bonds 57.7%
Convertible Corporate Bonds 35.4%
Temporary Cash Investment 4.1%
Convertible Preferred Stocks 2.8%
Maturity Distribution
(As a percentage of total investment in securities)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
0-1 years 2.5%
1-3 years 16.6%
3-4 years 18.6%
4-6 years 44.9%
6-8 years 10.4%
8+ years 7.0%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Bowater, Inc., 6.5%, 6/15/13 3.71%
2. CMS Energy Corp., 7.75%,
8/1/10 2.97
3. Freeport-Mc Corp., 5.5%
(144A) 2.87
4. Forest City Enterprises,
7.625%, 6/1/15 2.83
5. Meristar Hospitality Corp.,
9.125%, 1/15/11 2.69
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 11.12 $ 11.45
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.3137 $ - $ 0.047
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch
(ML) High Yield Master II Index and of the ML Index of Convertible Bonds
(Speculative Quality). Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
ML Convertible Pioneer High
Bonds Speculative ML High Yield Yield VCT
Quality Master II+ Portfolio
----------------- ------------- ------------
5/00 $10,000 $10,000 $10,000
6/00 8,424 9,770 10,623
7,882 10,207 12,387
6/02 7,744 10,013 12,211
10,529 12,830 16,215
6/04 11,090 13,006 16,254
+ Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a
broad-based measure of the performance of the non-investment grade U.S.
domestic bond market. The ML Index of Convertible Bonds (Speculative Quality)
is a market-capitalization weighted index including mandatory and
non-mandatory domestic corporate convertible securities. Index returns assume
reinvestment of dividends and, unlike Portfolio returns, do not reflect any
fees, expenses or sales charges. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
Net Asset Value
Life-of-Class 11.82%
(5/1/00)
1 Year 9.80%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
High-yield bonds offered slightly positive returns during the first half of
2004. In the following report, portfolio manager Margaret Patel describes the
market backdrop and why the Portfolio slightly underperformed its benchmark
index.
Q: How did the Portfolio perform?
A: During the six months ended June 30, 2004, the Portfolio's Class I shares
had a total return based on net asset value of 0.25%. By comparison, the
Merrill Lynch High Yield Master II Index returned 1.36%. The 30-day SEC
yield on June 30, 2004, was 3.88%.
Q: What was the environment like for the high-yield market during the first six
months of 2004?
A: Rising interest rates significantly dampened returns for all segments of the
fixed-income market. Signs of a strengthening economy and the increased
possibility of sustained inflationary pressures caused market yields to
rise in anticipation of an increase in short-term interest rates by the
Federal Reserve Board. That hike came to pass on the last day of the
period. Bond prices move in the opposite direction of interest rates and
within such an environment Treasury bonds suffered the worst relative price
declines. Steady economic growth helped high-yield bonds perform better
than Treasuries, but high-yield bonds still suffered price declines due to
rising market yields. Lower-quality securities outperformed higher-quality
issues during the period, as investors became more comfortable taking on
riskier investments within a strengthening economy.
Q: Why did the Portfolio's performance slightly lag that of the Merrill Lynch
High Yield Master II Index?
A. The Portfolio had a higher overall credit quality than the index during a
period when lower-rated bonds led the market. We favored higher-quality
securities because we felt that they offered better value and risk
profiles. We also increased the Portfolio's economic sensitivity during the
period, including adding investments in the basic materials sector.
Companies in this sector had performed well due to torrid demand from
China. However, during the period the Chinese government took steps to slow
economic growth to reduce inflationary pressures from building. Investors,
in turn, became concerned that the moves would soften demand for basic
materials, and so these investments suffered. Finally, the Portfolio's
allocation to convertible securities -- about 40% at the end of the period
-- also dampened performance somewhat. Convertibles underperformed generic
high-yield bonds because of declines in the underlying stock prices,
particularly in two of our areas of focus -- basic materials and
technology.
Q: Which investments proved to be some of the top performers during the fiscal
year?
Which disappointed?
A: Two energy holdings, Tom Brown and Nuevo Energy, offered significant price
appreciation when they were each acquired by investment-grade companies.
Convertible bonds issued by Kaydon -- which manufactures ball bearings,
hydraulic gear and filters for the aerospace, electronics and heavy
construction industries -- rose in concert with the underlying stock price
due to an improving business outlook. Real estate firm LNR Properties
continued to perform well despite the risk that higher interest rates might
hurt its business. On the down side, three commodity-based companies --
Freeport Mac MoRan, Coeur d'Alene Mining and Graftech, underperformed
because of fears that slower growth in the U.S. and China would reduce
demand for basic materials.
Q: What is your outlook?
A: The Fed's rate hike at the end of the period was widely expected, and the
Board indicated its willingness to implement any further rate increases in
a slow, measured manner. The U.S. economy remains relatively healthy, so we
believe that the overall outlook for corporate earnings should be positive.
It is possible that Treasury yields could continue to rise during the rest
of 2004, but we feel that the extent of any such increases should be
relatively muted. Within such an environment, high-yield bonds could
continue to attract investors who are more comfortable taking on more risk
within a healthy economy and who are looking for more attractive yields
than either those offered in the Treasury or other lower-yielding segments
of the fixed-income markets.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Portfolio invests in below investment-grade securities, which may be more
volatile and subject to greater price fluctuations than investment-grade
securities.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
S&P/Moody's
Shares Ratings Value
CONVERTIBLE PREFERRED STOCKS - 2.8%
Materials - 2.8%
Construction Materials - 0.0%
1,750 B-/B3 TXI Capital Trust I, 5.5%, 6/30/28 $ 80,325
-----------
Diversified Metals & Mining - 2.8%
3,000 CCC/NR Freeport-McCorp., 5.5% (144A) $ 2,688,750
-----------
Total Materials
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $3,077,338) $ 2,769,075
-----------
Principal
Amount
CONVERTIBLE CORPORATE BONDS - 35.4%
Materials - 5.4%
Commodity Chemicals - 0.3%
$ 200,000 BB-/B1 Millenium Chemicals, Inc., 4.0%, 11/15/23 (144A) $ 311,000
-----------
Diversified Metals & Mining - 1.6%
500,000 B+/B1 Massey Energy Co., 4.75% 5/15/23 $ 850,625
500,000 B-/NR Freeport McMoran Copper & Gold, Inc., 7.0%, 2/11/11 697,500
-----------
$ 1,548,125
-----------
Gold - 1.1%
1,000,000 NR/NR Coeur D'Alene Mines Corp. 1.25%, 1/15/24 $ 827,500
250,000 BBB+/Baa2 Placer Dome, Inc., 2.75%, 10/15/23 (144A) 282,500
-----------
$ 1,110,000
-----------
Specialty Chemicals - 0.5%
1,000,000 BBB/Baa3 RPM International, Inc., 1.389%, 5/13/33 $ 521,250
-----------
Steel - 1.9%
2,000,000 B-/NR Graftech International, 1.625%, 1/15/24 (144A) (a) $ 1,800,000
-----------
Total Materials $ 5,290,375
-----------
Capital Goods - 5.1%
Aerospace & Defense - 2.2%
400,000 NR/NR EDO Corp., 5.25%, 4/15/07 $ 418,500
1,725,000 B/B2 Alliant Technology Systems, 2.75%, 2/15/24 (144A) 1,785,375
-----------
$ 2,203,875
-----------
Constuction & Engineering - 1.3%
875,000 NR/NR Quanta Services, Inc., 4.0%, 7/1/07 $ 796,250
500,000 B/NR Quanta Services, 4.5%, 10/1/23 493,125
-----------
$ 1,289,375
-----------
Electrical Component & Equipment - 1.2%
2,595,000 NR/B1 Roper Industries, Inc., 1.4813%, 1/15/34 (a) $ 1,164,506
-----------
Industrial Machinery - 0.4%
300,000 BB-/Ba3 Kaydon Corp., 4.0%, 5/23/23 (144A) $ 361,125
-----------
Total Capital Goods $ 5,018,881
-----------
Media - 1.4%
Advertising - 1.4%
1,000,000 BB+/Baa3 Interpublic Group Companies, 4.5%, 3/15/23 $ 1,360,000
-----------
Total Media $ 1,360,000
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Retailing - 0.5%
Specialty Stores - 0.5%
$ 500,000 B+/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 (a) $ 484,375
-----------
Total Retailing $ 484,375
-----------
Health Care Equipment & Services - 2.1%
Health Care Equipment - 0.6%
300,000 NR/NR Wilson Greatbatch Technology, 2.25%, 6/15/13 $ 284,625
375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) 358,125
-----------
$ 642,750
-----------
Health Care Facilities - 1.5%
1,400,000 B-/B3 Community Health Systems, 4.25%, 10/15/08 $ 1,457,750
-----------
Total Health Care Equipment & Services $ 2,100,500
-----------
Pharmaceuticals & Biotechnology - 6.8%
Biotechnology - 1.9%
800,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 750,000
850,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 860,625
300,000 NR/NR Cubist Pharmaceuticals, 5.5%, 11/1/08 279,750
-----------
$ 1,890,375
-----------
Pharmaceuticals - 4.9%
400,000 NR/NR Vertex Pharmaceuticals, Inc., 5.75%, 2/15/11 (144A) $ 402,000
2,000,000 NR/NR Ivax Corp., 4.5%, 5/15/08 1,980,000
2,500,000 BB-/B1 Valeant Pharmaceuticals, 3.0%, 8/16/10 (144A) 2,381,250
-----------
$ 4,763,250
-----------
Total Pharmaceuticals & Biotechnology $ 6,653,625
-----------
Real Estate - 0.7%
Real Estate Management & Development - 0.7%
500,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 $ 698,750
-----------
Total Real Estate $ 698,750
-----------
Software & Services - 1.1%
Application Software - 0.8%
200,000 NR/NR Mentor Graphics, 6.875%, 6/15/07 $ 211,500
500,000 NR/NR Serena Software, 1.5%, 12/15/23 (144A) 537,500
-----------
$ 749,000
-----------
IT Consulting & Other Services - 0.3%
400,000 NR/NR Safeguard Scientifics, 2.625%, 3/15/24 (144A) $ 296,500
-----------
Total Software & Services $ 1,045,500
-----------
Technology Hardware & Equipment - 6.0%
Communications Equipment - 3.0%
1,500,000 B-/NR Adaptec, Inc., 0.75%, 12/22/23 $ 1,481,250
1,020,000 BB+/Ba2 Corning, Inc., 3.5%, 11/1/08 1,435,650
-----------
$ 2,916,900
-----------
Computer Storage & Peripherals - 0.8%
700,000 NR/B2 Maxtor Corp., 6.8%, 4/30/10 $ 738,500
-----------
Electronic Equipment & Instruments - 0.4%
300,000 B+/NR Flir Systems, Inc., 3.0%, 6/1/23 (a) $ 427,125
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Electronic Manufacturing Services - 1.4%
$ 1,500,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 1,402,500
-----------
Technology Distributors - 0.4%
400,000 NR/NR Bell Microproducts, Inc., 3.75%, 3/5/24 (144A) $ 397,500
-----------
Total Technology Hardware & Equipment $ 5,882,525
-----------
Semiconductors - 6.3%
Semiconductor Equipment - 3.5%
700,000 B-/NR Advanced Energy Industries, Inc., 5.25%, 11/15/06 $ 693,000
1,700,000 B-/NR FEI Co., 5.5%, 8/15/08 1,731,875
700,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 682,500
200,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 198,250
-----------
$ 3,305,625
-----------
Semiconductors - 2.8%
1,825,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 1,747,438
1,000,000 NR/NR Triquint Semiconductor, 4.0%, 3/1/07 (a) 957,500
-----------
$ 2,704,938
-----------
Total Semiconductors $ 6,010,563
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $33,516,548) $34,545,094
-----------
CORPORATE BONDS - 57.7%
Energy - 3.9%
Oil & Gas Equipment And Services - 0.3%
100,000 B+/B3 Transmontaigne, Inc., 9.125%, 6/1/10 $ 103,000
200,000 BB-/Ba3 Grant Prideco Escrow, 9.0%, 12/15/09 217,500
-----------
$ 320,500
-----------
Oil & Gas Refining Marketing & Transportation - 3.6%
1,255,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 1,374,225
1,900,000 B/B3 Tesoro Petroleum Corp., 9.625%, 4/1/12 2,132,750
-----------
$ 3,506,975
-----------
Total Energy $ 3,827,475
-----------
Materials - 13.9%
Commodity Chemicals - 4.6%
1,100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 1,078,000
2,500,000 BB+/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,375,000
1,000,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,045,000
-----------
$ 4,498,000
-----------
Diversified Metals & Mining - 1.3%
1,375,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 (a) $ 1,258,125
-----------
Metal & Glass Containers - 1.5%
1,000,000 B+/B1 Crown Holdings, 9.5%, 3/1/11 $ 1,090,000
500,000 B/B3 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 415,000
-----------
$ 1,505,000
-----------
Paper Products - 4.3%
685,000 BB/Ba2 Bowater Canada Finance, 7.95%, 11/15/11 $ 707,589
3,700,000 BB/Ba2 Bowater, Inc., 6.5%, 6/15/13 3,480,849
-----------
$ 4,188,438
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Specialty Chemicals - 2.2%
$ 1,200,000 BB-/B1 Millenium America, Inc., 7.625%, 11/15/26 $ 1,026,000
1,000,000 BB-/B1 Millennium America, Inc., 9.25%, 6/15/08 1,075,000
-----------
$ 2,101,000
-----------
Total Materials $13,550,563
-----------
Capital Goods - 7.3%
Aerospace & Defense - 5.1%
1,000,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 1/15/14 $ 955,000
2,500,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 2,437,500
1,525,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 1,570,750
-----------
$ 4,963,250
-----------
Industrial Machinery - 2.2%
800,000 B+/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 (a) $ 800,000
517,000 BBB+/Ba3 SPX Corp., 7.5%, 1/1/13 529,925
800,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 814,000
-----------
$ 2,143,925
-----------
Total Capital Goods $ 7,107,175
-----------
Transportation - 0.5%
Air Freight & Couriers - 0.5%
500,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 525,000
-----------
Total Transportation $ 525,000
-----------
Automobiles & Components - 0.4%
Auto Parts & Equipment - 0.4%
400,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 360,000
-----------
Total Automobiles & Components $ 360,000
-----------
Consumer Durables & Apparel - 1.4%
Homebuilding - 1.4%
400,000 BB/Ba2 Beazer Homes USA, 8.375%, 4/15/12 $ 422,000
1,000,000 BB/Ba2 Beazer Homes USA, 6.5%, 11/15/13 945,000
-----------
$ 1,367,000
-----------
Total Consumer Durables & Apparel $ 1,367,000
-----------
Media - 2.2%
Advertising - 2.2%
2,000,000 BB+/Baa3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,139,558
-----------
Total Media $ 2,139,558
-----------
Retailing - 1.0%
Department Stores - 1.0%
1,000,000 BB+/Ba3 J.C. Penney Co., Inc., 7.625%, 3/1/97 $ 1,025,000
-----------
Total Retailing $ 1,025,000
-----------
Health Care Equipment & Services - 0.8%
Health Care Facilities - 0.5%
500,000 BBB-/Ba1 HCA, Inc., 6.25%, 2/15/13 $ 497,008
-----------
Health Care Supplies - 0.3%
350,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 357,875
-----------
Total Health Care Equipment & Services $ 854,883
-----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
Pharmaceuticals & Biotechnology - 1.4%
Pharmaceuticals - 1.3%
$ 1,375,000 B/NR Valeant Pharmaceuticals, 7.0%, 12/15/11 (144A) $ 1,340,625
-----------
Total Pharmaceuticals & Biotechnology $ 1,340,625
-----------
Real Estate - 11.9%
Real Estate Management & Development - 6.4%
510,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 (144A) $ 712,725
800,000 B+/Ba3 LNR Property Corp., 7.625%, 7/15/13 796,000
2,115,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 2,062,125
2,635,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 2,648,175
-----------
$ 6,219,025
-----------
Real Estate Investment Trusts - 5.5%
500,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 495,000
2,300,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 2,403,500
2,500,000 CCC+/B2 Meristar Hospitality Corp., 9.125%, 1/15/11 2,525,000
-----------
$ 5,423,500
-----------
Total Real Estate $11,642,525
-----------
Technology Hardware & Equipment - 5.5%
Communications Equipment - 0.6%
700,000 BB+/Ba2 Corning, Inc., 6.2%, 3/15/16 $ 649,250
-----------
Electronic Equipment & Instruments - 2.0%
1,835,000 B/B2 General Cable Corp, 9.5%, 11/15/10 $ 1,972,625
-----------
Technology Distributors - 2.9%
1,550,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 $ 1,550,547
1,200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 1,253,473
-----------
$ 2,804,020
-----------
Total Technology Hardware & Equipment $ 5,425,895
-----------
Utilities - 7.4%
Electric Utilities - 7.5%
1,000,000 B+/B3 CMS Energy Corp., 7.5%, 1/15/09 $ 995,000
2,800,000 B+/B3 CMS Energy Corp., 7.75%, 8/1/10 2,786,000
2,000,000 CCC+/B3 Allegheny Energy Supply, 7.8%, 3/15/11 1,955,000
1,500,000 CCC+/B3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,483,125
-----------
$ 7,219,125
-----------
Total Utilities $ 7,219,125
-----------
TOTAL CORPORATE BONDS
(Cost $56,297,175) $56,384,824
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
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- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings Value
TEMPORARY CASH INVESTMENT - 4.1%
Security Lending Collateral - 4.1%
$ 3,990,710 Securities Lending Investment Fund, 1.29% $ 3,990,710
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $3,990,710) $ 3,990,710
------------
TOTAL INVESTMENT IN SECURITIES - 101.7%
(Cost $96,881,771)(a) $ 97,689,703
------------
OTHER ASSETS AND LIABILITIES - (1.7)% $ (1,635,148)
------------
TOTAL NET ASSETS - 100% $ 96,054,555
============
144A Security is exempt from registration under Rule 144A of the Securities Act
of 1933. Such securities may be resold normally to qualified institutional
buyers in a transaction exempt from registration. At June 30, 2004, the
value of these securities amounted to $15,138,100 or 15.8% of net assets.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
285,000 Flir Systems Inc., 3.0%, 6/1/23 $ 403,251
1,306,250 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 1,225,358
329,000 Graftech International, 1.625%, 1/15/24 (144A) 295,568
760,000 Manitowoc Co. Inc., 7.125%, 11/1/13 768,875
404,000 Roper Industries Inc., 1.4813%, 1/15/34 184,681
100,000 Sonic Automotive Inc., 5.25%, 5/7/09 97,648
950,000 Triquint Semiconductor, 4.0%, 3/1/07 920,998
----------
Total $3,896,379
==========
The accompanying notes are an integral part of these financial statements. 9
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year
6/30/04 Ended
Class I (unaudited) 12/31/03
Net asset value, beginning of period $ 11.45 $ 9.27
---------- ----------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.31 $ 0.76
Net realized and unrealized gain (loss) on investments (0.28) 2.18
---------- ----------
Net increase (decrease) from investment operations $ 0.03 $ 2.94
Distributions to shareowners:
Net investment income (0.31) (0.76)
Net realized gain (0.05) --
---------- ----------
Net increase (decrease) in net asset value $ (0.33) $ 2.18
---------- ----------
Net asset value, end of period $ 11.12 $ 11.45
========== ==========
Total return* 0.25% 32.78%
Ratio of net expenses to average net assets+ 0.77%** 0.89%
Ratio of net investment income (loss) to average net assets+ 5.53%** 7.22%
Portfolio turnover rate 67%** 48%
Net assets, end of period (in thousands) $ 63,375 $ 66,587
Ratios with no waiver of management fees and assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 0.77%** 0.89%
Net investment income (loss) 5.53%** 7.22%
Year Year 5/1/00
Ended Ended to
Class I 12/31/02 12/31/01 12/31/00(a)
Net asset value, beginning of period $ 10.33 $ 9.82 $ 10.00
---------- ---------- ----------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.92 $ 0.95 $ 0.61
Net realized and unrealized gain (loss) on investments (1.06) 0.62 (0.18)
---------- ---------- ----------
Net increase (decrease) from investment operations $ (0.14) $ 1.57 $ 0.43
Distributions to shareowners:
Net investment income (0.92) (0.95) (0.61)
Net realized gain -- (0.11) --
---------- ---------- ----------
Net increase (decrease) in net asset value $ (1.06) $ 0.51 $ (0.18)
---------- ---------- ----------
Net asset value, end of period $ 9.27 $ 10.33 $ 9.82
========== ========== ==========
Total return* (1.42)% 16.60% 4.12
Ratio of net expenses to average net assets+ 1.02% 1.15% 1.25%**
Ratio of net investment income (loss) to average net assets+ 9.39% 9.15% 9.18%**
Portfolio turnover rate 42% 36% 33%**
Net assets, end of period (in thousands) $ 41,111 $ 32,331 $ 6,849
Ratios with no waiver of management fees and assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 1.02% 1.28% 2.35%**
Net investment income (loss) 9.39% 9.02% 8.08%**
(a) Shares of High Yield VCT Portfolio 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.
10 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
High-Yield
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $3,896,379)
(Cost $96,881,771) $ 97,689,703
Cash 4,966,498
Foreign currencies, at value --
Receivables --
Investment securities sold 1,251,309
Fund shares sold 129,186
Dividends, interest and foreign taxes withheld 1,389,274
Other 240
-------------
Total assets $ 105,426,210
-------------
LIABILITIES:
Payables --
Investment securities purchased $ 5,290,138
Fund shares repurchased 22
Dividends --
Upon return for securities loaned 3,990,710
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 62,907
Accrued expenses 27,878
Other --
-------------
Total liabilities $ 9,371,655
-------------
NET ASSETS:
Paid-in capital $ 92,183,318
Accumulated net investment income (loss) 42,466
Accumulated undistributed net realized gain (loss) 3,020,839
Net unrealized gain (loss) on:
Investments 807,932
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-------------
Total net assets $ 96,054,555
-------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 63,375,020
Shares outstanding 5,697,234
-------------
Net asset value per share $ 11.12
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 32,679,535
Shares outstanding 2,937,735
-------------
Net asset value per share $ 11.12
The accompanying notes are an integral part of these financial statements. 11
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
High Yield
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends $ 25,646
Interest (net of foreign taxes withheld of $2,145) 2,986,213
Income on securities loaned, net 2,414
Other --
------------
Total investment income $ 3,014,273
EXPENSES:
Management fees $ 311,486
Transfer agent fees 293
Distribution fees (Class II) 34,430
Administrative fees 9,604
Custodian fees 9,660
Professional fees 26,244
Printing 8,162
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,996
------------
Total expenses $ 401,875
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
------------
Net expenses $ 401,875
------------
Net investment income (loss) $ 2,612,398
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 3,020,965
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
$ 3,020,965
------------
Change in net unrealized gain or loss from:
Investments $ (6,002,478)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
$ (6,002,478)
------------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ (2,981,513)
------------
Net increase (decrease) in net assets resulting
from operations $ (369,115)
------------
12 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer High Yield
VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 2,612,398 $ 4,106,902
Net realized gain (loss) on investments 3,020,965 1,124,588
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (6,002,478) 10,301,474
------------- -------------
Net increase (decrease) in net assets
resulting from operations $ (369,115) $ 15,532,964
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (1,887,530) $ (3,817,405)
Class II (724,685) (279,944)
Net realized gain
Class I (265,040) --
Class II (135,300) --
Tax return of capital
Class I -- --
Class II -- --
------------- -------------
Total distributions to shareowners $ (3,012,555) $ (4,097,349)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 40,007,704 $ 45,609,360
Reinvestment of distributions 2,994,517 4,059,022
Cost of shares repurchased (27,753,753) (18,254,761)
------------- -------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 15,248,468 $ 31,413,621
------------- -------------
Net increase (decrease) in net assets $ 11,866,798 $ 42,849,236
------------- -------------
NET ASSETS:
Beginning of period $ 84,187,757 $ 41,338,521
------------- -------------
End of period $ 96,054,555 $ 84,187,757
------------- -------------
Accumulated/(distributions in excess of)
net investment income (loss) $ 42,466 $ 42,283
------------- -------------
The accompanying notes are an integral part of these financial statements.
13
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer High Yield VCT Portfolio (The Portfolio) is a portfolio of Pioneer
Variable Contracts Trust (the Trust) 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 nineteen 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)
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 High Yield Portfolio is to maximize total return
through a combination of income and capital appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting years. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolios are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. Trading in foreign equity securities is substantially
completed each day at various times prior to the close of the New York
Stock Exchange. The value of such securities used in computing the net
asset value of the Portfolio's shares, based on the last sale price on the
principal exchange where they traded, are determined as of such times. As
of June 30, 2004, there were no fair valued securities.
Fixed income securities are valued at prices supplied by independent
pricing services, which consider such factors as Treasury spreads, yields,
maturities and ratings. Valuations may be supplemented by dealers and other
sources, as required. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the Board of Trustees.
Dividend income is recorded on the ex-dividend date, except that certain
dividends from foreign securities where the ex-dividend date may have
passed are recorded as soon as the Portfolio becomes aware of the
ex-dividend data in the exercise of reasonable diligence. Interest income,
including interest on income
14
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
bearing cash accounts, is recorded on the accrual basis, net of
unrecoverable foreign taxes withheld at the applicable country rates. All
discounts/premiums are accreted/amortized for financial reporting purposes.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
The High Yield Portfolio invests in below investment grade (high yield)
debt securities and preferred stocks. These high yield securities may be
convertible into equity securities of the issuer. Debt securities rated
below investment grade are commonly referred to as "junk bonds" and are
considered speculative. These securities involve greater risk of loss, are
subject to greater price volatility, and are less liquid, especially during
years of economic uncertainty or change, than higher rated debt securities.
The Portfolio is not diversified, which means that it can invest a higher
percentage of its asset in any one issuer than a diversified fund. Being
non-diversified may magnify the fund's losses from adverse events affecting
a particular issuer.
In addition, the non-diversified Portfolios have concentrations in certain
asset types, which may subject the Portfolios to additional risks. Further
description of these risks is included in the Trust's Prospectus.
B. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
C. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
D. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
In addition to the requirements of the Internal Revenue Code, the Portfolio
may also be required to pay local taxes on the recognition of capital gains
and/or the repatriation of foreign currencies in certain countries. During
the six months ended June 30, 2004, the no such taxes were paid.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
15
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Pioneer
High-Yield
VCT Portfolio
2003
--------------
Distributions paid from:
Ordinary Income $4,097,349
Long-Term capital gain --
----------
$4,097,349
Return of Capital --
----------
Total distributions $4,097,349
----------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 42,283
Undistributed long-term gain/
(Capital loss carryforward) 400,214
Unrealized appreciation (depreciation) 6,810,410
----------
Total $7,252,907
==========
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively. Shareowners of each class share all expenses and
fees paid to the transfer agent, Pioneer Investment Management Shareholder
Services, Inc. (PIMSS), for its services, which are allocated based on the
number of accounts in each class and the ratable allocation of related
out-of-pocket expenses (see Note 3). Income, common expenses and realized
and unrealized gains and losses are calculated at the Portfolio level and
allocated daily to each class of shares based on the respective percentage
of adjusted net assets at the beginning of the day. Distributions paid by
the Portfolio with respect to each class of shares are calculated in the
same manner, at the same time, and in the same amount, except that Class I
and Class II shares can bear different transfer agent and distribution
fees. Dividends and distributions to shareowners are recorded on the
ex-dividend date. Income, expenses (excluding 12b-1 fees) and gains and
losses are calculated at the Portfolio level and are allocated daily based
on the respective percentage of adjusted net assets at the beginning of the
day.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets.
The portion of the Portfolios' expenses attributable to Class II (or Class I
for shares in the case of High Yield Portfolios) will be reduced only to the
extent such expenses are reduced for Class I shares (or Class II shares).
Pioneer may subsequently recover reimbursed expenses (within three years of
being incurred) from certain Portfolios if the expense ratio of the Class I (or
Class II) shares would otherwise be less than the expense limitation of the
class. $7,270 was reimbursed by High Yield Portfolio under this arrangement and
is included in miscellaneous expense.
16
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each class will reimburse PIM no more than the amount by which that class'
expenses were reduced.
In addition, under the management and administration agreement, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $56,197 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $255 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$6,455 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
----------------------------------------------------------------------------------------------
High Yield Portfolio $96,881,771 $3,691,838 $ (2,883,906) $807,932
-------------- -------------- ---------------- ---------------
- ----------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $47,769,685 and $31,032,220, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- ---------------------------------------------------------------------------------------------------
High Yield Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ---------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 1,201,971 $ 13,743,588 2,515,726 $ 26,817,319
Reinvestment of distributions 187,908 2,134,532 357,809 3,779,086
Shares repurchased (1,508,494) (17,051,802) (1,491,103) (15,895,254)
---------------------------------------------------------------
Net increase (decrease) (118,615) $ (1,173,682) 1,382,432 $ 14,701,151
===============================================================
CLASS II:
Shares sold 2,297,852 $ 26,264,116 1,708,526 $ 18,792,041
Reinvestment of distributions 75,932 859,985 25,089 279,836
Shares repurchased (972,496) (10,701,951) (221,726) (2,359,726)
---------------------------------------------------------------
Net increase 1,401,288 $ 16,422,150 1,511,889 $ 16,712,470
===============================================================
- ---------------------------------------------------------------------------------------------------
17
[logo] Pioneer
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16060-00-0804
[logo] Pioneer
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Oak Ridge Large Cap Growth VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Oak Ridge Large Cap Growth VCT
Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 6
Notes to Financial Statements 10
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 94.6%
Depositary Receipts for International Stocks 5.4%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Information Technology 23.2%
Financials 19.1%
Health Care 17.9%
Consumer Discretionary 16.5%
Consumer Staples 9.1%
Industrials 7.8%
Energy 6.4%
Five Largest Holdings
(As a percentage of equity holdings)
1. Procter & Gamble Co. 3.78%
2. Genentech, Inc. 3.58
3. Apache Corp. 3.38
4. eBAY, Inc. 3.34
5. Microsoft Corp. 3.31
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 3/15/04
Net Asset Value per Share $ 10.37 $ 10.00
Distributions per Share Short-Term Long-Term
(3/15/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Oak Ridge Large Cap Growth VCT Portfolio at net asset value, compared to that
of the Russell 1000 Growth Index. Portfolio returns are based on net asset
value and do not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Oak Ridge
Russell 1000 Large Cap Growth
Growth Index VCT Portfolio
------------ ----------------
3/04 $10,000 $10,000
6/04 10,194 10,174
The Russell 1000 Growth Index contains those Russell 1000 securities with a
greater-than-average growth orientation. Index returns are calculated monthly,
assume reinvestment of dividends and, unlike Portfolio returns, do not reflect
any fees, expenses or sales charges. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life of Fund 3.70%
(3/15/04)
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
2
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In the following interview, David Klaskin, Pioneer Oak Ridge Large Cap Growth
VCT Portfolio's Lead Manager, discusses the factors that influenced performance
for the abbreviated period ended June 30, 2004.
Q: How did the U.S. stock market perform over recent months?
A: Stocks delivered the strongest returns in the first half of the reporting
period, during which the market was supported by the ongoing expansion of
the world economy, low interest rates and the continued improvement of
corporate earnings results. The backdrop for stocks started to deteriorate
in March, however, as investors began to anticipate that the U.S. Federal
Reserve would soon have to begin raising interest rates in order to keep
inflation at bay.
In the latter part of the period: higher-quality companies with strong
earnings growth and sound fundamentals came back into favor. In contrast,
smaller, lower-quality companies (including many with no earnings) generally
had been the best performers in 2003 and the first calendar quarter of this
year.
Q: How did the Portfolio perform during the period?
A: Class II shares of the Portfolio produced a total return of 3.70% at net
asset value for the abbreviated period from March 15, 2004 through June 30,
2004, ahead of its benchmark, the Russell 1000 Growth Index which returned
1.94% for the period from March 31, 2004 through June 30, 2004.
The gradual return to higher quality issues during April and May could signal
an end to a challenging period for the Portfolio. Like most growth-oriented
managers, we look for companies that offer accelerating sales and earnings
growth. However, we strive to make sure that the companies we own in the
Portfolio have what we think are sensible valuations relative to their growth
prospects. In other words, we will not overpay for companies whose stock
prices are not adequately supported by fundamentals. We believe that this is
the best way to find companies poised to perform well over a three-to-five
year time horizon. With the markets' preferences returning to a focus on
quality, this approach again began to bear fruit during the latter half of
the period.
Q: Please discuss some of the key factors in the Portfolio's performance.
A: We are pleased to report that the vast majority of our investment decisions
paid off. While we didn't hit any home runs, we also didn't suffer any
"blow-ups" from individual holdings. In fact, most of the stocks in the
portfolio produced steady gains.
The Portfolio received the strongest performance from its holdings in health
care stocks. This sector in general - and the biotechnology and medical
equipment industries in particular - is home to a wealth of fast-growing
companies selling at what we believe to be reasonable prices. Genentech was a
strong individual performer for the Portfolio, and while it is still a large
position, we have begun to trim its weighting in the stock as its multiple
had expanded to a valuation more reflective of its prospects. The stock is
benefiting from the high hopes for the drug Avastin, which has proven
effective in treating several forms of cancer. Zimmer Holdings, a leader in
making replacement joints, also performed well, as did Alcon, an eye care
device maker that has benefited from both higher earnings and an increase in
its valuation. A recent addition within the health care sector is Caremark
Rx, a pharmacy benefits company that we believe is poised for strong growth
resulting from the need for cost-effective drug distribution.
We also generated strong performance from our stock selection within the
energy sector, which has been helped by the continued rise in oil and gas
prices. Both of the Portfolio's holdings in this area - Apache Corp. and XTO
Energy - executed particularly well.
In the consumer area, we emphasize companies with strong earnings growth and
dominant positions within their respective industries, such as Walmart and
Procter & Gamble.
Q: The Portfolio is underweight in technology. Why do you hold this
positioning, which is unusual for a growth portfolio?
A: We are having no trouble finding technology companies with good growth
prospects. What is challenging is finding tech stocks that are reasonably
valued in relation to their growth rates. The Portfolio's underweight in
technology proved helpful in recent months, as many of the high-flying
stocks in the tech sector lost ground.
Our strategy with respect to technology is to select companies that are
market leaders and that are gaining market share from their competitors. We
believe companies that are gaining share will, over the long-term, perform
well versus the sector as a whole. It is our belief that the best performing
stocks over the next market cycle will not be the manufacturers of
technology, but the companies best utilizing technological advancement to
gain market share in their respective sectors.
Q: What are some examples of investments that did not work as well?
A: As we stated earlier, very few of the Portfolio's holdings performed poorly.
Having said that, our investment in the Spanish language television
broadcaster Univision produced a loss. Although the company reported strong
first quarter earnings, it was conservative in its forward-looking
guidance. Citicorp, meanwhile, weakened on concerns over the effects of
litigation and the potential impact of rising interest rates. We believe
these fears are overstated, and maintain our position in the stock.
Meanwhile, our purchase of Texas Instruments proved poorly timed, leading
to a short-term loss. However, we believe TI will deliver good performance
over time due to its exposure to the fast-growing communications area.
Q: What is your outlook for the stock market?
A: We are encouraged by the recent improvement in the performance of
higher-quality stocks. The market environment remains uncertain, with the
positive effects of a stronger economy and growing corporate earnings
offset by the fear of rising interest rates and worries about Iraq,
terrorism and the upcoming election. But an environment such as this may
prove advantageous to stock pickers such as us, because quality, earnings
and valuations will likely begin to matter once again. And in such an
environment, we believe that our concentrated portfolio of reasonably
valued, fundamentally sound stocks will benefit accordingly.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 92.6%
Energy - 5.9%
Oil & Gas Exploration & Production - 5.9%
631 Apache Corp. $ 27,480
830 Cross Timbers Oil Co. 24,726
--------
$ 52,206
--------
Total Energy $ 52,206
--------
Capital Goods - 4.7%
Electrical Components & Equipment - 1.8%
493 General Electric Co. $ 15,973
--------
Industrial Conglomerates - 2.9%
495 Danaher Corp. $ 25,666
--------
Total Capital Goods $ 41,639
--------
Transportation - 2.5%
Air Freight & Couriers - 2.5%
269 FedEx Corp. $ 21,975
--------
Total Transportation $ 21,975
--------
Hotels, Restaurants & Leisure - 1.3%
Casinos & Gaming - 1.3%
296 International Game Technology $ 11,426
--------
Total Hotels, Restaurants & Leisure $ 11,426
--------
Media - 2.2%
Broadcasting & Cable TV - 2.2%
611 Univision Communications, Inc.* $ 19,509
--------
Total Media $ 19,509
--------
Retailing - 11.7%
Computer & Electronics Retail - 2.1%
356 Best Buy Co., Inc. $ 18,063
--------
Home Improvement Retail - 1.9%
323 Lowe's Companies, Inc. $ 16,974
--------
Internet Retail - 5.0%
295 eBAY, Inc.* $ 27,125
561 InterActive Corp.* 16,909
--------
$ 44,034
--------
Specialty Stores - 2.7%
817 Staples, Inc. $ 23,946
--------
Total Retailing $103,017
--------
Food & Drug Retailing - 4.9%
Food Distributors - 2.4%
599 Sysco Corp. $ 21,486
--------
Hypermarkets & Supercenters - 2.5%
410 Wal-Mart Stores, Inc. $ 21,632
--------
Total Food & Drug Retailing $ 43,118
--------
Shares Value
Household & Personal Products - 3.5%
Household Products - 3.5%
564 Procter & Gamble Co. $ 30,704
--------
Total Household & Personal
Products $ 30,704
--------
Health Care Equipment & Services - 9.6%
Health Care Distributors - 1.9%
250 Teva Pharmaceutical Industries, Ltd. (A.D.R.) $ 16,823
--------
Health Care Equipment - 2.5%
249 Zimmer Holdings, Inc.* $ 21,962
--------
Health Care Services - 2.1%
565 Caremark Rx, Inc.* $ 18,611
--------
Health Care Supplies - 3.1%
340 Alcon, Inc. $ 26,741
--------
Total Health Care Equipment &
Services $ 84,137
--------
Pharmaceuticals & Biotechnology - 7.0%
Biotechnology - 4.3%
162 Amgen, Inc.* $ 8,840
518 Genentech, Inc.* 29,112
--------
$ 37,952
--------
Pharmaceuticals - 2.7%
684 Pfizer, Inc. $ 23,448
--------
Total Pharmaceuticals &
Biotechnology $ 61,400
--------
Banks - 4.6%
Diversified Banks - 4.6%
493 Popular, Inc. $ 21,086
712 U.S. Bancorp 19,623
--------
$ 40,709
--------
Total Banks $ 40,709
--------
Diversified Financials - 9.1%
Consumer Finance - 4.3%
356 American Express Co. $ 18,291
493 SLM Corp. 19,942
--------
$ 38,233
--------
Investment Banking & Brokerage - 2.1%
339 Merrill Lynch & Co., Inc. $ 18,299
--------
Diversified Financial Services - 2.7%
507 Citigroup, Inc. $ 23,576
--------
Total Diversified Financials $ 80,108
--------
Insurance - 3.9%
Life & Health Insurance - 1.9%
416 Aflac, Inc. $ 16,977
--------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Multi-Line Insurance - 2.0%
247 American International Group, Inc. $ 17,606
--------
Total Insurance $ 34,583
--------
Software & Services - 7.8%
Application Software - 3.1%
942 Microsoft Corp. $ 26,904
--------
Data Processing & Outsourced Services - 4.7%
393 Affiliated Computer Services, Inc.* $ 20,805
467 First Data Corp. 20,791
--------
$ 41,596
--------
Total Software & Services $ 68,500
--------
Technology Hardware & Equipment - 11.7%
Communications Equipment - 2.9%
351 Qualcomm, Inc. $ 25,616
--------
Computer Hardware - 4.4%
645 Dell, Inc.* $ 23,104
170 IBM Corp.* 14,986
--------
$ 38,090
--------
Shares Value
Electronic Manufacturing Services - 1.9%
661 Jabil Circuit, Inc.* $ 16,640
--------
Technology Distributors - 2.5%
384 Fisher Scientific International, Inc.* $ 22,176
--------
Total Technology Hardware &
Equipment $102,522
--------
Semiconductors - 2.0%
709 Texas Instruments, Inc. $ 17,144
--------
Total Semiconductors $ 17,144
--------
TOTAL COMMON STOCKS
(Cost $803,436) $812,697
--------
TOTAL INVESTMENT
IN SECURITIES - 92.6%
(Cost $803,436) $812,697
--------
OTHER ASSETS AND
LIABILITIES - 7.4% $ 65,077
--------
TOTAL NET ASSETS - 100.0% $877,774
========
* Non-income producing security.
(A.D.R.) American Depository Receipt
The accompanying notes are an integral part of these financial statements. 5
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
3/15/04
to
6/30/04
Class II (a) (unaudited)
Net asset value, beginning of period $ 10.00
-------
Increase from investment operations:
Net investment income $ --
Net realized and unrealized gain on investments and foreign currency transactions 0.37
-------
Net increase from investment operations $ 0.37
-------
Net increase in net asset value $ 0.37
-------
Net asset value, end of period $ 10.37
=======
Total return* 3.70%
Ratio of net expenses to average net assets+ 0.95%**
Ratio of net investment income to average net assets+ 0.10%**
Portfolio turnover rate 15%**
Net assets, end of period (in thousands) $ 878
Ratios with no waiver of management fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 25.13%**
Net investment loss (24.09)%**
(a) Class II shares were first publicly offered on March 15, 2004
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
6 The accompanying notes are an integral part of these financial statements.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Oak Ridge
Large Cap Growth
VCT Portfolio
ASSETS:
Investment in securities, at value (Cost $803,436) 812,697
Cash 149,940
Futures collateral --
Foreign currencies, at value --
Receivables --
Investment securities sold --
Fund shares sold 14,341
Variation margin --
Dividends, interest and foreign taxes withheld 519
Forward foreign currency settlement contracts, net
Forward foreign currency portfolio hedge contracts, open-net
Due from Pioneer Investment Management, Inc. 7,820
Other 10
-------
Total assets $985,327
--------
LIABILITIES:
Payables --
Investment securities purchased $ 90,503
Fund shares repurchased --
Dividends --
Upon return of securities loaned --
Forward foreign currency settlement contracts, net --
Forward foreign currency portfolio hedge contracts, open-net --
Variation margin --
Due to bank
Due to affiliates 1,814
Accrued expenses 15,236
--------
Total liabilities $107,553
--------
NET ASSETS:
Paid-in capital $869,151
Accumulated net investment income (loss) 102
Accumulated undistributed net realized gain (loss) (740)
Net unrealized gain (loss) on:
Investments 9,261
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
--------
Total net assets $877,774
--------
NET ASSET VALUE PER SHARE:
Class II:
No Par Value (Unlimited number of shares authorized)
Net assets $877,774
Shares outstanding 84,638
--------
Net asset value per share $ 10.37
--------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Oak Ridge
Large Cap Growth
VCT Portfolio
For the period
from 3/15/04
(Commencement of
Operations) to
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $23) $ 940
Interest 99
Income on securities loaned, net --
Other --
---------
Total investment income $ 1,039
---------
EXPENSES:
Management fees $ 740
Transfer agent fees 504
Distribution fees (Class II) 247
Administrative fees 4,625
Custodian fees 7,072
Professional fees 8,059
Printing 3,743
Fees and expenses of nonaffiliated trustees 36
Miscellaneous --
---------
Total expenses $ 25,026
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (24,089)
---------
Less fees paid indirectly
Net expenses $ 937
---------
Net investment income (loss) $ 102
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ (740)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
---------
$ (740)
---------
Change in net unrealized gain or loss from:
Investments $ 9,261
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
---------
$ 9,261
---------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ 8,521
---------
Net increase (decrease) in net assets resulting
from operations $ 8,623
=========
8 The accompanying notes are an integral part of these financial statements.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Oak Ridge
Large Cap Growth
VCT Portfolio
For the period
from 3/15/04
(Commencement of
Operations) to
6/30/04
(unaudited)
FROM OPERATIONS:
Net investment income $ 102
Net realized gain (loss) on investments (740)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 9,261
--------
Net increase (decrease) in net assets
resulting from operations $ 8,623
--------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class I $ --
Class II $ --
Net realized gain
Class I --
Class II --
Tax return of Capital
Class I --
Class II --
--------
Total distributions to shareholders $ --
--------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $869,656
Reinvestment of distributions --
Cost of shares repurchased (505)
--------
Net increase in net assets
resulting from fund share transactions $869,151
--------
Net increase in net assets $877,774
NET ASSETS:
Beginning of period --
--------
End of period $877,774
========
Accumulated net investment income (loss),
end of period $ 102
========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Oak Ridge Large Cap Growth VCT Portfolio (the Portfolio) a
Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware
statutory trust registered under the Investment Company Act of 1940 as an
open-end management investment company. The Trust consists of nineteen 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)
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.
The financial statements and financial highlights of all other portfolios are
presented in separate books.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolio are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. 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. As of June 30, 2004, there were no
securities fair valued.
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. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
10
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. Upon entering into a futures contract, the Portfolio
is required to deposit with a broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the associated futures
exchange. Subsequent payments for futures contracts ("variation margin")
are paid or received by the Portfolio, depending on the daily fluctuation
in the value of the contracts, and are recorded by the Portfolio as
unrealized gains or losses. When the contract is closed, the Portfolio
realize a gain or loss equal to the difference between the opening and
closing value of the contract. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio.
Changes in the value of the contracts may not directly correlate to the
changes in the value of the underlying securities. These risks may decrease
the effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, Oak Ridge Large Cap
Growth Portfolio had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Portfolio level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day. Distributions paid by the Portfolio with
respect to each class of shares are calculated in the same manner, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees.
11
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Income, expenses (excluding 12b-1 fees) and gains and losses are calculated
at the Portfolio level and are allocated daily based on the respective
percentage of adjusted net assets at the beginning of the day. Dividends
and distributions to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.75% of the Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $1,542 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito Italiano provides substantially all
transfer agent and shareowner services to the Trust at negotiated rates.
Included in due to affiliates is $129 in transfer agent fees payable to PIMSS
at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$143 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------------
Oak Ridge Large Cap
Growth Portfolio $803,436 $20,914 $ (11,653) $9,261
======== ======= ========= ======
- --------------------------------------------------------------------------------------
12
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the period ended
June 30, 2004, were $820,969 and $16,793, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------
Oak Ridge Large Cap Growth Portfolio '04 Shares '04 Amount
- ---------------------------------------------------------------
CLASS II:
Shares sold 84,687 $869,656
Reinvestment of distributions -- --
Shares repurchased (49) (505)
---------------------
Net increase 84,638 $869,151
=====================
- --------------------------------------------------------------------------------
13
[logo] Pioneer
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16070-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Real Estate Shares VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 5
Notes to Financial Statements 9
Trustees, Officers and Service Providers 14
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stock 100.0%
Sector Distribution
(As a percentage of equity holdings)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Office 17.4%
Apartment 16.8%
Regional Mail 15.0%
Industrial 12.7%
Shopping Center 10.4%
Hotel 8.7%
Diversified 8.5%
Self Storage 4.1%
Cash 3.0%
Factory Outlet 2.1%
Manufactured Homes 1.0%
Health Care 0.3%
Five Largest Holdings
(As a percentage of equity holdings)
- -----------------------------------------------
1. Simon DeBartolo Group, Inc. 6.00%
- -----------------------------------------------
2. Boston Properties, Inc. 5.02
- -----------------------------------------------
3. Equity Residential Property Trust 4.36
- -----------------------------------------------
4. ProLogis Trust 3.97
- -----------------------------------------------
5. Catellus Development Corp. 3.91
- -----------------------------------------------
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 19.55 $ 18.57
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.400 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Real Estate Shares VCT Portfolio at net asset value, compared to that of the
Wilshire Real Estate Securities Index. Portfolio returns are based on net asset
value and do not reflect applicable insurance fees and surrender charges.
[DATA BELOW IS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Wilshire Pioneer
Real Estate Real Estate
Securities Index+ Shares VCT Portfolio
3/95 10,000 10,000
11,322 11,696
6/96 15,497 15,875
18,565 19,235
6/98 15,330 15,629
14,841 14,977
6/00 19,403 19,397
21,431 20,911
6/02 21,983 21,440
30,133 28,890
6/04 32,226 31,028
+ Index comparison begins on 2/28/95. The Wilshire Real Estate Securities Index
is a market-capitalization weighted measure of the performance of real estate
investment trusts (equity and hybrid) and real estate operating companies.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Portfolio returns, do not reflect any fees, expenses or sales charges.
You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 12.89%
(3/1/95)
5 Years 13.58%
1 Year 28.90%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
Fear of higher interest rates, rising oil prices and the ongoing turmoil in Iraq
contributed to volatile markets for the six months ended June 30, which made up
the first half or your Portfolio's fiscal year. In this report, Mathew Troxell,
a member of the Portfolio's investment management team, discusses the sector's
positive returns amidst the shifting economic landscape and his expectations for
2004.
Q: Was the market and economic environment favorable for the Portfolio's
investment strategy?
A: Real estate stocks, like most asset classes, experienced great volatility
during the reporting period.
With evidence suggesting that the U.S. economy was on its way to recovery,
the real estate market rose strongly during the first quarter of 2004.
However, in early April, the jobs report for March was surprisingly strong
and sparked a sell-off in the bond market. Bond investors feared that the
economy might be growing too fast and would ignite inflation. Interest rates
began to rise, pushing bond prices down. Prices of real estate stocks also
fell sharply even though historically they have exhibited a low correlation
to bond prices. Rising oil prices and political uncertainty in Iraq further
heightened investor concerns. During May and June, real estate investment
trusts began to recover and picked up enough positive momentum to regain much
of the ground lost in April -- ending the six months with relatively strong
performance gains.
For the six months ended June 30, 2004, the Portfolio's Class I shares rose
7.4% at net asset value. In comparison, the Wilshire Real Estate Securities
Index increased 6.96% for the same period.
Q: What investments helped performance during the six months?
A: Several holdings contributed positively to the Portfolio's returns. AvalonBay
Communities, one of the Portfolio's largest holdings, is an
apartment/multi-family real estate investment trust (REIT) that has benefited
from the expectation of improving fundamentals for apartments. Job growth has
been very positive for household formations, especially for young adults who
are leaving home for the first time. This demographic group has the highest
propensity to rent rather than buy. This stronger renter demand is giving
apartment REIT managers, such as AvalonBay, greater pricing flexibility. In
addition, rising interest rates should contribute to higher renter demand,
because buying a home becomes a more expensive option.
In the lodging sector, Starwood Hotels and Resorts performed well,
particularly in the final two months of the reporting period. Starwood, as
well as the sector in general, are benefiting from a recovery in lodging
demand, which is directly correlated to the improving economy. Catellus
Development, a real estate management and development company, holds a
portfolio of high-quality predominately industrial properties generating
strong cash flow. This REIT's positive performance was driven, in part, by
management's decision to convert to REIT status early in 2004. The heightened
investor interest helped it to outperform the benchmark during the six
months.
Q: What investments hurt performance during the six months?
A: We believe that Simon Property Group is a solid company, but after
consistently outperforming the real estate market during the multi-year rally
through the first quarter of 2004, it, along with other retail names, lagged
in the final months of the reporting period. Following the market correction
this spring, it began to recover. However, when management announced in late
June that it was acquiring Chelsea Property Group (also held by the
Portfolio), investors reacted negatively. We view the proposed merger very
positively, because we think Chelsea Property Group, which owns factory
outlet shopping centers in Japan as well as in the United States, would add
international diversity and a new retail focus to Simon's current portfolio.
Following disappointing performance last year, Apartment Investment and
Management continued to lag the benchmark. This REIT, which owns a diverse
portfolio of multi-family apartment complexes, suffered more than its peers
as apartment fundamentals proved challenging last year and experienced
lower-than-expected fee income and higher-than-expected
apartment-turnover-related expenses last year -- resulting in a reduced
dividend. Even with the greater promise for improving fundamentals, we
reduced the position this spring, because we tempered our view of its total
return potential.
Q: What is your outlook for the balance of 2004?
A: We think that the various property types making up the real estate market are
generally experiencing improving fundamentals. While real estate earnings
typically lag an improvement in fundamentals, hotel and apartment landlords
can respond fairly quickly. Should economic growth continue, however, we
believe retail landlords will begin to lose the relative advantage they have
previously enjoyed. We believe that it will fall to astute stock selection to
separate the wheat from the chafe.
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.
- --------------------------------------------------------------------------------
Real estate investments may be subject to special risks, including risks related
to general and local economic conditions and risks related to an individual
property.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.4%
Hotels, Restaurants & Leisure - 5.3%
Hotels, Resorts & Cruise Lines - 5.3%
75,000 Hilton Hotels Corp.* $ 1,399,500
58,000 Starwood Hotels & Resorts 2,601,300
-----------
$ 4,000,800
-----------
Total Hotels, Restaurants & Leisure $ 4,000,800
-----------
Diversified Financials - 3.0%
Diversified Financial Services - 3.0%
77,000 Brookfield Properties Corp. $ 2,213,750
-----------
Total Diversified Financials $ 2,213,750
-----------
Real Estate - 89.1%
Real Estate Management & Development - 4.0%
115,500 Catellus Development Corp. $ 2,847,075
8,200 Inland Real Estate Corp.* 106,682
-----------
$ 2,953,757
-----------
Real Estate Investment Trusts - 85.1%
38,500 Apartment Investment & Management Co. $ 1,198,505
46,200 AMB Property Corp. 1,599,906
22,400 Affordable Residential Communities* 371,840
16,500 Alexandria Real Estate Equities, Inc. 936,870
44,000 Arden Realty Group, Inc. 1,294,040
92,500 Archstone Communities Trust 2,713,025
50,000 AvalonBay Communities, Inc.* 2,826,000
73,100 Boston Properties, Inc. 3,660,848
17,500 Chelsea Property Group, Inc. 1,141,350
30,000 Camden Property Trust 1,374,000
10,000 Carramerica Realty Corp. 302,300
61,000 Developers Diversifies Realty Corp. 2,157,570
57,000 Duke Realty Investments, Inc. 1,813,170
79,000 Equity Office Properties Trust 2,148,800
107,000 Equity Residential Property Trust 3,181,110
5,800 First Potomac Realty Trust* 111,186
36,000 Federal Realty Investment Trust 1,497,240
79,500 General Growth Properties, Inc. 2,350,815
25,500 Highwoods Properties, Inc.* 599,250
Shares Value
189,000 Host Marriott Corp.* $ 2,336,040
6,000 Healthcare Realty Trust, Inc. 224,880
2,500 Kilroy Realty Corp. 85,250
53,000 Liberty Property Trust 2,131,130
35,500 The Macerich Co. 1,699,385
11,300 Manufactured Home Communities, Inc. 375,047
9,100 Mills Corp. 424,970
10,500 Corporate Office Properties 260,925
88,000 ProLogis Trust 2,896,960
29,300 Pan Pacific Retail Properties, Inc. 1,480,236
55,000 Prentiss Properties Trust 1,843,600
45,206 Public Storage, Inc. 2,079,928
25,500 PS Business Parks Inc* 1,026,120
48,000 Regency Centers Corp. 2,059,200
35,000 The Rouse Co.* 1,662,500
9,500 iStar Financial, Inc.* 380,000
27,500 Shurgard Storage Centers, Inc. 1,028,500
15,800 Strategic Hotel Capital, Inc.* 232,260
85,000 Simon DeBartolo Group, Inc. 4,370,700
51,000 Taubman Centers, Inc. 1,167,390
37,600 Trizec Properties Inc. 611,376
47,200 United Dominion Realty Trust 933,616
46,000 Vornado Realty Trust 2,627,060
16,500 Western Resources, Inc. 516,120
-----------
$63,731,018
-----------
Total Real Estate $66,684,775
-----------
TOTAL COMMON STOCKS
(Cost $55,838,852) $72,899,325
-----------
TOTAL INVESTMENT
IN SECURITIES - 97.4%
(Cost $55,838,852) $72,899,325
-----------
OTHER ASSETS AND
LIABILITIES - 2.6% $ 1,967,974
-----------
TOTAL NET ASSETS - 100.0% $74,867,299
===========
* Non-income producing security.
4 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 $ 13.07
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.42 $ 0.74 $ 0.62 $ 0.68 $ 0.71 $ 0.66
Net realized and unrealized gain (loss) on investments 0.96 4.16 (0.23) 0.40 2.67 (1.20)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 1.38 $ 4.90 $ 0.39 $ 1.08 $ 3.38 $ (0.54)
Distributions to shareowners:
Net investment income (0.40) (0.64) (0.69) (0.56) (0.59) (0.60)
Net realized gain -- -- -- -- -- (0.12)
Tax return of capital -- (0.16) -- (0.17) (0.10) (0.08)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.98 $ 4.10 $ (0.30) $ 0.35 $ 2.69 $ (1.34)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 19.55 $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73
======= ======= ======= ======= ======= =======
Total return* 7.40% 34.75% (2.53)% 7.80% 29.51% (4.17)%
Ratio of net expenses to average net assets+ 0.94%** 1.03% 1.07% 1.16% 1.10% 1.15%
Ratio of net investment income (loss) to average net assets+ 4.22%** 4.49% 4.76% 4.71% 5.02% 5.07%
Portfolio turnover rate 43%** 20% 29% 34% 31% 54%
Net assets, end of period (in thousands) $30,297 $31,891 $29,873 $33,026 $32,982 $28,318
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.30%
Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 4.92%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.14%
Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 5.08%
(a) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 5
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Real Estate
Shares
VCT Portfolio
ASSETS:
Investment in securities, at value
(Cost $55,838,852) $ 72,899,325
Cash 1,906,225
Foreign currencies, at value --
Receivables --
Investment securities sold 2,124,520
Fund shares sold 181,129
Dividends, interest and foreign taxes withheld 428,504
Other 354
------------
Total assets $ 77,540,057
------------
LIABILITIES:
Payables --
Investment securities purchased $ 2,208,201
Fund shares repurchased 378,282
Dividends --
Upon return for securities loaned --
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 66,321
Accrued expenses 19,954
Other --
------------
Total liabilities $ 2,672,758
------------
NET ASSETS:
Paid-in capital $ 57,527,714
Accumulated net investment income (loss) 160,542
Accumulated undistributed net realized gain (loss) 118,570
Net unrealized gain (loss) on:
Investments 17,060,473
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $ 74,867,299
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 30,296,916
Shares outstanding 1,549,560
------------
Net asset value per share $ 19.55
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 44,570,383
Shares outstanding 2,283,389
------------
Net asset value per share $ 19.52
6 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Real Estate Shares
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $1,676) $1,885,996
Interest 18,128
Income on securities loaned, net 535
Other --
----------
Total investment income $1,904,659
----------
EXPENSES:
Management fees $ 294,190
Transfer agent fees 1,494
Distribution fees (Class II) 53,188
Administrative fees 9,250
Custodian fees 13,052
Professional fees 19,250
Printing 8,855
Fees and expenses of nonaffiliated trustees --
Miscellaneous 899
----------
Total expenses $ 400,178
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
----------
Net expenses $ 400,178
----------
Net investment income (loss) $1,504,481
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $3,075,780
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$3,075,780
----------
Change in net unrealized gain or loss from:
Investments $ 359,869
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ 359,869
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $3,435,649
----------
Net increase (decrease) in net assets resulting
from operations $4,940,130
----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Real Estate
Shares VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 1,504,481 $ 3,062,870
Net realized gain (loss) on investments 3,075,780 (474,302)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 359,869 15,553,008
------------ -------------
Net increase (decrease) in net assets
resulting from operations $ 4,940,130 $ 18,141,576
------------ -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (637,400) $ (1,422,912)
Class II (859,854) (1,519,594)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
------------ -------------
Total distributions to shareowners $ (1,497,254) $ (2,942,506)
------------ -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 7,974,724 $ 9,753,610
Reinvestment of distributions 1,497,254 2,942,506
Cost of shares repurchased (9,831,522) (17,969,003)
------------ -------------
Net increase (decrease) in net assets
resulting from fund share transactions $ (359,544) $ (5,272,887)
------------ -------------
Net increase (decrease) in net assets $ 3,083,332 $ 9,926,183
------------ -------------
NET ASSETS:
Beginning of period $ 71,783,967 $ 61,857,784
------------ -------------
End of period $ 78,867,299 $ 71,783,967
============ =============
Accumulated/(distributions in excess of)
net investment income (loss) $ 160,542 $ 153,315
============ =============
8 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Real Estate Shares 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 nineteen 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)
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 Real Estate Shares Portfolio pursues long-term
capital growth, with current income as a secondary objective.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for the
portfolio are computed once daily, on each day the New York Stock Exchange is
open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
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. As of June 30, 2004, there were no fair valued securities.
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. Temporary
cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicable country rates.
Because Real Estate Shares Portfolio invests a substantial portion of its
assets in real estate
9
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
investment trusts (REITs), the Portfolio may be subject to certain risks
associated with direct investments in REITs. REITs may be affected by changes
in the value of their underlying properties and by defaults by borrowers or
tenants. REITs depend generally on their ability to generate cash flow to
make distributions to shareowners, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time. In addition, the performance of a
REIT may be affected by its failure to qualify for tax-free pass-through of
income under the Internal Revenue Code or its failure to maintain exemption
from registration under the Investment Company Act of 1940.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes in
interest rates, securities prices, and currency rates or to seek to increase
total return. Upon entering into a futures contract, the Portfolio is
required to deposit with a broker an amount of cash or securities equal to
the minimum "initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value of
the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees, elements
of market risk which may exceed the amounts recognized by the Portfolio.
Changes in the value of the contracts may not directly correlate to the
changes in the value of the underlying securities. These risks may decrease
the effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, Real Estate Shares had no
open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolio's
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of each Portfolio's distributions may be shown in the
accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
A portion of the dividend income recorded by Real Estate Shares Portfolio is
from distributions by publicly traded REITs, and such distributions for tax
purposes may also consist of capital gains and return of capital. The actual
return of capital and capital gains portions of such distributions will be
determined by formal notifications from the REITs subsequent to the calendar
year-end. Distributions received from the REITs that are determined to be a
return of capital are recorded by the Trust as a reduction of the cost basis
of the securities held.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003,
10
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Real Estate Shares VCT Portfolio had a capital loss carryforward of
$3,310,843, of which the following amounts will expire between 2007 and 2011
if not utilized: $2,238,450 in 2007, $619,294 in 2008 and $453,069 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the components
of distributable earnings (accumulated losses) as of December 31, 2003 and
the distributions paid during the year ended December 31, 2003 on a tax basis
as of December 31, 2003.
- --------------------------------------------------------------------------------
Pioneer
Real Estate
Shares
VCT Portfolio
2003
- ---------------------------------------------------------
Distributions paid from:
Ordinary Income* $ 2,171,485
Long-Term capital gain --
-----------
2,171,485
Return of Capital --
-----------
Total distributions $ 2,171,485
-----------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/
(Capital loss carryforward) (2,665,210)
Unrealized appreciation (depreciation) 16,408,604
-----------
Total $13,743,394
-----------
- --------------------------------------------------------------------------------
* Included in the Portfolio's distributions from 2003 ordinary income is
$192,564 in excess of investment company taxable income, which, in accordance
with U.S. tax law, is taxable to shareowners as ordinary income
distributions.
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on wash
sales, returns of capital on REITs, and the recognition of unrealized gains or
losses on certain futures contracts.
Prior to June 30, 2004, the Portfolio has reclassified $21,639 to decrease net
unrealized gain on investments, $6,268 to decrease accumulated undistributed net
realized gain on investments and $27,907 to increase paid-in capital. The
reclassification has no impact on the net assets of the Portfolio and presents
the Portfolio's capital accounts on a tax basis.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for
its services, which are allocated based on the number of accounts in each
class and the ratable allocation of related out-of-pocket expenses (see Note
3). Income, common expenses and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning of
the day. Distributions paid by the Portfolio with respect to each class of
shares are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day. Dividends and distributions to shareowners are recorded
on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Trust. The loans are secured by collateral of at least 102%,
at all times, of the fair value of the securities loaned. The fair value of
the collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand. The
Trust invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities
11
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
(collateral), including accrued interest received from counterparties, is
required to be at least equal to or in excess of the value of the repurchase
agreement at the time of purchase. The collateral for all repurchase
agreements is held in safekeeping in the customer-only account of the
Portfolio's custodian, or subcustodian. The Trust's investment adviser,
Pioneer Investment Management, Inc. (PIM), is responsible for determining
that the value of the collateral remains at least equal to the repurchase
price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.80% of the Portfolio's average daily net assets. In addition,
under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $55,958 was payable to PIM related to
management fees, administrative fees and certain other services, and is included
in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$10,106 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------------
Real Estate Shares Portfolio $56,411,455 $16,815,051 $ (327,181) $16,487,870
----------- ----------- ---------- -----------
- --------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $17,444,652 and $15,240,948, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------
Real Estate Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -----------------------------------------------------------------------------------------
CLASS II:
Shares sold 46,990 $ 914,044 153,884 $ 2,545,266
Reinvestment of distributions 31,935 637,400 87,137 1,422,912
Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017)
-------- ------------ -------- ------------
Net increase (167,581) $ (3,090,354) (347,178) $ (5,232,839)
======== ============ ======== ============
CLASS II:
Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344
Reinvestment of distributions 43,174 859,854 92,474 1,519,594
Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986)
-------- ------------ -------- ------------
Net increase 132,798 $ 2,730,810 (62,278) $ (40,048)
-------- ------------ -------- ------------
- --------------------------------------------------------------------------------
12
- --------------------------------------------------------------------------------
This page for your notes.
13
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16066-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Mid Cap Value VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 7
Notes to Financial Statements 11
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 93.0%
Temporary Cash Investment 6.0%
Depositary Receipts for International Stocks 1.0%
Sector Distribution
(As a percentage of equity holdings)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Financials 21.7%
Consumer Discretionary 15.6%
Industrials 12.6%
Information Technology 12.6%
Health Care 9.6%
Materials 8.5%
Energy 6.6%
Utilities 6.5%
Consumer Staples 6.3%
Five Largest Holdings
(As a percentage of equity holdings)
- -----------------------------------
1. Foot Locker, Inc. 2.58%
- -----------------------------------
2. Mattel, Inc. 2.29
- -----------------------------------
3. W.W. Grainger, Inc. 2.26
- -----------------------------------
4. Safeway, Inc. 2.14
- -----------------------------------
5. CIGNA Corp. 2.13
- -----------------------------------
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 21.99 $ 20.47
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.080 $ - $ 0.2095
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Mid Cap Value VCT Portfolio at net asset value, compared to that of the Russell
Midcap Value Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[DATA BELOW IS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer
Russell Mid Cap
Mid-Cap Value VCT
Value Index Portfolio
3/95 10,000 10,000
12,263 11,819
12/96 14,748 13,596
19,812 16,952
12/98 20,820 16,271
20,799 18,407
12/00 24,789 21,721
25,369 23,130
12/02 22,920 20,537
31,643 28,234
6/04 33,910 30,733
Index comparison begins 2/28/95. The Russell Midcap Value Index measures the
performance of the value-oriented stocks in the Russell Midcap Index. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 12.66%
(3/1/95)
5 Years 10.11%
1 Year 32.23%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
Despite interim volatility, stocks tended to gain over the first six months of
2004, riding on the tide of a strengthening economy and generally rising
corporate profitability. In the following interview, Rod Wright discusses the
market environment and portfolio strategies during the six months ended June 30,
2004. Mr. Wright is responsible for day-to-day portfolio supervision of Pioneer
Mid Cap Value VCT Portfolio.
Q: How did the Portfolio perform?
A: The Portfolio performed well. For six months ended June 30, 2004, the
Portfolio had a total return of 8.85% at net asset value, while the Russell
Midcap Value Index returned 7.17%.
Q: What were the principal factors that affected performance?
A: Despite a succession of fears that caused short-term market reversals, stocks
generally rose during the six months as evidence accumulated that the economy
was strengthening and that corporate earnings were increasing. The rally that
had driven the market for most of 2003 continued in early 2004 until March,
when market interest rates spiked up on fears about the effects of rising oil
prices, the possibility of increasing inflationary pressure and the
likelihood that the Federal Reserve would tighten monetary policy. Adding to
the uncertainty was the anxiety over the continuing violence in Iraq. In the
final weeks of the period, however, the market rebounded again in
anticipation of good news about corporate earnings and the widening
expectation that the Federal Reserve would act gradually in raising
short-term rates, helping to sustain the economic recovery.
Q: What types of investments helped Portfolio performance?
A: Security selection was the primary factor, as stocks across the industry
spectrum contributed to performance. Stocks in the health care, financial
services, telecommunications and industrial sectors did well, while stocks in
basic materials, consumer staples and consumer discretionary sectors did less
well. The top individual contributor was Charter One Financial, which was
taken over by Royal Bank of Scotland, at a substantial premium to its
valuation. Several other performance leaders were formerly out-of-favor
companies whose stock prices began appreciating as their earnings and
business prospects began to improve. They included: NCR, the technology
conglomerate that began turning around its business in time to benefit from
an increase in corporate capital spending; and Reliant Energy, an independent
power producer and energy merchant whose stock gained as a result of a
corporate restructuring and the sale of undervalued assets. The Portfolio
also had success with stocks such as Becton Dickinson, the medical supplies
company, which benefited from rising earnings and the introduction of new
products, and Providian, a credit-card issuer whose prospects began to
improve under a restructuring plan implemented by new management.
Q: Were there any disappointments?
A: We had a few. Investment Technology Group, a company specializing in
electronic trading operations, declined as it faced increased competition in
the financial markets. However, we continued to hold the stock because of the
value of its assets. We have sold our stake in another disappointment,
Seagate Technology, a manufacturer of disc drives, which became the victim of
industry overcapacity. Similarly, we also eliminated positions in two
disappointing mining stocks, Freeport-McMoRan and Newmont Mining, both of
which declined as the price of gold weakened.
Q: What is your investment outlook?
A: We think that the market trends will continue to be choppy, as a variety of
factors will weigh on investors' minds. However, the outlook for corporate
earnings is generally positive and companies are generating a great deal of
free cash flow. We intend to remain focused on our core discipline,
concentrating on investments in quality companies with reasonable stock
valuations.
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.
- --------------------------------------------------------------------------------
Mid-capitalization stocks may be subject to greater short-term price
fluctuations than securities of larger companies.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.9%
Energy - 6.4%
Integrated Oil & Gas - 0.9%
115,840 Occidental Petroleum Corp. $ 5,607,814
------------
Oil & Gas Drilling - 2.9%
138,315 ENSCO International, Inc. $ 4,024,967
98,730 Nabors Industries, Inc.* 4,464,571
155,930 Transocean Offshore, Inc.* 4,512,612
98,235 Weatherford International, Inc.* 4,418,610
------------
$ 17,420,760
------------
Oil & Gas Exploration & Production - 2.0%
82,861 Devon Energy Corp. $ 5,468,826
180,485 Pioneer Natural Resources Co. 6,331,414
------------
$ 11,800,240
------------
Oil & Gas Refining Marketing &
Transportation - 0.6%
57,785 Sun Company, Inc. $ 3,676,282
------------
Total Energy $ 38,505,096
------------
Materials - 8.3%
Commodity Chemicals - 1.0%
115,445 Air Products & Chemicals, Inc. $ 6,055,090
------------
Diversified Chemical - 1.6%
155,120 PPG Industries, Inc. $ 9,693,449
------------
Diversified Metals & Mining - 2.0%
155,285 Phelps Dodge Corp.* $ 12,036,140
------------
Metal & Glass Containers - 1.6%
130,210 Ball Corp. $ 9,381,631
------------
Paper Products - 2.1%
311,267 Flowserve Corp.* $ 7,762,999
164,600 Meadwestvaco Corp. 4,837,594
------------
$ 12,600,593
------------
Total Materials $ 49,766,903
------------
Capital Goods - 6.0%
Aerospace & Defense - 0.9%
148,300 United Defense Industries, Inc.* $ 5,190,500
------------
Electrical Components & Equipment - 1.8%
178,465 American Power Conversion Corp. $ 3,506,837
486,390 Symbol Technologies, Inc. 7,169,389
------------
$ 10,676,226
------------
Industrial Conglomerates - 3.3%
222,080 American Standard Companies, Inc.* $ 8,952,045
131,520 ITT Industries, Inc. 10,916,160
------------
$ 19,868,205
------------
Total Capital Goods $ 35,734,931
------------
Shares Value
Commercial Services & Supplies - 4.6%
Commercial Printing - 2.0%
90,200 John H. Harland Co. $ 2,647,370
294,540 R.R. Donnelly & Sons Co. (a) 9,725,711
------------
$ 12,373,081
------------
Diversified Commercial Services - 1.0%
131,010 H & R Block, Inc. $ 6,246,557
------------
Environmental Services - 1.6%
319,335 Republic Services, Inc. $ 9,241,555
------------
Total Commercial Services &
Supplies $ 27,861,193
------------
Transportation - 1.7%
Airlines - 0.6%
228,310 Southwest Airlines Co. $ 3,828,759
------------
Railroads - 1.1%
149,120 Canadian National Railway Co. $ 6,500,141
------------
Total Transportation $ 10,328,900
------------
Consumer Durables & Apparel - 4.2%
Apparel, Accessories & Luxury Goods - 0.9%
297,010 The Limited Brands, Inc. $ 5,554,087
------------
Housewares & Specialties - 0.5%
105,600 Yankee Candle Co.* $ 3,088,800
------------
Leisure Products - 2.3%
736,530 Mattel, Inc. $ 13,441,673
------------
Photographic Products - 0.5%
115,500 Eastman Kodak Co. $ 3,116,190
------------
Total Consumer Durables & Apparel $ 25,200,750
------------
Hotels, Restaurants & Leisure - 2.3%
Restaurants - 2.3%
148,700 Brinker International, Inc.* $ 5,073,644
230,605 Tricon Global Restaurants, Inc.* 8,583,116
------------
$ 13,656,760
------------
Total Hotels, Restaurants & Leisure $ 13,656,760
------------
Media - 0.8%
Movies & Entertainment - 0.8%
271,660 Regal Entertainment Group (a) $ 4,917,046
------------
Total Media $ 4,917,046
------------
Retailing - 7.9%
Apparel Retail - 2.1%
132,230 Jones Apparel Group, Inc. $ 5,220,440
196,400 Liz Claiborne, Inc. 7,066,472
------------
$ 12,286,912
------------
Department Stores - 0.8%
130,200 J.C. Penney Co., Inc. $ 4,916,352
------------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
General Merchandise Stores - 2.0%
238,200 American Greetings Corp.* $ 5,521,476
172,680 Sears, Roebuck and Co. 6,520,397
------------
$ 12,041,873
------------
Specialty Stores - 3.0%
620,430 Foot Locker, Inc. $ 15,101,266
195,300 Toys "R" Us, Inc.* 3,111,129
------------
$ 18,212,395
------------
Total Retailing $ 47,457,532
------------
Food & Drug Retailing - 6.2%
Drug Retail - 1.5%
211,270 CVS Corp. $ 8,877,565
------------
Food Retail - 3.4%
280,590 ConAgra, Inc. $ 7,598,377
494,200 Safeway, Inc.* 12,523,028
------------
$ 20,121,405
------------
Hypermarkets & Supercenters - 1.3%
313,670 BJ'S Wholesale Club, Inc.* $ 7,841,750
------------
Total Food & Drug Retailing $ 36,840,720
------------
Health Care Equipment & Services - 9.4%
Health Care Distributors - 0.5%
82,400 Par Pharmaceutical Co., Inc.* $ 2,901,304
------------
Health Care Equipment - 2.4%
239,400 Apogent Technologies, Inc.* $ 7,660,800
132,205 Becton, Dickinson & Co. 6,848,219
------------
$ 14,509,019
------------
Health Care Facilities - 3.3%
557,200 Tenet Healthcare Corp.* $ 7,472,052
330,060 Triad Hospitals, Inc.* 12,288,134
------------
$ 19,760,186
------------
Health Care Services - 1.1%
164,630 Laboratory Corp. of America Holdings* $ 6,535,811
------------
Managed Health Care - 2.1%
181,500 CIGNA Corp. $ 12,489,015
------------
Total Health Care Equipment &
Services $ 56,195,335
------------
Banks - 9.1%
Regional Banks - 5.4%
99,000 City National Corp. $ 6,504,300
140,330 KeyCorp 4,194,464
116,165 Marshall & Ilsley Corp. 4,540,890
99,005 North Fork Bancorporation, Inc. 3,767,140
66,240 SouthTrust Corp. 2,570,774
90,775 TCF Financial Corp. 5,269,489
89,400 Zions Bancorporation 5,493,630
------------
$ 32,340,687
------------
Shares Value
Thrifts & Mortgage Finance - 3.7%
115,699 Countrywide Financial Corp. $ 8,127,855
115,375 GreenPoint Financial Corp. 4,580,388
222,760 The PMI Group, Inc. 9,694,515
------------
$ 22,402,758
------------
Total Banks $ 54,743,445
------------
Diversified Financials - 6.0%
Consumer Finance - 3.1%
671,200 Providian Financial Corp.* $ 9,846,504
16,514 White Mountains Insurance Group, Ltd. 8,422,140
------------
$ 18,268,644
------------
Asset Management & Custody Banks - 1.1%
214,590 Federated Investors, Inc. $ 6,510,661
------------
Investment Banking & Brokerage - 1.8%
190,500 A.G. Edwards, Inc. $ 6,482,715
341,950 Investment Technology Group, Inc.* 4,373,541
------------
$ 10,856,256
------------
Total Diversified Financials $ 35,635,561
------------
Insurance - 6.3%
Insurance Brokers - 2.1%
180,710 Platinum Underwriter Holdings, Ltd. (a) $ 5,499,005
187,840 Willis Group Holdings, Ltd. 7,034,608
------------
$ 12,533,613
------------
Life & Health Insurance - 0.9%
99,130 Jefferson - Pilot Corp. $ 5,035,804
------------
Property & Casualty Insurance - 3.3%
104,105 Ambac Financial Group, Inc. $ 7,645,471
278,500 Safeco Corp. 12,254,000
------------
$ 19,899,471
------------
Total Insurance $ 37,468,888
------------
Software & Services - 2.3%
Data Processing & Outsourced Services - 2.3%
555,530 The BISYS Group, Inc.* $ 7,810,752
239,929 SunGard Data Systems, Inc.* 6,238,154
------------
$ 14,048,906
------------
Total Software & Services $ 14,048,906
------------
Technology Hardware & Equipment - 9.4%
Communications Equipment - 3.2%
296,600 Century Telephone Enterprises, Inc. $ 8,909,864
356,121 Tellabs, Inc.* 3,112,498
230,200 Utstarcom, Inc (a)* 6,963,550
------------
$ 18,985,912
------------
Computer Hardware - 1.9%
231,360 NCR Corp.* $ 11,473,142
------------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Computer Storage & Peripherals - 2.1%
284,600 SanDisk Corp. (a)* $ 6,172,974
214,600 Storage Technology Corp.* 6,223,400
------------
$ 12,396,374
------------
Electronic Equipment & Instruments - 2.2%
230,080 W.W. Grainger, Inc. $ 13,229,600
------------
Total Technology Hardware &
Equipment $ 56,085,028
------------
Semiconductors - 0.6%
260,900 Cypress Semiconductor Corp. (a)* $ 3,702,171
------------
Total Semiconductors $ 3,702,171
------------
Utilities - 6.4%
Electric Utilities - 4.6%
148,675 Constellation Energy Group $ 5,634,783
140,350 DTE Energy Co. 5,689,789
115,315 Entergy Corp. 6,458,793
347,300 PG&E Corp.* 9,703,562
------------
$ 27,486,927
------------
Gas Utilities - 0.1%
16,315 KeySpan Energy Corp. $ 598,761
------------
Multi-Utilities & Unregulated Power - 1.7%
920,000 Reliant Energy* $ 9,963,600
------------
Total Utilities $ 38,049,288
------------
TOTAL COMMON STOCKS
(Cost $509,973,009) $586,198,453
------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 6.2%
Repurchase Agreement - 2.0%
$12,100,000 UBS Warburg, Inc. 1.25%,
dated 6/30/04, repurchase price of
$12,100,000 plus accrued interest on
7/1/04 collateralized by $11,094,000
U.S. Treasury Bill, 7.0%, 7/15/06 $ 12,100,000
------------
Shares
Security Lending Collateral - 4.2%
25,038,825 Securities Lending
Investment Fund, 1.29% $ 25,038,825
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $37,138,825) $ 37,138,825
------------
TOTAL INVESTMENT
IN SECURITIES - 104.1%
(Cost $547,111,834) (a) $623,337,278
------------
OTHER ASSETS AND
LIABILITIES - (4.1)% $(24,737,403)
------------
TOTAL NET ASSETS - 100.0% $598,599,875
============
* Non-income producing security.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
105,980 Cypress Semiconductor Corp.* $ 1,462,524
14,695 Platinum Underwriter Holdings Ltd. 445,552
249,900 Regal Entertainment Group 4,510,695
155,000 R.R. Donnelly & Sons Co. 5,128,950
263,720 SanDisk Corp.* 5,909,965
275,023 Utstarcom, Inc* 8,363,449
-----------
Total $25,821,135
===========
6 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 20.47 $ 14.94 $ 17.35 $ 17.79 $ 16.26 $ 14.49
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.05 $ 0.14 $ 0.07 $ 0.07 $ 0.13 $ 0.13
Net realized and unrealized gain (loss) on investments 1.76 5.45 (1.97) 1.06 2.62 1.77
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 1.81 $ 5.59 $ (1.90) $ 1.13 $ 2.75 $ 1.90
Distributions to shareowners:
Net investment income (0.08) (0.06) (0.05) (0.10) (0.13) (0.13)
Net realized gain (0.21) -- (0.46) (1.47) (1.09) --
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 1.52 $ 5.53 $ (2.41) $ (0.44) $ 1.53 $ 1.77
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 21.99 $ 20.47 $ 14.94 $ 17.35 $ 17.79 $ 16.26
======== ======== ======== ======== ======== ========
Total return* 8.85% 37.48% (11.21)% 6.49% 18.00% 13.13%
Ratio of net expenses to average net assets+ 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76%
Ratio of net investment income (loss) to average net assets+ 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77%
Portfolio turnover rate 71%** 52% 68% 95% 85% 91%
Net assets, end of period (in thousands) $198,767 $170,237 $120,687 $128,340 $111,466 $120,526
Ratio with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76%
Net investment income (loss) 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77%
Ratio with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76%
Net investment income (loss) 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77%
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 7
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Mid Cap
Value
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $25,821,135)
(Cost $547,111,834) $ 623,337,278
Cash 232,088
Foreign currencies, at value --
Receivables --
Investment securities sold 9,079,092
Fund shares sold 824,503
Variation margin --
Dividends, interest and foreign taxes withheld 422,351
Forward foreign currency settlement contracts, net --
Due from Pioneer Investment Management, Inc. --
Other --
-------------
Total assets $ 633,895,312
-------------
LIABILITIES:
Payables --
Investment securities purchased $ 9,767,200
Fund shares repurchased 17,620
Dividends --
Upon return of securities loaned 25,038,825
Forward foreign currency settlement contracts, net --
Reserve for repatriation taxes --
Due to bank --
Due to affiliates 439,928
Accrued expenses 31,864
-------------
Total liabilities $ 35,295,437
-------------
NET ASSETS:
Paid-in capital $ 491,654,895
Accumulated net investment income (loss) 1,141,650
Accumulated undistributed net realized gain (loss) 29,577,886
Net unrealized gain (loss) on:
Investments 76,225,444
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-------------
Total net assets $ 598,599,875
-------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 198,767,124
Shares outstanding 9,037,285
-------------
Net asset value per share $ 21.99
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 399,832,751
Shares outstanding 18,321,840
-------------
Net asset value per share $ 21.82
8 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Mid Cap Value
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $5,324) $ 3,149,536
Interest 61,832
Income on securities loaned, net 6,732
Other --
-----------
Total investment income $ 3,218,100
-----------
EXPENSES:
Management fees $ 1,558,884
Transfer agent fees 1,432
Distribution fees (Class II) 369,014
Administrative fees 41,873
Custodian fees 39,878
Professional fees 37,060
Printing 23,211
Fees and expenses of nonaffiliated trustees --
Miscellaneous 5,011
-----------
Total expenses $ 2,076,363
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
-----------
Net expenses $ 2,076,363
-----------
Net investment income (loss) $ 1,141,737
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $31,570,054
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$31,570,054
-----------
Change in net unrealized gain or loss from:
Investments $ 7,930,499
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$ 7,930,499
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $39,500,553
===========
Net increase (decrease) in net assets resulting
from operations $40,642,290
===========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Mid Cap
Value VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 1,141,737 $ 1,803,484
Net realized gain (loss) on investments 31,570,054 6,004,760
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 7,930,499 75,230,670
------------- -------------
Net increase (decrease) in net assets
resulting from operations $ 40,642,290 $ 83,038,914
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (711,725) $ (438,494)
Class II (1,067,643) (236,135)
Net realized gain
Class I (1,863,831) --
Class II (3,740,321) --
Tax return of capital
Class I -- --
Class II -- --
------------- -------------
Total distributions to shareowners $ (7,383,520) $ (674,629)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 196,943,386 $ 161,143,658
Reinvestment of distributions 7,383,520 674,611
Cost of shares repurchased (20,342,972) (44,550,616)
------------- -------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 183,983,934 $ 117,267,653
------------- -------------
Net increase (decrease) in net assets $ 217,242,704 $ 199,631,938
------------- -------------
NET ASSETS:
Beginning of period $ 381,357,171 $ 181,725,233
------------- -------------
End of period $ 598,599,875 $ 381,357,171
============= =============
Accumulated/(distributions in excess of)
net investment income (loss) $ 1,141,650 $ 1,779,281
============= =============
10 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Mid Cap Value 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 nineteen 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)
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 Mid Cap Value Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for the
portfolio are computed once daily, on each day the New York Stock Exchange is
open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
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. As of June 30, 2004, there were no fair valued securities.
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. Temporary
cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicable country rates.
B. Futures Contracts The Portfolio may enter into futures transactions to hedge
against changes in interest rates, securities prices, and currency rates or
to seek to increase total
11
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
return. Upon entering into a futures contract, the Portfolio is required to
deposit with a broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the associated futures exchange. Subsequent
payments for futures contracts ("variation margin") are paid or received by
the Portfolio, depending on the daily fluctuation in the value of the
contracts, and are recorded by the Portfolio as unrealized gains or losses.
When the contract is closed, the Portfolio realize a gain or loss equal to
the difference between the opening and closing value of the contract. The use
of futures contracts involves, to varying degrees, elements of market risk
which may exceed the amounts recognized by the Portfolio. Changes in the
value of the contracts may not directly correlate to the changes in the value
of the underlying securities. These risks may decrease the effectiveness of
the Portfolio's hedging and trading strategies and potentially result in a
loss. As of June 30, 2004, Mid Cap Value Portfolio had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolio's
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of each Portfolio's distributions may be shown in the
accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the components
of distributable earnings (accumulated losses) as of December 31, 2003 and
the distributions paid during the year ended December 31, 2003 on a tax basis
as of December 31, 2003.
- --------------------------------------------------------------------------------
Pioneer
Mid Cap Value
VCT Portfolio
2003
- ----------------------------------------------------------
Distributions paid from:
Ordinary Income $ 674,629
Long-Term capital gain --
-----------
$ 674,629
Return of Capital --
-----------
Total distributions $ 674,629
===========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 3,095,345
Undistributed long-term gain/
(Capital loss carryforward) 4,286,038
Unrealized appreciation (depreciation) 66,304,827
-----------
Total $73,686,210
===========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
12
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for
its services, which are allocated based on the number of accounts in each
class and the ratable allocation of related out-of-pocket expenses (see Note
3). Income, common expenses and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning of
the day. Distributions paid by the Portfolio with respect to each class of
shares are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day. Dividends and distributions to shareowners are recorded
on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Trust. The loans are secured by collateral of at least 102%,
at all times, of the fair value of the securities loaned. The fair value of
the collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand. The
Trust invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase. The
collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at least
equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $352,423 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$87,247 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
13
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
--------------- -------------- ----------------- ---------------
Mid Cap Value Portfolio $549,097,482 $120,657,540 $ (46,417,744) $74,239,796
============ ============ ============= ===========
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $343,646,689 and $167,846,365, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------
Mid Cap Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -----------------------------------------------------------------------------------------------
CLASS I:
Shares sold 1,350,399 $ 28,801,387 2,677,744 $ 46,157,551
Reinvestment of distributions 117,892 2,575,556 26,084 438,476
Shares repurchased (746,981) (15,842,125) (2,465,836) (40,592,863)
--------- ------------- ---------- -------------
Net increase 721,400 $ 15,534,818 237,992 $ 6,003,164
--------- ------------- ---------- -------------
CLASS II:
Shares sold 7,925,107 $ 168,141,999 6,515,291 $ 114,986,107
Reinvestment of distributions 221,974 4,807,964 93,450 236,135
Shares repurchased (214,474) (4,500,847) (1,080,224) (3,957,753)
========= ============= ========== =============
Net increase 7,932,607 $ 168,449,116 6,280,420 $ 111,264,489
========= ============= ========== =============
14
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15
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16
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17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16064-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Real Estate Shares VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 5
Notes to Financial Statements 9
Trustees, Officers and Service Providers 14
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stock 100.0%
Sector Distribution
(As a percentage of equity holdings)
[DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Office 17.4%
Apartment 16.8%
Regional Mail 15.0%
Industrial 12.7%
Shopping Center 10.4%
Hotel 8.7%
Diversified 8.5%
Self Storage 4.1%
Cash 3.0%
Factory Outlet 2.1%
Manufactured Homes 1.0%
Health Care 0.3%
Five Largest Holdings
(As a percentage of equity holdings)
- -----------------------------------------------
1. Simon DeBartolo Group, Inc. 6.00%
- -----------------------------------------------
2. Boston Properties, Inc. 5.02
- -----------------------------------------------
3. Equity Residential Property Trust 4.36
- -----------------------------------------------
4. ProLogis Trust 3.97
- -----------------------------------------------
5. Catellus Development Corp. 3.91
- -----------------------------------------------
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 19.55 $ 18.57
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.400 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Real Estate Shares VCT Portfolio at net asset value, compared to that of the
Wilshire Real Estate Securities Index. Portfolio returns are based on net asset
value and do not reflect applicable insurance fees and surrender charges.
[DATA BELOW IS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Wilshire Pioneer
Real Estate Real Estate
Securities Index+ Shares VCT Portfolio
3/95 10,000 10,000
11,322 11,696
6/96 15,497 15,875
18,565 19,235
6/98 15,330 15,629
14,841 14,977
6/00 19,403 19,397
21,431 20,911
6/02 21,983 21,440
30,133 28,890
6/04 32,226 31,028
+ Index comparison begins on 2/28/95. The Wilshire Real Estate Securities Index
is a market-capitalization weighted measure of the performance of real estate
investment trusts (equity and hybrid) and real estate operating companies.
Index returns are calculated monthly, assume reinvestment of dividends and,
unlike Portfolio returns, do not reflect any fees, expenses or sales charges.
You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 12.89%
(3/1/95)
5 Years 13.58%
1 Year 28.90%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
Fear of higher interest rates, rising oil prices and the ongoing turmoil in Iraq
contributed to volatile markets for the six months ended June 30, which made up
the first half or your Portfolio's fiscal year. In this report, Mathew Troxell,
a member of the Portfolio's investment management team, discusses the sector's
positive returns amidst the shifting economic landscape and his expectations for
2004.
Q: Was the market and economic environment favorable for the Portfolio's
investment strategy?
A: Real estate stocks, like most asset classes, experienced great volatility
during the reporting period.
With evidence suggesting that the U.S. economy was on its way to recovery,
the real estate market rose strongly during the first quarter of 2004.
However, in early April, the jobs report for March was surprisingly strong
and sparked a sell-off in the bond market. Bond investors feared that the
economy might be growing too fast and would ignite inflation. Interest rates
began to rise, pushing bond prices down. Prices of real estate stocks also
fell sharply even though historically they have exhibited a low correlation
to bond prices. Rising oil prices and political uncertainty in Iraq further
heightened investor concerns. During May and June, real estate investment
trusts began to recover and picked up enough positive momentum to regain much
of the ground lost in April -- ending the six months with relatively strong
performance gains.
For the six months ended June 30, 2004, the Portfolio's Class I shares rose
7.4% at net asset value. In comparison, the Wilshire Real Estate Securities
Index increased 6.96% for the same period.
Q: What investments helped performance during the six months?
A: Several holdings contributed positively to the Portfolio's returns. AvalonBay
Communities, one of the Portfolio's largest holdings, is an
apartment/multi-family real estate investment trust (REIT) that has benefited
from the expectation of improving fundamentals for apartments. Job growth has
been very positive for household formations, especially for young adults who
are leaving home for the first time. This demographic group has the highest
propensity to rent rather than buy. This stronger renter demand is giving
apartment REIT managers, such as AvalonBay, greater pricing flexibility. In
addition, rising interest rates should contribute to higher renter demand,
because buying a home becomes a more expensive option.
In the lodging sector, Starwood Hotels and Resorts performed well,
particularly in the final two months of the reporting period. Starwood, as
well as the sector in general, are benefiting from a recovery in lodging
demand, which is directly correlated to the improving economy. Catellus
Development, a real estate management and development company, holds a
portfolio of high-quality predominately industrial properties generating
strong cash flow. This REIT's positive performance was driven, in part, by
management's decision to convert to REIT status early in 2004. The heightened
investor interest helped it to outperform the benchmark during the six
months.
Q: What investments hurt performance during the six months?
A: We believe that Simon Property Group is a solid company, but after
consistently outperforming the real estate market during the multi-year rally
through the first quarter of 2004, it, along with other retail names, lagged
in the final months of the reporting period. Following the market correction
this spring, it began to recover. However, when management announced in late
June that it was acquiring Chelsea Property Group (also held by the
Portfolio), investors reacted negatively. We view the proposed merger very
positively, because we think Chelsea Property Group, which owns factory
outlet shopping centers in Japan as well as in the United States, would add
international diversity and a new retail focus to Simon's current portfolio.
Following disappointing performance last year, Apartment Investment and
Management continued to lag the benchmark. This REIT, which owns a diverse
portfolio of multi-family apartment complexes, suffered more than its peers
as apartment fundamentals proved challenging last year and experienced
lower-than-expected fee income and higher-than-expected
apartment-turnover-related expenses last year -- resulting in a reduced
dividend. Even with the greater promise for improving fundamentals, we
reduced the position this spring, because we tempered our view of its total
return potential.
Q: What is your outlook for the balance of 2004?
A: We think that the various property types making up the real estate market are
generally experiencing improving fundamentals. While real estate earnings
typically lag an improvement in fundamentals, hotel and apartment landlords
can respond fairly quickly. Should economic growth continue, however, we
believe retail landlords will begin to lose the relative advantage they have
previously enjoyed. We believe that it will fall to astute stock selection to
separate the wheat from the chafe.
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.
- --------------------------------------------------------------------------------
Real estate investments may be subject to special risks, including risks related
to general and local economic conditions and risks related to an individual
property.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.4%
Hotels, Restaurants & Leisure - 5.3%
Hotels, Resorts & Cruise Lines - 5.3%
75,000 Hilton Hotels Corp.* $ 1,399,500
58,000 Starwood Hotels & Resorts 2,601,300
-----------
$ 4,000,800
-----------
Total Hotels, Restaurants & Leisure $ 4,000,800
-----------
Diversified Financials - 3.0%
Diversified Financial Services - 3.0%
77,000 Brookfield Properties Corp. $ 2,213,750
-----------
Total Diversified Financials $ 2,213,750
-----------
Real Estate - 89.1%
Real Estate Management & Development - 4.0%
115,500 Catellus Development Corp. $ 2,847,075
8,200 Inland Real Estate Corp.* 106,682
-----------
$ 2,953,757
-----------
Real Estate Investment Trusts - 85.1%
38,500 Apartment Investment & Management Co. $ 1,198,505
46,200 AMB Property Corp. 1,599,906
22,400 Affordable Residential Communities* 371,840
16,500 Alexandria Real Estate Equities, Inc. 936,870
44,000 Arden Realty Group, Inc. 1,294,040
92,500 Archstone Communities Trust 2,713,025
50,000 AvalonBay Communities, Inc.* 2,826,000
73,100 Boston Properties, Inc. 3,660,848
17,500 Chelsea Property Group, Inc. 1,141,350
30,000 Camden Property Trust 1,374,000
10,000 Carramerica Realty Corp. 302,300
61,000 Developers Diversifies Realty Corp. 2,157,570
57,000 Duke Realty Investments, Inc. 1,813,170
79,000 Equity Office Properties Trust 2,148,800
107,000 Equity Residential Property Trust 3,181,110
5,800 First Potomac Realty Trust* 111,186
36,000 Federal Realty Investment Trust 1,497,240
79,500 General Growth Properties, Inc. 2,350,815
25,500 Highwoods Properties, Inc.* 599,250
Shares Value
189,000 Host Marriott Corp.* $ 2,336,040
6,000 Healthcare Realty Trust, Inc. 224,880
2,500 Kilroy Realty Corp. 85,250
53,000 Liberty Property Trust 2,131,130
35,500 The Macerich Co. 1,699,385
11,300 Manufactured Home Communities, Inc. 375,047
9,100 Mills Corp. 424,970
10,500 Corporate Office Properties 260,925
88,000 ProLogis Trust 2,896,960
29,300 Pan Pacific Retail Properties, Inc. 1,480,236
55,000 Prentiss Properties Trust 1,843,600
45,206 Public Storage, Inc. 2,079,928
25,500 PS Business Parks Inc* 1,026,120
48,000 Regency Centers Corp. 2,059,200
35,000 The Rouse Co.* 1,662,500
9,500 iStar Financial, Inc.* 380,000
27,500 Shurgard Storage Centers, Inc. 1,028,500
15,800 Strategic Hotel Capital, Inc.* 232,260
85,000 Simon DeBartolo Group, Inc. 4,370,700
51,000 Taubman Centers, Inc. 1,167,390
37,600 Trizec Properties Inc. 611,376
47,200 United Dominion Realty Trust 933,616
46,000 Vornado Realty Trust 2,627,060
16,500 Western Resources, Inc. 516,120
-----------
$63,731,018
-----------
Total Real Estate $66,684,775
-----------
TOTAL COMMON STOCKS
(Cost $55,838,852) $72,899,325
-----------
TOTAL INVESTMENT
IN SECURITIES - 97.4%
(Cost $55,838,852) $72,899,325
-----------
OTHER ASSETS AND
LIABILITIES - 2.6% $ 1,967,974
-----------
TOTAL NET ASSETS - 100.0% $74,867,299
===========
* Non-income producing security.
4 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year
6/30/04 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 $ 13.07
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.42 $ 0.74 $ 0.62 $ 0.68 $ 0.71 $ 0.66
Net realized and unrealized gain (loss) on investments 0.96 4.16 (0.23) 0.40 2.67 (1.20)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 1.38 $ 4.90 $ 0.39 $ 1.08 $ 3.38 $ (0.54)
Distributions to shareowners:
Net investment income (0.40) (0.64) (0.69) (0.56) (0.59) (0.60)
Net realized gain -- -- -- -- -- (0.12)
Tax return of capital -- (0.16) -- (0.17) (0.10) (0.08)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 0.98 $ 4.10 $ (0.30) $ 0.35 $ 2.69 $ (1.34)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 19.55 $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73
======= ======= ======= ======= ======= =======
Total return* 7.40% 34.75% (2.53)% 7.80% 29.51% (4.17)%
Ratio of net expenses to average net assets+ 0.94%** 1.03% 1.07% 1.16% 1.10% 1.15%
Ratio of net investment income (loss) to average net assets+ 4.22%** 4.49% 4.76% 4.71% 5.02% 5.07%
Portfolio turnover rate 43%** 20% 29% 34% 31% 54%
Net assets, end of period (in thousands) $30,297 $31,891 $29,873 $33,026 $32,982 $28,318
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.30%
Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 4.92%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.14%
Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 5.08%
(a) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 5
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Real Estate
Shares
VCT Portfolio
ASSETS:
Investment in securities, at value
(Cost $55,838,852) $ 72,899,325
Cash 1,906,225
Foreign currencies, at value --
Receivables --
Investment securities sold 2,124,520
Fund shares sold 181,129
Dividends, interest and foreign taxes withheld 428,504
Other 354
------------
Total assets $ 77,540,057
------------
LIABILITIES:
Payables --
Investment securities purchased $ 2,208,201
Fund shares repurchased 378,282
Dividends --
Upon return for securities loaned --
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 66,321
Accrued expenses 19,954
Other --
------------
Total liabilities $ 2,672,758
------------
NET ASSETS:
Paid-in capital $ 57,527,714
Accumulated net investment income (loss) 160,542
Accumulated undistributed net realized gain (loss) 118,570
Net unrealized gain (loss) on:
Investments 17,060,473
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $ 74,867,299
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 30,296,916
Shares outstanding 1,549,560
------------
Net asset value per share $ 19.55
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 44,570,383
Shares outstanding 2,283,389
------------
Net asset value per share $ 19.52
6 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Real Estate Shares
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $1,676) $1,885,996
Interest 18,128
Income on securities loaned, net 535
Other --
----------
Total investment income $1,904,659
----------
EXPENSES:
Management fees $ 294,190
Transfer agent fees 1,494
Distribution fees (Class II) 53,188
Administrative fees 9,250
Custodian fees 13,052
Professional fees 19,250
Printing 8,855
Fees and expenses of nonaffiliated trustees --
Miscellaneous 899
----------
Total expenses $ 400,178
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
----------
Net expenses $ 400,178
----------
Net investment income (loss) $1,504,481
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $3,075,780
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$3,075,780
----------
Change in net unrealized gain or loss from:
Investments $ 359,869
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ 359,869
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $3,435,649
----------
Net increase (decrease) in net assets resulting
from operations $4,940,130
----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Real Estate
Shares VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 1,504,481 $ 3,062,870
Net realized gain (loss) on investments 3,075,780 (474,302)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 359,869 15,553,008
------------ -------------
Net increase (decrease) in net assets
resulting from operations $ 4,940,130 $ 18,141,576
------------ -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (637,400) $ (1,422,912)
Class II (859,854) (1,519,594)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
------------ -------------
Total distributions to shareowners $ (1,497,254) $ (2,942,506)
------------ -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 7,974,724 $ 9,753,610
Reinvestment of distributions 1,497,254 2,942,506
Cost of shares repurchased (9,831,522) (17,969,003)
------------ -------------
Net increase (decrease) in net assets
resulting from fund share transactions $ (359,544) $ (5,272,887)
------------ -------------
Net increase (decrease) in net assets $ 3,083,332 $ 9,926,183
------------ -------------
NET ASSETS:
Beginning of period $ 71,783,967 $ 61,857,784
------------ -------------
End of period $ 78,867,299 $ 71,783,967
============ =============
Accumulated/(distributions in excess of)
net investment income (loss) $ 160,542 $ 153,315
============ =============
8 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Real Estate Shares 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 nineteen 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)
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 Real Estate Shares Portfolio pursues long-term
capital growth, with current income as a secondary objective.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for the
portfolio are computed once daily, on each day the New York Stock Exchange is
open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
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. As of June 30, 2004, there were no fair valued securities.
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. Temporary
cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicable country rates.
Because Real Estate Shares Portfolio invests a substantial portion of its
assets in real estate
9
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
investment trusts (REITs), the Portfolio may be subject to certain risks
associated with direct investments in REITs. REITs may be affected by changes
in the value of their underlying properties and by defaults by borrowers or
tenants. REITs depend generally on their ability to generate cash flow to
make distributions to shareowners, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time. In addition, the performance of a
REIT may be affected by its failure to qualify for tax-free pass-through of
income under the Internal Revenue Code or its failure to maintain exemption
from registration under the Investment Company Act of 1940.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes in
interest rates, securities prices, and currency rates or to seek to increase
total return. Upon entering into a futures contract, the Portfolio is
required to deposit with a broker an amount of cash or securities equal to
the minimum "initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value of
the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees, elements
of market risk which may exceed the amounts recognized by the Portfolio.
Changes in the value of the contracts may not directly correlate to the
changes in the value of the underlying securities. These risks may decrease
the effectiveness of the Portfolio's hedging and trading strategies and
potentially result in a loss. As of June 30, 2004, Real Estate Shares had no
open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolio's
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of each Portfolio's distributions may be shown in the
accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
A portion of the dividend income recorded by Real Estate Shares Portfolio is
from distributions by publicly traded REITs, and such distributions for tax
purposes may also consist of capital gains and return of capital. The actual
return of capital and capital gains portions of such distributions will be
determined by formal notifications from the REITs subsequent to the calendar
year-end. Distributions received from the REITs that are determined to be a
return of capital are recorded by the Trust as a reduction of the cost basis
of the securities held.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003,
10
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Real Estate Shares VCT Portfolio had a capital loss carryforward of
$3,310,843, of which the following amounts will expire between 2007 and 2011
if not utilized: $2,238,450 in 2007, $619,294 in 2008 and $453,069 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the components
of distributable earnings (accumulated losses) as of December 31, 2003 and
the distributions paid during the year ended December 31, 2003 on a tax basis
as of December 31, 2003.
- --------------------------------------------------------------------------------
Pioneer
Real Estate
Shares
VCT Portfolio
2003
- ---------------------------------------------------------
Distributions paid from:
Ordinary Income* $ 2,171,485
Long-Term capital gain --
-----------
2,171,485
Return of Capital --
-----------
Total distributions $ 2,171,485
-----------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/
(Capital loss carryforward) (2,665,210)
Unrealized appreciation (depreciation) 16,408,604
-----------
Total $13,743,394
-----------
- --------------------------------------------------------------------------------
* Included in the Portfolio's distributions from 2003 ordinary income is
$192,564 in excess of investment company taxable income, which, in accordance
with U.S. tax law, is taxable to shareowners as ordinary income
distributions.
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on wash
sales, returns of capital on REITs, and the recognition of unrealized gains or
losses on certain futures contracts.
Prior to June 30, 2004, the Portfolio has reclassified $21,639 to decrease net
unrealized gain on investments, $6,268 to decrease accumulated undistributed net
realized gain on investments and $27,907 to increase paid-in capital. The
reclassification has no impact on the net assets of the Portfolio and presents
the Portfolio's capital accounts on a tax basis.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for
its services, which are allocated based on the number of accounts in each
class and the ratable allocation of related out-of-pocket expenses (see Note
3). Income, common expenses and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning of
the day. Distributions paid by the Portfolio with respect to each class of
shares are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day. Dividends and distributions to shareowners are recorded
on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Trust. The loans are secured by collateral of at least 102%,
at all times, of the fair value of the securities loaned. The fair value of
the collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand. The
Trust invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities
11
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
(collateral), including accrued interest received from counterparties, is
required to be at least equal to or in excess of the value of the repurchase
agreement at the time of purchase. The collateral for all repurchase
agreements is held in safekeeping in the customer-only account of the
Portfolio's custodian, or subcustodian. The Trust's investment adviser,
Pioneer Investment Management, Inc. (PIM), is responsible for determining
that the value of the collateral remains at least equal to the repurchase
price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.80% of the Portfolio's average daily net assets. In addition,
under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $55,958 was payable to PIM related to
management fees, administrative fees and certain other services, and is included
in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$10,106 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------------
Real Estate Shares Portfolio $56,411,455 $16,815,051 $ (327,181) $16,487,870
----------- ----------- ---------- -----------
- --------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $17,444,652 and $15,240,948, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------
Real Estate Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -----------------------------------------------------------------------------------------
CLASS II:
Shares sold 46,990 $ 914,044 153,884 $ 2,545,266
Reinvestment of distributions 31,935 637,400 87,137 1,422,912
Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017)
-------- ------------ -------- ------------
Net increase (167,581) $ (3,090,354) (347,178) $ (5,232,839)
======== ============ ======== ============
CLASS II:
Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344
Reinvestment of distributions 43,174 859,854 92,474 1,519,594
Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986)
-------- ------------ -------- ------------
Net increase 132,798 $ 2,730,810 (62,278) $ (40,048)
-------- ------------ -------- ------------
- --------------------------------------------------------------------------------
12
- --------------------------------------------------------------------------------
This page for your notes.
13
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16066-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Fund VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 8
Notes to Financial Statements 12
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[The following table was depicted as a pie chart in the printed material.]
U.S. Common Stocks 94.7%
Depositary Receipts for International Stocks 3.5%
International Common Stocks 1.8%
Sector Distribution
(As a percentage of equity holdings)
[The following table was depicted as a pie chart in the printed material.]
Financials 17.1%
Information Technology 13.9%
Consumer Discretionary 13.0%
Health Care 12.5%
Industrials 12.3%
Consumer Staples 11.9%
Energy 8.2%
Materials 5.7%
Telecommunication Services 3.3%
Utilities 2.1%
Five Largest Holdings
(As a percentage of equity holdings)
1. ChevronTexaco Corp. 2.17%
2. Exxon Mobil Corp. 2.11
3. McGraw-Hill Co., Inc. 1.93
4. Target Corp. 1.85
5. SBC Communications, Inc. 1.71
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $ 18.98 $ 18.70
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ 0.100 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Fund VCT Portfolio at net asset value, compared to that of the Standard &
Poor's (S&P) 500 Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
S&P 500 Pioneer Fund VCT Portfolio
------- --------------------------
10/97 10000 10000
10643 10543
12/98 13686 13296
16565 15411
12/00 15060 15600
13275 13908
12/02 10342 11261
13306 13936
6/04 13764 14220
The S&P 500 Index is an unmanaged measure of 500 widely held common stocks
listed on the New York Stock Exchange, American Stock Exchange and the
over-the-counter market. Index returns assume reinvestment of dividends and,
unlike Portfolio returns, do not reflect any fees, expenses or sales charges.
Portfolio returns are based on net asset value and do not reflect any
annuity-related costs. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 5.42%
(10/31/97)
5 Years -0.70%
1 Year 17.84%
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
See the pages that comprise the inside cover of this report for performance net
of any contract fees, expenses or sales charges.
2
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In the following discussion, portfolio manager John Carey, reviews the
investment environment and the performance of Pioneer Fund VCT Portfolio over
the six months ended June 30, 2004.
Q: How did the Portfolio perform over the first six months of 2004?
A: Pioneer Fund VCT Portfolio recorded a positive total return of 2.04% at net
asset value in the six months ended June 30, 2004. The Standard & Poor's 500
Index showed a total return of 3.44% over the same period. Investors
appeared to be "rotating" out of more highly priced stocks and into shares
more moderately priced, with dividends and steadier earnings outlooks.
Q: Please discuss the Portfolio's performance versus the S&P 500 Index.
A: Our underperformance versus the S&P was attributable mainly to our stock
holdings in four sectors: information technology, materials, industrials and
telecommunications services. Our strongest positive contributors were our
investments in consumer discretionary, consumer staples and health care.
Taking first the negative contributors, our technology holdings showed an
overall decline of 1.59% versus the S&P sector gain of 0.44%. The main
culprits were our positions in Texas Instruments, Novellus Systems, Synopsys
and Nokia. After analyzing the different situations, we retained shares in
Texas Instruments and Nokia, but liquidated our positions in Novellus and
Synopsys. With regard to materials, where again we showed a negative return
(3.80%) versus a slight positive return (0.71%) for the S&P sector, the
largest factor was our position in Rio Tinto. In the case of the materials,
we believe that the fundamentals are strong for the group looking out at
least over the next couple of years and that it was mainly "profit taking"
behind the weak share prices. Perhaps, too, there was some concern about a
potential slow-down in the Chinese economy, which has been a prime user of
many raw materials as that country rapidly industrializes. Following our
evaluation of the "pros and cons," we retained Rio Tinto, a prominent
worldwide mining company, as well as our shares of other companies in the
sector.
Industrials presented a mixed picture, with our investments rising 5.13%
versus an increase for the sector of 7.42%. We had very good performance
from our railroad holding Norfolk Southern, but our capital-goods stocks
were more sluggish. Finally, in telecomm services, we did not own AT&T
Wireless, which received a premium take-over bid, but instead owned
BellSouth and SBC Communications, the companies in the joint venture,
Cingular, that made the bid. BellSouth and SBC both declined as investors
worried that they "overpaid."
On the bright side, we had some nice gains from stocks in consumer
discretionary, consumer staples and health care. They were, respectively,
John Wiley & Sons, publisher of scientific and technical books and journals
and also owner of the "For Dummies" imprint; Colgate-Palmolive, major brand
in toothpaste; and Becton Dickinson, provider of medical supplies including
disposable syringes.
Q: What changes have you have made to the Portfolio so far this year?
A: We were fairly active during the six months, adding 18 positions and
eliminating 18. The combined effect of securities transactions and market
fluctuations produced overall increases for our weightings in the energy,
consumer discretionary, consumer staples, health care and financials
sectors; overall decreases for our weightings in industrials and information
technology; and no meaningful change for our weightings in materials,
telecommunications services and utilities. In energy, we initiated positions
in Apache, British Petroleum, Pioneer Natural Resources and Occidental
Petroleum and sold positions in Transocean, Royal Dutch Petroleum, and Shell
Transport & Trading. We believed that Transocean was fairly valued, and in
the cases of Royal Dutch and the allied Shell Transport we had developed
reservations about management in the wake of significant downward revisions
in oil and gas reserves estimates. On the other hand, we thought that
prospects were positive for the companies we added and that the larger
number of holdings would provide the portfolio with more diversification.
In consumer discretionary we invested in three companies we thought were
poised to do better with the stronger economy, Ford Motor, Liz Claiborne,
and Walt Disney, and sold two stocks that had been longer-term
disappointments, Dow Jones and Eastman Kodak. We also added Clorox,
formulator of bleaches and other household cleansers, and Estee Lauder,
cosmetics manufacturer, in consumer staples. Our health care additions were
among our most significant and included equipment makers Guidant and St.
Jude Medical, distributor Cardinal Health, and generic-drug companies Barr
Pharmaceuticals and Mylan Laboratories.
One of our purchases in financials proved to be particularly well timed, as
SouthTrust, a regional bank headquartered in Birmingham, Alabama, received a
generous acquisition offer from another bank, Wachovia, not long after we
had bought it. Another entry we made to the portfolio was U.S. Bancorp,
based in Minneapolis, Minnesota. In other sectors, we bought, in materials,
Ecolab, supplier of industrial and institutional cleaning chemicals, and, in
information technology, Apple Computer, survivor, against all odds, in the
personal-computer business as well as innovative producer of the very hot
iPod digital-music player.
Along with the seven names already mentioned in energy and consumer
discretionary and (above) in information technology, we deleted the
following: Boeing, Lockheed Martin, Robert Half, Union Pacific, Medco Health
Solutions, Bank of America, Electronics Data Systems, BMC Software, Cisco
Systems, QUALCOMM and Altera.
Q: What is your outlook on the stock market and economy for the remainder of
2004?
A: At the midpoint of 2004, the market appears in disarray. Truth be told,
interest rates have not really moved very much at all, but there appears
great anxiety about greater moves to come. Inflation is not a current
problem, yet the high oil and raw-materials prices, as well as the prospect
of rising wages with growth in employment, provide the worriers a reason to
focus on the risk of inflation. Corporate earnings are generally very strong
and also strongly up from last year, but the expressed concern is with
respect to slowing of the impressive comparisons.
The market to us remains attractive, even if more moderately attractive than
it was in early 2003 when prices were much lower and the economy was still
just poised for its rebound rather than underway with the rebound as it is
currently. We see especially good values, however, among the good companies
with good long-term records in which we like to invest on your behalf and
which were relatively neglected by investors up until recently.
Betting which way the market might go on a short-term basis has never seemed
to us like a particularly fruitful endeavor. So our intention is, as always,
to stay invested over the coming months, and years, and to stay invested in
the solid kinds of companies we always aim to own in your Portfolio. Thank
you for your support.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 96.5%
Energy - 7.9%
Integrated Oil & Gas - 5.9%
16,643 BP Amoco Plc (A.D.R.) $ 891,566
57,921 ChevronTexaco Corp. 5,450,945
24,727 ConocoPhillips 1,886,423
119,280 Exxon Mobil Corp. 5,297,224
36,993 Occidental Petroleum Corp. 1,790,831
------------
$ 15,316,989
------------
Oil & Gas Drilling - 0.9%
42,044 Smith International, Inc.* $ 2,344,373
------------
Oil & Gas Exploration & Production - 1.1%
18,971 Apache Corp. $ 826,187
57,988 Pioneer Natural Resources Co. 2,034,219
------------
$ 2,860,406
------------
Total Energy $ 20,521,768
------------
Materials - 5.5%
Aluminum - 0.6%
46,252 Alcoa, Inc. $ 1,527,704
------------
Commodity Chemicals - 1.1%
23,113 Air Products & Chemicals, Inc. $ 1,212,277
38,676 E.I. du Pont de Nemours and Co. 1,717,988
------------
$ 2,930,265
------------
Diversified Chemical - 0.4%
18,467 PPG Industries, Inc. $ 1,154,003
------------
Diversified Metals & Mining - 2.5%
32,924 Phelps Dodge Corp.* $ 2,551,939
164,111 Rio Tinto Plc 3,949,666
------------
$ 6,501,605
------------
Paper Products - 0.5%
43,199 Meadwestvaco Corp. $ 1,269,619
------------
Specialty Chemicals - 0.4%
32,149 Ecolab, Inc. $ 1,019,123
------------
Total Materials $ 14,402,319
------------
Capital Goods - 7.4%
Aerospace & Defense - 1.5%
38,908 General Dynamics Corp. $ 3,863,564
------------
Electrical Components & Equipment - 0.7%
18,467 Emerson Electric Co. $ 1,173,578
26,633 General Electric Co. 862,909
------------
$ 2,036,487
------------
Shares Value
Industrial Conglomerates - 2.8%
20,674 Illinois Tool Works, Inc. $ 1,982,430
45,528 Johnson Controls, Inc. 2,430,285
31,359 United Technologies Corp. 2,868,721
------------
$ 7,281,436
------------
Industrial Machinery - 2.4%
33,682 Caterpillar, Inc. $ 2,675,698
50,290 Deere & Co. 3,527,341
------------
$ 6,203,039
------------
Total Capital Goods $ 19,384,526
------------
Commercial Services & Supplies - 1.0%
Office Services & Supplies - 1.0%
47,154 Canon, Inc. (A.D.R.) $ 2,518,023
------------
Total Commercial Services &
Supplies $ 2,518,024
------------
Transportation - 3.4%
Airlines - 0.9%
137,864 Southwest Airlines Co. $ 2,311,979
------------
Railroads - 2.0%
40,302 Burlington Northern, Inc. $ 1,413,391
146,340 Norfolk Southern Corp. 3,880,937
------------
$ 5,294,328
------------
Trucking - 0.5%
16,958 United Parcel Service $ 1,274,733
------------
Total Transportation $ 8,881,040
------------
Automobiles & Components - 2.3%
Automobile Manufacturers - 2.3%
208,966 Ford Motor Corp. $ 3,270,318
46,602 PACCAR, Inc. 2,702,450
------------
$ 5,972,768
------------
Total Automobiles & Components $ 5,972,768
------------
Media - 6.2%
Advertising - 1.0%
35,541 Omnicom Group $ 2,697,206
------------
Movies & Entertainment - 0.4%
34,933 The Walt Disney Co. $ 890,442
------------
Publishing - 4.8%
46,390 Elsevier NV $ 652,795
40,418 Gannett Co. 3,429,467
113,495 John Wiley & Sons, Inc. 3,631,840
63,415 McGraw-Hill Co., Inc. 4,855,687
------------
$ 12,569,789
------------
Total Media $ 16,157,437
------------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Retailing - 4.1%
Apparel Retail - 0.3%
19,973 Liz Claiborne, Inc. $ 718,629
------------
Department Stores - 0.6%
53,341 May Department Stores Co. $ 1,466,344
------------
General Merchandise Stores - 2.1%
29,152 Family Dollar Stores, Inc. $ 886,804
109,408 Target Corp. 4,646,558
------------
$ 5,533,362
------------
Home Improvement Retail - 0.8%
39,604 Lowe's Companies, Inc. $ 2,081,190
------------
Specialty Stores - 0.3%
25,229 Barnes & Noble, Inc.* $ 857,281
------------
Total Retailing $ 10,656,806
------------
Food & Drug Retailing - 3.5%
Drug Retail - 1.6%
112,775 Walgreen Co. $ 4,083,583
------------
Food Distributors - 1.3%
12,492 Cardinal Health, Inc. $ 875,065
68,293 Sysco Corp. 2,449,670
------------
$ 3,324,735
------------
Hypermarkets & Supercenters - 0.6%
30,854 Wal-Mart Stores, Inc. $ 1,627,857
------------
Total Food & Drug Retailing $ 9,036,175
------------
Food, Beverage & Tobacco - 4.7%
Packaged Foods & Meats - 3.6%
70,267 Campbell Soup Co. $ 1,888,777
36,702 General Mills, Inc. 1,744,446
45,065 Hershey Foods Corp. 2,085,158
59,465 H.J. Heinz Co., Inc. 2,331,028
61,629 Sara Lee Corp. 1,416,851
------------
$ 9,466,260
------------
Soft Drinks - 1.1%
53,078 PepsiCo, Inc. $ 2,859,843
------------
Total Food, Beverage & Tobacco $ 12,326,103
------------
Household & Personal Products - 3.3%
Household Products - 3.3%
12,405 Clorox Co. $ 667,141
53,543 Colgate-Palmolive Co. 3,129,588
19,005 Estee Lauder Co. 927,064
70,848 Procter & Gamble Co. 3,856,965
------------
$ 8,580,758
------------
Total Household & Personal
Products $ 8,580,758
------------
Shares Value
Health Care Equipment & Services - 5.9%
Health Care Distributors - 2.4%
47,967 Abbott Laboratories $ 1,955,135
75,610 Johnson & Johnson 4,211,477
------------
$ 6,166,612
------------
Health Care Equipment - 2.7%
58,653 Becton, Dickinson & Co. $ 3,038,225
35,076 Biomet, Inc. 1,558,777
26,639 Guidant Corp. 1,488,587
13,291 St. Jude Medical, Inc.* 1,005,464
------------
$ 7,091,053
------------
Managed Health Care - 0.8%
20,042 United Healthcare Group, Inc. $ 1,247,615
7,549 Wellpoint Health Networks, Inc.* 845,563
------------
$ 2,093,178
------------
Total Health Care Equipment &
Services $ 15,350,843
------------
Pharmaceuticals & Biotechnology - 6.1%
Pharmaceuticals - 6.1%
33,785 Barr Laboratorie, Inc.* $ 1,138,555
35,772 Eli Lilly & Co. 2,500,821
55,400 Merck & Co., Inc. 2,631,500
67,544 Mylan Laboratories, Inc. 1,367,766
45,761 Novartis AG (A.D.R.) 2,036,364
62,253 Pfizer, Inc. 2,134,033
15,214 Roche Holdings AG (A.D.R.)* 1,508,088
145,764 Schering-Plough Corp. 2,693,719
------------
$ 16,010,846
------------
Total Pharmaceuticals &
Biotechnology $ 16,010,846
------------
Banks - 7.4%
Diversified Banks - 2.2%
32,784 Charter One Financial, Inc. $ 1,448,725
85,656 U.S. Bancorp 2,360,679
35,519 Wells Fargo & Co. 2,032,752
------------
$ 5,842,156
------------
Regional Banks - 4.2%
28,340 First Horizon National Corp. $ 1,288,620
114,053 National City Corp. 3,992,996
38,351 SouthTrust Corp. 1,488,402
47,329 SunTrust Banks, Inc. 3,075,912
19,396 Zions Bancorporation 1,191,884
------------
$ 11,037,814
------------
Thrifts & Mortgage Finance - 1.0%
64,028 Washington Mutual, Inc. $ 2,474,042
------------
Total Banks $ 19,354,012
------------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Diversified Financials - 5.6%
Asset Management & Custody Banks - 3.8%
52,067 The Bank of New York Co., Inc. $ 1,534,935
37,051 Federated Investors Inc. 1,124,127
62,368 State Street Corp. 3,058,527
81,766 T. Rowe Price Associates, Inc. 4,121,006
------------
$ 9,838,595
------------
Consumer Finance - 0.8%
38,211 American Express Co. $ 1,963,281
------------
Investment Banking & Brokerage - 1.0%
49,593 Merrill Lynch & Co., Inc. $ 2,677,030
------------
Total Diversified Financials $ 14,478,906
------------
Insurance - 3.5%
Multi - Line Insurance - 1.0%
37,283 American International Group, Inc. $ 2,657,532
------------
Property & Casualty Insurance - 2.5%
46,109 Chubb Corp. $ 3,143,712
26,583 Safeco Corp. 1,169,652
52,652 St. Paul Travelers Companies, Inc. 2,134,512
------------
$ 6,447,876
------------
Total Insurance $ 9,105,408
------------
Software & Services - 4.7%
Application Software - 2.4%
35,888 Adobe Systems, Inc. $ 1,668,792
119,628 Microsoft Corp. 3,416,576
26,017 Symantec Corp.* 1,139,024
------------
$ 6,224,392
------------
Data Processing & Outsourced Services - 2.3%
39,373 Automatic Data Processing, Inc. $ 1,648,941
32,311 Computer Sciences Corp.* 1,500,200
21,836 DST Systems, Inc.* 1,050,093
25,494 Fiserv, Inc.* 991,462
32,184 SunGard Data Systems, Inc.* 836,784
------------
$ 6,027,480
------------
Total Software & Services $ 12,251,872
------------
Technology Hardware & Equipment - 5.4%
Communications Equipment - 2.0%
182,952 Motorola, Inc. $ 3,338,874
128,455 Nokia Corp (A.D.R.) 1,867,736
------------
$ 5,206,610
------------
Shares Value
Computer Hardware - 3.4%
17,403 Apple Computer, Inc.* $ 566,294
60,976 Dell, Inc.* 2,184,160
22,881 Diebold, Inc. 1,209,718
72,740 Hewlett-Packard Co. 1,534,814
24,634 IBM Corp.* 2,171,487
252,670 Sun Microsystems, Inc.* 1,096,588
------------
$ 8,763,061
------------
Total Technology Hardware &
Equipment $ 13,969,671
------------
Semiconductors - 3.4%
Semiconductor Equipment - 0.9%
120,790 Applied Materials, Inc.* $ 2,369,900
------------
Semiconductors - 2.5%
126,597 Intel Corp. $ 3,494,077
118,406 Texas Instruments, Inc. 2,863,057
------------
$ 6,357,134
------------
Total Semiconductors $ 8,727,034
------------
Telecommunication Services - 3.2%
Integrated Telecommunication Services - 3.2%
18,815 Alltel Corp. $ 952,415
116,841 BellSouth Corp. 3,063,571
176,887 SBC Communications, Inc. 4,289,510
------------
$ 8,305,496
------------
Total Telecommunication Services $ 8,305,496
------------
Utilities - 2.0%
Electric Utilities - 1.3%
26,945 American Electric Power Co., Inc. $ 862,240
29,268 Consolidated Edison, Inc. 1,163,696
46,790 Southern Co. 1,363,929
------------
$ 3,389,865
------------
Gas Utilities - 0.6%
22,532 KeySpan Energy Corp. (a) $ 826,924
31,011 Vectren Corp. 778,065
------------
$ 1,604,989
------------
Water Utilities - 0.1%
14,953 Aqua America, Inc. $ 299,808
------------
Total Utilities $ 5,294,662
------------
TOTAL COMMON STOCKS
(Cost $224,336,202) $251,286,474
------------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 3.7%
Repurchase Agreement - 3.4%
$ 8,800,000 UBS Warburg, Inc., 1.25%,
dated 6/30/04, repurchase price of
$8,800,000 plus accrued interest on
7/1/04 collateralized by $8,068,000
U.S. Treasury Bill, 7.0%, 7/15/06 $ 8,800,000
------------
Shares
Security Lending Collateral - 0.3%
766,159 Securities Lending
Investment Fund, 1.29% $ 766,159
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $9,566,159) $ 9,566,159
------------
TOTAL INVESTMENT IN
SECURITIES - 100.2%
(Cost $233,902,361) (a) $260,852,633
------------
OTHER ASSETS AND
LIABILITIES - (0.2)% $ (506,268)
------------
TOTAL NET ASSETS - 100.0% $260,346,365
============
* Non-income producing security.
(A.D.R.) American Depositary Receipt
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
20,707 KeySpan Energy Corp. $751,043
The accompanying notes are an integral part of these financial statements. 7
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months Ended Year Year
6/30/04 Ended Ended
Class I (unaudited) 12/31/03 12/31/02
Net asset value, beginning of period $ 18.09 $ 15.11 $ 18.40
-------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.22 $ 0.41 $ 0.42
Net realized and unrealized gain (loss) on investments 0.49 2.96 (3.30)
-------- -------- --------
Net increase (decrease) from investment operations $ 0.71 $ 3.37 $ (2.88)
Distributions to shareowners:
Net investment income (0.18) (0.39) (0.41)
Net realized gain -- -- --
-------- -------- --------
Net increase (decrease) in net asset value $ 0.53 $ 2.98 $ (3.29)
-------- -------- --------
Net asset value, end of period $ 18.62 $ 18.09 $ 15.11
======== ======== ========
Total return* 3.94% 22.61% (15.82)%
Ratio of net expenses to average net assets+ 0.72%** 0.78% 0.80%
Ratio of net investment income (loss) to average net assets+ 2.34%** 2.55% 2.48%
Portfolio turnover rate 18%** 12% 12%
Net assets, end of period (in thousands) $158,805 $155,634 $133,258
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.72%** 0.78% 0.80%
Net investment income (loss) 2.34%** 2.55% 2.48%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.72%** 0.78% 0.80%
Net investment income (loss) 2.34%** 2.55% 2.48%
Year Year Year
Ended Ended Ended
Class I 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 21.28 $ 20.72 $ 21.44
-------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.40 $ 0.51 $ 0.42
Net realized and unrealized gain (loss) on investments (1.86) 2.28 (0.15)
-------- -------- --------
Net increase (decrease) from investment operations $ (1.46) $ 2.79 $ 0.27
Distributions to shareowners:
Net investment income (0.36) (0.49) (0.41)
Net realized gain (1.06) (1.74) (0.58)
-------- -------- --------
Net increase (decrease) in net asset value $ (2.88) $ 0.56 $ (0.72)
-------- -------- --------
Net asset value, end of period $ 18.40 $ 21.28 $ 20.72
======== ======== ========
Total return* (6.97)% 14.85% 1.21%
Ratio of net expenses to average net assets+ 0.75% 0.71% 0.70%
Ratio of net investment income (loss) to average net assets+ 2.07% 2.40% 1.97%
Portfolio turnover rate 13% 13% 23%
Net assets, end of period (in thousands) $164,019 $181,920 $226,379
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.75% 0.71% 0.70%
Net investment income (loss) 2.07% 2.40% 1.97%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.75% 0.71% 0.70%
Net investment income (loss) 2.07% 2.40% 1.97%
* 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.
8 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Fund
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $751,043)
(Cost $233,902,361) $ 260,852,633
Cash 63,820
Foreign currencies, at value --
Receivables --
Investment securities sold --
Fund shares sold 150,340
Dividends, interest and foreign taxes withheld 264,315
Other 622
-------------
Total assets $ 261,331,730
-------------
LIABILITIES:
Payables --
Investment securities purchased $ --
Fund shares repurchased 14,838
Dividends --
Upon return for securities loaned 766,159
Forward foreign currency portfolio hedge contracts, open -- net --
Due to bank --
Due to affiliates 184,570
Accrued expenses 19,798
Other --
-------------
Total liabilities $ 985,365
-------------
NET ASSETS:
Paid-in capital $ 268,906,525
Accumulated net investment income (loss) (75,908)
Accumulated undistributed net realized gain (loss) (35,434,524)
Net unrealized gain (loss) on:
Investments 26,950,272
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-------------
Total net assets $ 260,346,365
-------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 149,564,869
Shares outstanding 7,879,911
-------------
Net asset value per share $ 18.98
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 110,781,496
Shares outstanding 5,850,266
-------------
Net asset value per share $ 18.94
The accompanying notes are an integral part of these financial statements. 9
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Fund
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $19,683) $ 2,102,920
Interest 57,470
Income on securities loaned, net 7,876
Other --
-----------
Total investment income $ 2,168,266
EXPENSES:
Management fees $ 811,005
Transfer agent fees 1,223
Distribution fees (Class II) 123,119
Administrative fees 15,324
Custodian fees 20,922
Professional fees 26,346
Printing 3,962
Fees and expenses of nonaffiliated trustees --
Miscellaneous 3,740
-----------
Total expenses $ 1,005,641
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
-----------
Net expenses $ 1,005,641
-----------
Net investment income (loss) $ 1,162,625
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $(1,304,040)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (3,646)
-----------
$(1,307,686)
-----------
Change in net unrealized gain or loss from:
Investments $ 5,111,020
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$ 5,111,020
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ 3,803,334
-----------
Net increase (decrease) in net assets resulting
from operations $ 4,965,959
===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Fund
VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 1,162,625 $ 2,086,873
Net realized gain (loss) on investments (1,307,686) (8,525,302)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 5,111,020 49,662,141
------------- -------------
Net increase (decrease) in net assets
resulting from operations $ 4,965,959 $ 43,223,712
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (793,149) $ (1,580,150)
Class II (445,384) (520,900)
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
------------- -------------
Total distributions to shareowners $ (1,238,533) $ (2,101,050)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 33,243,901 $ 58,651,489
Reinvestment of distributions 1,238,553 2,101,050
Cost of shares repurchased (20,190,548) (37,658,369)
------------- -------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 14,291,886 $ 23,940,170
------------- -------------
Net increase (decrease) in net assets $ 18,019,312 $ 64,216,832
------------- -------------
NET ASSETS:
Beginning of period $ 242,327,053 $ 178,110,221
------------- -------------
End of period $ 260,346,365 $ 242,327,053
============= =============
Accumulated/(distributions in excess of)
net investment income (loss) $ (75,908) $ --
============= =============
The accompanying notes are an integral part of these financial statements. 11
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
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 nineteen seperarate 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)
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 Fund Portfolio is to seek capital appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolio are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. 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. As of June 30, 2004, there were no
fair valued securities.
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. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total
12
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
return. Upon entering into a futures contract, the Portfolio is required to
deposit with a broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value
of the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees,
elements of market risk which may exceed the amounts recognized by the
Portfolio. Changes in the value of the contracts may not directly correlate
to the changes in the value of the underlying securities. These risks may
decrease the effectiveness of the Portfolio's hedging and trading
strategies and potentially result in a loss. As of June 30, 2004, Fund
Portfolio had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Fund VCT Portfolio had a capital loss
carryforward of $33,944,745, of which the following amounts will expire
between 2009 and 2011 if not utilized: $6,699,261 in 2009, $14,227,957 in
2010 and $13,017,527 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
13
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
- -------------------------------------------------
Pioneer
Fund
VCT Portfolio
2003
- -------------------------------------------------
Distributions paid from:
Ordinary Income $ 2,101,050
Long- Term capital gain --
------------
$ 2,101,050
Return of Capital --
------------
Total distributions $ 2,101,050
------------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/
(Capital loss carryforward) (33,944,745)
Unrealized appreciation
(depreciation) 21,657,159
------------
Total $(12,287,586)
============
- -------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on wash
sales, returns of capital on REITs, and the recognition of unrealized gains or
losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Portfolio level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day. Distributions paid by the Portfolio with
respect to each class of shares are calculated in the same manner, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees. Income, expenses
(excluding 12b-1 fees) and gains and losses are calculated at the Portfolio
level and are allocated daily based on the respective percentage of
adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolio's average daily net assets. In addition,
under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $159,258 was payable to PIM related to
management fees, administrative fees and certain other services, and is
included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito
14
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Italiano provides substantially all transfer agent and shareowner services to
the Trust at negotiated rates. Included in due to affiliates is $257 in
transfer agent fees payable to PIMSS at June 30, 2004.
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$25,055 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ------------------------------------------------------------------------------------------
Fund Portfolio $234,084,454 $39,850,461 $ (13,082,282) $26,768,179
------------ ----------- ------------- -----------
- ------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $50,667,140 and $30,168,567, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- -----------------------------------------------------------------------------------------------
Fund Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -----------------------------------------------------------------------------------------------
CLASS II:
Shares sold 184,697 $ 3,484,043 519,126 $ 8,479,870
Reinvestment of distributions 42,211 793,149 94,945 1,580,150
Shares repurchased (628,636) (11,825,399) (1,616,113) (25,664,887)
--------------------------------------------------------------
Net increase (401,728) $(7,548,207) (1,156,042) $(15,504,867)
==============================================================
CLASS II:
Shares sold 1,580,694 $29,759,858 3,031,681 $ 50,171,619
Reinvestment of distributions 23,726 445,384 30,685 520,900
Shares repurchased (443,565) (8,365,149) (747,392) (12,093,482)
--------------------------------------------------------------
Net increase 1,160,855 $21,840,093 2,314,974 $ 38,599,037
==============================================================
- -----------------------------------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16061-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Small Cap Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Small Cap Value VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 8
Notes to Financial Statements 12
Trustees, Officers and Service Providers 18
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Common Stocks 87.0%
Temporary Cash Investment 6.3%
Depositary Receipts for International Stocks 4.0%
Closed End Mutual Funds 1.3%
Exchange Traded Fund 0.8%
International Common Stocks 0.6%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Financials 23.7%
Industrials 21.3%
Consumer Discretionary 13.1%
Materials 8.8%
Information Technology 8.5%
Health Care 7.9%
Energy 7.0%
Utilities 5.2%
Consumer Staples 3.4%
Telecommunication Services 1.1%
Five Largest Holdings
(As a percentage of equity holdings)
1. Nu Skin Enterprises, Inc. 2.17%
2. Massey Energy Co. 1.79
3. Pediatrix Medical
Group, Inc. 1.74
4. Insight Enterprises, Inc. 1.70
5. Wabtec Corp. 1.63
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $13.45 $12.47
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Small Cap Value VCT Portfolio at net asset value, compared to that of the
Russell 2000 Value Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Small Cap Value VCT Portfolio Russell 2000 Value Index
------------------------------------- ------------------------
11/01 $10,000 $10,000
6/01 $10,572 $10,612
6/02 $ 8,980 $ 9,400
6/03 $12,132 $13,727
6/04 $13,086 $14,802
Index comparison begins 11/30/01. The Russell 2000 Value Index is a measure of
the performance of the value-oriented stocks in the Russell 2000 Index. Index
returns are calculated monthly, assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
Net Asset Value
Life-of-Class 11.88%
(11/9/01)
1 Year 29.95%
All total returns shown assume reinvestment of distributions at net asset
value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net
asset value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292
or visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower.
2
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
In the following discussion, portfolio manager David Adams and assistant
portfolio manager Jack McPherson review their investment strategies and the
performance of Pioneer Small Cap Value VCT Portfolio.
Q: How did the Portfolio perform over this period?
A. For the six months ended June 30, 2004, Class II shares of Pioneer Small Cap
Value VCT Portfolio returned 7.86% at net asset value. These results were
in line with the 7.83% return on the Russell 2000 Value Index, the
Portfolio's benchmark, for the same period.
Q: What were conditions like over the first half of the year, and how did you
respond?
A. The U.S. economic recovery continued to take hold over the early months of
the year. But as global demand drove up prices for key commodities,
inflationary pressures led the Federal Reserve Board to raise short-term
interest rates at its June meeting. Anticipation of higher rates had been a
damper on the markets for several weeks prior to the Fed's move.
The Portfolio's positive results over the period reflected our commitment to
our established discipline. In contrast to last year when speculative issues
were market leaders, the kind of companies we invest in - better-quality
issues with strong financial characteristics and good earnings prospects -
have been in favor for much of 2004.
Q: Which sectors or stocks helped performance the most?
A. Our overweight position in energy-related companies compared to our
benchmark was the biggest positive over this period. Massey Energy
benefited as global demand pushed up the price of Appalachian coal. The
weak U.S. dollar also made domestic coal more competitive in foreign
markets. In energy services, Maverick Tube saw orders for its oil well
casings increase as drilling activity grew in response to higher energy
prices. Unit Corporation benefited from higher prices at its own wells, as
well as from increased activity in its equipment leasing business. Stelmar
Shipping is experiencing firm pricing for its fleet of double-hulled
tankers as existing tanker capacity is unable to meet the demands of an
expanding world economy.
Q: Which of your other decisions had a positive impact?
A. In the financial sector, we found good value among commercial banks whose
business customers tend to increase borrowings as business conditions
improve. Shares of Texas Capital Bancshares and Cardinal Financial both
rose; those regional banks are well positioned to capture market share if
customers seek local alternatives in the wake of the J.P. Morgan-BankOne
merger. Advanta, which supplies credit cards for small businesses, was a
strong contributor, and Selective Insurance gained, thanks to favorable
claims experience and higher premiums.
Among industrial firms, we bought Wabtac, a maker of parts for rail cars, at
a low point in its business cycle. Shares have moved higher as the expanding
economy absorbs excess freight capacity and new cars are being built.
In health care, Pediatrix Medical Group saw continued good results from its
hospital-based neonatology services. Shares of Cross Country Healthcare
gained as investors anticipated renewed demand for temporary nursing staff at
hospitals seeking to fill vacancies following a period of cutbacks. Software
makers Borland and SPSS were sluggish performers. Investors also grew
cautious toward Rewards Network as it worked to implement a new business
plan. Lower gold prices hurt results at Iamgold, which is also attempting to
acquire another firm while being targeted as a merger partner.
Q: What is your outlook for the upcoming months?
A. Most businesses sectors are doing well in the economic recovery, but an
apparent slowdown in job creation and a wave of cautious earnings forecasts
may hint at a slower pace of expansion. Inflation, higher interest rates
and world tensions may also give investors reasons to defer commitments, at
least until the presidential election is decided. Against that background,
good, attractively valued companies continue to emerge, creating
opportunities for our value-oriented investment style.
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.
Small-capitalization stocks, while offering the potential for higher returns,
may be subject to greater short-term price fluctuations than securities of
larger companies.
The Portfolio's investment adviser, Pioneer Investment Management, Inc.,
reduced its management fee and certain other expenses; otherwise, returns would
have been lower.
3
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 86.1%
Energy - 6.1%
Oil & Gas Drilling - 1.6%
1,100 Atwood Oceanics, Inc.* $ 45,925
19,511 Key Energy Services, Inc.* 184,184
6,550 Todco* 101,329
-----------
$ 331,438
-----------
Oil & Gas Equipment & Services - 1.8%
10,125 Gulfmark Offshore, Inc.* $ 159,770
7,890 Maverick Tube Corp.* 207,191
-----------
$ 366,961
-----------
Oil & Gas Exploration & Production - 2.7%
4,550 Penn Virginia Corp. $ 164,301
9,370 Swift Energy Co.* 206,702
5,994 Unit Corp.* 188,511
-----------
$ 559,514
-----------
Total Energy $ 1,257,913
-----------
Materials - 7.6%
Diversified Metals & Mining - 1.6%
11,314 Massey Energy Co. $ 319,168
-----------
Gold - 1.5%
9,150 Glamis Gold, Ltd.* $ 160,400
27,875 IAMGOLD Corp. (a) 155,543
-----------
$ 315,943
-----------
Metal & Glass Containers - 0.7%
3,962 Jarden Corp.* $ 142,592
-----------
Paper Products - 1.9%
12,093 Domtar, Inc. (a) $ 156,483
7,550 Flowserve Corp.* 188,297
3,425 Longview Fibre Co. 50,450
-----------
$ 395,230
-----------
Specialty Chemicals - 0.4%
2,900 Great Lakes Chemical Corp. $ 78,474
-----------
Steel - 1.5%
2,675 Carpenter Technology $ 91,084
21,693 Graftech International, Ltd.* 226,909
-----------
$ 317,993
-----------
Total Materials $ 1,569,400
-----------
Capital Goods - 7.7%
Aerospace & Defense - 0.3%
3,450 Intrado, Inc.* $ 55,511
-----------
Construction, Farm Machinery &
Heavy Trucks - 1.4%
16,150 Wabtec Corp. $ 291,346
-----------
Shares Value
Construction & Engineering - 0.8%
3,795 Granite Construction, Inc. $ 69,183
5,800 Insituform Technologies, Inc.* 94,366
-----------
$ 163,549
-----------
Electrical Components & Equipment - 0.9%
16,004 Power-One, Inc.* $ 175,724
-----------
Industrial Conglomerates - 1.3%
14,760 Cornell Companies, Inc.* $ 200,736
6,021 NN, Inc. 76,527
-----------
$ 277,263
-----------
Industrial Machinery - 2.2%
8,062 Joy Global, Inc. $ 241,376
2,350 Kaydon Corp. 72,686
1,469 Nacco Industries, Inc. 139,555
-----------
$ 453,617
-----------
Trading Companies & Distributors - 0.8%
5,803 Applied Industrial Technologies, Inc. $ 174,786
-----------
Total Capital Goods $ 1,591,796
-----------
Commercial Services & Supplies - 7.1%
Data Processing Services - 0.5%
7,725 Gartner Group, Inc.* $ 102,125
-----------
Commercial Printing - 0.8%
3,793 John H. Harland Co. $ 111,325
1,600 Valassis Communications, Inc.* 48,752
-----------
$ 160,077
-----------
Diversified Commercial Services - 4.9%
2,600 Arbitron, Inc.* $ 94,952
13,700 Central Parking Corp. 256,053
4,378 Chemed Corp. 212,333
2,570 FTI Consulting, Inc.* 42,405
10,685 Profit Recovery Group International* 58,447
20,105 Rent-Way, Inc.* 180,945
6,025 Watson Wyatt & Co. Holdings 160,566
-----------
$ 1,005,701
-----------
Employment Services - 0.9%
6,095 Korn/Ferry International* $ 118,060
11,575 On Assignment, Inc.* 68,293
-----------
$ 186,353
-----------
Total Commercial Services &
Supplies $ 1,454,256
-----------
Transportation - 3.7%
Marine - 0.8%
5,277 Stelmar Shipping Ltd. $ 174,933
-----------
Railroads - 1.2%
9,543 Genesee & Wyoming, Inc.* $ 226,169
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Trucking - 1.7%
12,950 Central Freight Lines, Inc.* $ 103,600
2,968 Dollar Thrifty Automotive Group* 81,442
4,375 Forward Air Corp.* 163,620
-----------
$ 348,662
-----------
Total Transportation $ 749,764
-----------
Automobiles & Components - 0.7%
Auto Parts & Equipment - 0.7%
7,995 Federal Signal Corp. $ 148,787
-----------
Total Automobiles & Components $ 148,787
-----------
Consumer Durables & Apparel - 2.0%
Apparel, Accessories & Luxury Goods - 1.3%
14,593 Charming Shoppes, Inc.* $ 130,315
2,950 Kellwood Co. 128,473
-----------
$ 258,788
-----------
Footwear - 0.7%
6,641 Maxwell Shoe Co., Inc.* $ 154,337
-----------
Total Consumer Durables & Apparel $ 413,125
-----------
Hotels, Restaurants & Leisure - 0.6%
Restaurants - 0.6%
7,169 O'Charley's, Inc.* $ 123,235
-----------
Total Hotels, Restaurants & Leisure $ 123,235
-----------
Media - 2.0%
Advertising - 1.6%
4,841 EMAK Worldwide, Inc.* $ 60,270
6,344 R.H. Donnelley Corp.+* 277,487
-----------
$ 337,757
-----------
Publishing - 0.4%
5,465 Advanced Marketing Services, Inc. $ 70,553
-----------
Total Media $ 408,310
-----------
Retailing - 6.1%
Apparel Retail - 0.7%
3,695 Stage Stores, Inc.* $ 139,154
-----------
Catalog Retail - 1.5%
17,075 Insight Enterprises, Inc.* $ 303,252
-----------
General Merchandise Stores - 0.3%
1,615 Blyth Industries, Inc. $ 55,701
-----------
Specialty Stores - 3.6%
5,275 Claire's Stores, Inc. $ 114,468
5,502 Guitar Center, Inc.* 244,674
16,057 Hancock Fabrics, Inc. 204,727
4,923 School Specialty, Inc.* 178,754
-----------
$ 742,623
-----------
Total Retailing $ 1,240,730
-----------
Shares Value
Food & Drug Retailing - 1.1%
Food Retail - 1.1%
6,183 Fresh Del Monte Produce, Inc. (a) $ 156,244
4,875 Wild Oats Markets, Inc.* 68,591
-----------
$ 224,835
-----------
Total Food & Drug Retailing $ 224,835
-----------
Household & Personal Products - 1.9%
Household Products - 1.9%
15,304 Nu Skin Enterprises, Inc. $ 387,497
-----------
Total Household & Personal
Products $ 387,497
-----------
Health Care Equipment & Services - 6.3%
Health Care Distributors - 2.3%
3,235 Amerigroup Corp.* $ 159,162
5,525 Chattem, Inc.* 159,507
8,375 Cross Country Healthcares, Inc.* (a) 152,003
-----------
$ 470,672
-----------
Health Care Equipment - 0.1%
600 Analogic Corp. $ 25,458
-----------
Health Care Facilities - 0.7%
1,675 Sunrise Senior Living, Inc. (a)* $ 65,560
2,133 Triad Hospitals, Inc.* 79,412
-----------
$ 144,972
-----------
Health Care Services - 1.9%
4,452 Pediatrix Medical Group, Inc.+* $ 310,972
4,550 Providence Service Corp.* 85,495
-----------
$ 396,467
-----------
Managed Health Care - 1.3%
6,830 PacifiCare Health Systems* $ 264,048
-----------
Total Health Care Equipment &
Services $ 1,301,617
-----------
Pharmaceuticals & Biotechnology - 0.5%
Biotechnology - 0.5%
14,105 Kendle International, Inc.* $ 109,314
-----------
Total Pharmaceuticals &
Biotechnology $ 109,314
-----------
Banks - 6.6%
Diversified Banks - 3.0%
9,655 BankAtlantic Bancorp, Inc. $ 178,135
3,231 Banner Corp. 93,893
55 International Bancshares Corp.* 2,230
6,600 Provident Financial Services, Inc. 115,830
13,875 Texas Capital Bancshares, Inc.* 230,325
-----------
$ 620,413
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Regional Banks - 3.2%
5,000 Alliance Bankshares Corp.* $ 75,250
19,325 Cardinal Financial Corp.* 174,891
2,400 City National Corp. 157,680
930 Irwin Financial Corp. 24,552
11,275 Sterling Bancshares, Inc. 159,992
1,280 Whitney Holding Corp. 57,178
-----------
$ 649,543
-----------
Thrifts & Mortgage Finance - 0.4%
7,075 First Niagara Financial Group, Inc. $ 84,900
-----------
Total Banks $ 1,354,856
-----------
Diversified Financials - 5.9%
Consumer Finance - 2.8%
6,025 Advanta Corp. $ 132,128
5,778 Advanta Corp. (Class B) 132,432
20,406 Medallion Financial Corp. 162,228
15,100 Rewards Network, Inc. (a)* 135,900
-----------
$ 562,688
-----------
Investment Banking & Brokerage - 2.4%
4,150 A.G. Edwards, Inc. $ 141,225
17,975 Apollo Investment Corp.* 247,516
2,300 Piper Jaffray Co.* 104,029
-----------
$ 492,770
-----------
Specialized Finance - 0.7%
4,068 Financial Federal Corp. (a)* $ 143,438
-----------
Total Diversified Financials $ 1,198,896
-----------
Insurance - 3.5%
Life & Health Insurance - 0.4%
3,231 FBL Financial Group, Inc. $ 91,308
-----------
Property & Casualty Insurance - 2.5%
3,175 American Safety Insurance Group, Ltd.* $ 47,657
5,251 IPC Holdings, Ltd. 193,919
11,400 Quanta Capital Holdings (144A)* 122,436
2,375 RLI Corp. 86,688
1,525 Selective Insurance Group, Inc. (a) 60,817
-----------
$ 511,517
-----------
Reinsurance - 0.6%
4,775 Odyssey Re Holdings Corp. (a) $ 114,600
-----------
Total Insurance $ 717,425
-----------
Real Estate - 3.9%
Real Estate Management & Development - 0.8%
2,875 Corrections Corp. of America* $ 113,534
1,951 Levitt Corp.* 50,258
-----------
$ 163,792
-----------
Shares Value
Real Estate Investment Trusts - 3.1%
3,610 Bedford Property Investors, Inc. $ 105,556
1,528 Entertainment Properties Trust 54,611
3,850 Reckson Associates Realty Corp. 105,721
8,215 Trizec Properties, Inc. 133,576
3,396 Universal Health Realty, Inc. 97,465
6,237 Ventas, Inc. 145,634
-----------
$ 642,563
-----------
Total Real Estate $ 806,355
-----------
Software & Services - 3.6%
Application Software - 0.8%
8,779 SPSS, Inc.* $ 157,759
-----------
Data Processing & Outsourced Services - 0.9%
5,078 Lightbridge, Inc.* $ 28,437
11,967 Pegusus Systems, Inc.* 157,127
-----------
$ 185,564
-----------
Internet Software & Services - 0.8%
5,875 Internet Security Systems, Inc.* $ 90,123
6,800 PEC Solutions, Inc.* 81,124
-----------
$ 171,247
-----------
Systems Software - 1.1%
18,375 Borland Software Corp.* $ 156,004
5,275 Netiq Corp.* 69,630
-----------
$ 225,634
-----------
Total Software & Services $ 740,204
-----------
Technology Hardware & Equipment - 2.8%
Communications Equipment - 1.0%
31,500 Remec, Inc.* $ 199,080
-----------
Computer Storage & Peripherals - 0.8%
2,575 Applied Films Corp.* $ 74,727
3,400 Electronics For Imaging, Inc.* 96,084
-----------
$ 170,811
-----------
Electronic Equipment & Instruments - 0.6%
8,800 Planar Systems, Inc.* $ 117,832
-----------
Technology Distributors - 0.4%
2,300 Tech Data Corp.* $ 89,999
-----------
Total Technology Hardware &
Equipment $ 577,722
-----------
Semiconductors - 1.0%
Semiconductor Equipment - 0.7%
2,768 Advanced Energy Industries, Inc.* $ 43,513
2,187 Brooks Automation, Inc.* 44,068
2,745 Photronics, Inc.* 51,990
-----------
$ 139,571
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Semiconductors - 0.3%
5,670 HI/FN, Inc. (a)* $ 67,757
-----------
Total Semiconductors $ 207,328
-----------
Telecommunication Services - 0.9%
Wireless Telecommunication Services - 0.9%
18,803 Boston Communications Group, Inc.* $ 192,731
-----------
Total Telecommunication Services $ 192,731
-----------
Utilities - 4.5%
Gas Utilities - 3.7%
4,175 AGL Resources, Inc. $ 121,284
11,800 NUI Corp. (a) 172,280
4,680 People's Energy Corp. 197,262
9,549 Southwestern Energy Co.* 273,770
-----------
$ 764,596
-----------
Multi-Utilities & Unregulated Power - 0.4%
1,750 Energen Corp. $ 83,983
-----------
Utilities - 0.4%
2,325 UGI Corp. $ 74,633
-----------
Total Utilities $ 923,212
-----------
TOTAL COMMON STOCKS
(Cost $14,675,424) $17,699,308
-----------
EXCHANGE TRADED FUND - 0.7%
875 Russell 2000 Exchange Traded Fund $ 150,763
-----------
TOTAL EXCHANGE TRADED FUND
(Cost $113,541) $ 150,763
-----------
Shares Value
TEMPORARY CASH INVESTMENT - 5.9%
Security Lending Collateral - 5.9%
1,202,726 Securities Lending Investment Fund,
1.29% $ 1,202,726
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,202,726) $ 1,202,726
-----------
TOTAL INVESTMENT IN SECURITIES - 92.7%
(Cost $15,991,691) (a) $19,052,797
-----------
OTHER ASSETS AND
LIABILITIES - 7.3% $ 1,504,180
-----------
TOTAL NET ASSETS - 100.0% $20,556,977
===========
* Non-income producing security.
+ At May 31, 2004, the following securities have pledged to cover margin
requirements for open futures contracts:
Shares Description Market Value
2,385 Pediatrix Medical Group, Inc.* $166,592
400 R.H. Donnelley Corp.* 17,496
144A Security is exempt from registration under Rule 144A of the Securities Act
of 1933. Such securities may be resold normally to qualified institutional
buyers in a transaction exempt from registration. At June 30, 2004, the
value of these securities amounted to $122,436 or 0.6% of net assets.
(a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value
3,735 Cross Country Healthcares, Inc.* $ 68,238
10,960 Domtar, Inc. 141,713
2,915 Financial Federal Corp.* 102,258
5,565 Fresh Del Monte Produce, Inc. 139,292
4,720 HI/FN, Inc.* 56,262
26,481 IAMGOLD Corp. 141,938
11,540 NUI Corp. 163,176
3,860 Odyssey Re Holdings Corp. 92,640
12,635 Rewards Network, Inc.* 116,874
1,425 Selective Insurance Group, Inc. 55,889
1,496 Sunrise Senior Living, Inc.* 58,254
----------
Total $1,136,534
==========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 5/1/03
6/30/04 to
Class II (a) (unaudited) 12/31/03
Net asset value, beginning of period $12.47 $ 9.11
------ ------
Increase (decrease) from investment operations:
Net investment income (loss) $(0.03) $(0.00)
Net realized and unrealized gain on investments and foreign currency transactions 1.01 3.37
------ ------
Net increase from investment operations $ 0.98 $ 3.36
Distributions to shareowners:
Net investment income -- --
Net realized gain -- --
------ ------
Net increase in net asset value $ 0.98 $ 3.36
------ ------
Net asset value, end of period $13.45 $12.47
====== ======
Total return* 7.86% 36.88%
Ratio of net expenses to average net assets+ 1.58%** 1.58%**
Ratio of net investment income to average net assets+ (0.62)%** (0.15)%**
Portfolio turnover rate 43%** 74%
Net assets, end of period (in thousands) $6,014 $2,760
Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for
fees paid indirectly:
Net expenses 1.64%** 2.65%**
Net investment income (loss) (0.68)%** (1.22)%**
Ratios with waiver of management fees and assumption of expenses by PIM and no reduction for
fees paid indirectly:
Net expenses 1.58%** 1.58%**
Net investment income (loss) (0.62)%** (0.15)%**
(a) Class II shares were first publicly offered May 1, 2003.
* Assumes initial investment at net asset value at the beginning of each
period,reinvestment of all distriibutions and the complete redemption of the
investment at the net asset value at the end of each period.
** Annualized
+ Ratios with no reduction for fees paid indirectly
8 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Small Cap
Value
VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $1,136,534)
(Cost $15,991,691) $19,052,797
Cash 2,718,102
Foreign currencies, at value --
Receivables --
Investment securities sold 23,852
Fund shares sold 21,160
Variation margin 7,700
Dividends, interest and foreign taxes withheld 15,498
Forward foreign currency settlement contracts, net --
Due from Pioneer Investment Management, Inc. --
Other 584
-----------
Total assets $21,839,693
-----------
LIABILITIES:
Payables --
Investment securities purchased $ 10,897
Fund shares repurchased 20,907
Dividends --
Upon return of securities loaned 1,202,726
Forward foreign currency settlement contracts, net --
Reserve for repatriation taxes --
Due to bank --
Due to affiliates 6,556
Accrued expenses 41,630
-----------
Total liabilities $ 1,282,716
-----------
NET ASSETS:
Paid-in capital $17,643,559
Accumulated net investment income (loss) (32,380)
Accumulated undistributed net realized gain (loss) (170,680)
Net unrealized gain (loss) on:
Investments 3,061,106
Futures contracts 55,372
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
Total net assets $20,556,977
-----------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $14,543,028
Shares outstanding 1,077,380
-----------
Net asset value per share $ 13.50
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 6,013,949
Shares outstanding 447,131
-----------
Net asset value per share $ 13.45
The accompanying notes are an integral part of these financial statements. 9
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Small Cap Value
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $61) $ 74,837
Interest 4,917
Income on securities loaned, net 1,081
Other --
----------
Total investment income $ 80,835
----------
EXPENSES:
Management fees $ 65,883
Transfer agent fees (1,877)
Distribution fees (Class II) 5,351
Administrative fees 9,250
Custodian fees 18,376
Professional fees 22,386
Printing 2,274
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,004
----------
Total expenses $ 122,647
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (5,786)
----------
Net expenses $ 116,879
----------
Net investment income (loss) $ (36,044)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 839,832
Futures contracts 26,278
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ 866,110
----------
Change in net unrealized gain or loss from:
Investments $ 481,469
Futures contracts 32,938
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
----------
$ 514,407
----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $1,380,517
==========
Net increase (decrease) in net assets resulting
from operations $1,344,473
==========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Small Cap Value
VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ (36,044) $ 2,125
Net realized gain (loss) on investments 866,110 (334,168)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions 514,407 3,353,942
----------- ------------
Net increase (decrease) in net assets
resulting from operations $ 1,344,473 $ 3,021,899
----------- ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ -- $ --
Class II -- --
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
----------- ------------
Total distributions to shareowners $ -- $ --
----------- ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 6,450,844 $ 15,752,093
Reinvestment of distributions -- --
Cost of shares repurchased (2,046,639) (10,568,904)
----------- ------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 4,404,205 $ 5,183,189
----------- ------------
Net increase (decrease) in net assets $ 5,748,678 $ 8,205,088
----------- ------------
NET ASSETS:
Beginning of period $14,808,299 $ 6,603,211
----------- ------------
End of period $20,556,977 $ 14,808,299
=========== ============
Accumulated/(distributions in excess of)
net investment income (loss) $ (32,380) $ 3,664
=========== ============
The accompanying notes are an integral part of these financial statements. 11
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Small Cap Value 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 nineteen 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)
The Portfolio commenced operations on May 1, 2003. Portfolio shares may only be
purchased by insurance companies for the purpose of funding variable annuity or
variable life insurance contracts, and may also be purchased by qualified
pension and retirement plans.
The investment objective of Small Cap Value Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the portfolio are computed once daily, on each day the New York Stock
Exchange is open, as of the close of regular trading on the Exchange. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that have
not traded on the date of valuation, or securities for which sale prices
are not generally reported, are valued at the mean between the last bid and
asked prices. 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. As of June 30, 2004 there were no
securities fair valued.
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. Temporary cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total
12
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
return. Upon entering into a futures contract, the Portfolio is required to
deposit with a broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the associated futures exchange.
Subsequent payments for futures contracts ("variation margin") are paid or
received by the Portfolio, depending on the daily fluctuation in the value
of the contracts, and are recorded by the Portfolio as unrealized gains or
losses. When the contract is closed, the Portfolio realize a gain or loss
equal to the difference between the opening and closing value of the
contract. The use of futures contracts involves, to varying degrees,
elements of market risk which may exceed the amounts recognized by the
Portfolio. Changes in the value of the contracts may not directly correlate
to the changes in the value of the underlying securities. These risks may
decrease the effectiveness of the Portfolio's hedging and trading
strategies and potentially result in a loss. As of June 30, 2004, Small
Company Portfolio had the following open contracts:
- ----------------------------------------------------------------------------------------------------------------
Number of
Contracts Settlement Market Unrealized
Type Long/(Short) Month Value Gain/(Loss)
- ----------------------------------------------------------------------------------------------------------------
Small Cap Value Portfolio Russell 2000 4 September 2004 $1,184,700 $55,372
- ----------------------------------------------------------------------------------------------------------------
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent,
the net realized gains and losses on foreign currency contracts,
disposition of foreign currencies, and the difference between the amount of
income accrued and the U.S. dollar actually received. Further, the effects
of changes in foreign currency exchange rates on investments are not
segregated in the statement of operations from the effects of changes in
market price of those securities but are included with the net realized and
unrealized gain or loss on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts)
for the purchase or sale of a specific foreign currency at a fixed price on
a future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the
Portfolio's financial statements. The Portfolio records realized gains and
losses at the time a portfolio hedge is offset by entry into a closing
transaction or extinguished by delivery of the currency. Risks may arise
upon entering into these contracts from the potential inability of
counterparties to meet the terms of the contract and from unanticipated
movements in the value of foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of each Portfolio's distributions
may be shown in the accompanying financial statements as either from, or in
excess of, net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Small Cap Value VCT Portfolio had a capital
loss carryforward of $513,628, of which the following amounts will expire
between 2010 and 2011 if not utilized: $508,141 in 2010 and $5,487 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2003 and the distributions paid during the year ended December 31, 2003
on a tax basis as of December 31, 2003.
13
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer
Small Cap Value
VCT Portfolio
2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ --
Long-Term capital gain --
----------
--
Return of Capital --
----------
Total distributions $ --
==========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 3,397
Undistributed long-term gain/
(Capital loss carryforward) (513,628)
Unrealized appreciation (depreciation) 2,079,176
----------
Total $1,568,945
==========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor,
Inc. (PFD), the principal underwriter for the Trust and a wholly owned
indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano),
$612,526 in commissions on the sale of Trust shares for the six months
ended June 30, 2004. Distribution fees are calculated based on the average
daily net asset values attributable to Class I and Class II shares of the
Portfolio, respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses and realized and unrealized gains and
losses are calculated at the Portfolio level and allocated daily to each
class of shares based on the respective percentage of adjusted net assets
at the beginning of the day. Distributions paid by the Portfolio with
respect to each class of shares are calculated in the same manner, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees. Income, expenses
(excluding 12b-1 fees) and gains and losses are calculated at the Portfolio
level and are allocated daily based on the respective percentage of
adjusted net assets at the beginning of the day. Dividends and
distributions to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns income in the
form of negotiated lenders' fees. The Portfolio also continues to receive
interest or dividends on the securities loaned, and gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for account of the Trust. The loans are secured by collateral
of at least 102%, at all times, of the fair value of the securities loaned.
The fair value of the collateral will be adjusted daily to reflect any
price fluctuation in the value of the loaned securities. The Trust has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Trust invests cash collateral in the Securities
Lending Investment Fund which is managed by Brown Brothers Harriman & Co.,
the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.75% of the Portfolio's average daily net assets. In addition,
under the management and administration agreements, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Portfolio. At June 30, 2004, $5,022 was payable to PIM related to
management fees, administrative fees and certain other services, and is
included in due to affiliates.
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly
owned indirect subsidiary of UniCredito
14
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Italiano provides substantially all transfer agent and shareowner services to
the Trust at negotiated rates. Included in due to affiliates is $255 in
transfer agent fees payable to PIMSS at June 30, 2004
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$1,279 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -------------------------------------------------------------------------------------------------
Small Cap Value Portfolio $16,492,152 $2,915,941 $(355,296) $2,560,645
----------- ---------- --------- ----------
- -------------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than
U.S. Government obligations and temporary cash investments for the six months
ended June 30, 2004, were $7,241,266 and $3,313,196, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- -----------------------------------------------------------------------------------------------------
Small Cap Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- -----------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 239,892 $ 3,132,677 1,276,588 $ 13,058,675
Reinvestment of distributions -- -- -- --
Shares repurchased (126,447) (1,650,422) (1,028,432) (10,409,382)
-----------------------------------------------------------------------
Net increase 113,445 $ 1,482,255 248,156 $ 2,649,293
=======================================================================
CLASS II:
Shares sold 255,800 $ 3,318,167 235,328 $ 2,693,418
Reinvestment of distributions -- -- -- --
Shares repurchased (29,908) (396,217) (14,089) (159,522)
-----------------------------------------------------------------------
Net increase 255,892 $ 2,921,950 221,239 $ 2,533,896
=======================================================================
- ------------------------------------------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16067-00-0804
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Shares VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2004
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 7
Notes to Financial Statements 11
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/04
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
U.S. Common Stocks 91.8%
Depositary Receipts for International Stocks 8.2%
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
Sector Distribution
(As a percentage of equity holdings)
Information Technology 30.2%
Health Care 22.9%
Consumer Discretionary 14.5%
Industrials 10.1%
Financials 8.6%
Consumer Staples 7.6%
Materials 3.5%
Telecommunication Services 1.6%
Energy 1.0%
Five Largest Holdings
(As a percentage of equity holdings)
1. Microsoft Corp. 5.50%
2. Intel Corp. 4.41
3. Sandisk Corp. 3.05
4. Bristol-Myers Squibb Co. 3.02
5. Samsung Electronics Co., Ltd. 2.84
Holdings will vary for other periods. This list excludes temporary cash and
derivative investments.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/04
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/04 12/31/03
Net Asset Value per Share $11.96 $12.10
Distributions per Share Short-Term Long-Term
(1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Growth Shares VCT Portfolio at net asset value, compared to that of the Russell
1000 Growth Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.]
Date Pioneer Growth Shares Russell 1000
VCT Portfolio* Index
10/31/1997 $10,000 $10,000
$10,222 $10,646
12/31/1998 $13,521 $13,522
$14,539 $16,351
12/31/2000 $13,539 $15,079
$10,934 $13,202
12/31/2002 $7,099 $10,343
$8,855 $13,436
6/30/2004 $8,753 $13,883
The Russell 1000 Growth Index contains those Russell 1000 securities with
greater-than-average growth orientation. Companies in this index tend to exhibit
higher price-to-book and price-to-earnings ratios, lower dividend yields and
higher forecasted growth values than the Value universe. Index returns are
calculated monthly, assume reinvestment of dividends and, unlike Portfolio
returns, do not reflect any fees, expenses or sales charges. You cannot invest
directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2004)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class -1.98%
(10/31/97)
5 Years -10.08%
1 Year 9.42%
All total returns shown assume reinvestment of distributions at net asset value.
Performance data shown represents past performance. Past performance does not
guarantee future results. Assumes reinvestment of all distributions at net asset
value. Investment return and principal value fluctuate, and shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance shown. For performance
data that is current to the most recent month-end, please call 1-800-225-6292 or
visit our web site at www.pioneerfunds.com.
Portfolio performance does not reflect any variable contract fees, expenses or
sales charges. If they had been included, performance would have been lower. See
the pages that comprise the inside cover of this report for performance net of
any contract fees, expenses or sales charges.
2
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/04
- --------------------------------------------------------------------------------
The U.S. economy continued to grow during the first half of 2004, but the
general investment environment for equities began turning slightly negative as
rising corporate profit trends began to weaken, consumer spending was not as
strong as expected, and markets began anticipating a tighter monetary policy
from the Federal Reserve. In the following interview, Christopher Galizio
discusses the factors that affected the performance of Pioneer Growth Shares VCT
Portfolio during the six-month period ended June 30, 2004. Mr. Galizio is a
member of the Portfolio's management team.
Q: How did the Portfolio perform during the first half of 2004?
A: For the six-month period ended June 30, 2004, the Growth Shares Portfolio
Class II had a total return of -1.16% at net asset value. For the same
period, the Russell 1000 Growth Index returned 2.74%. We believe the
Portfolio's underperformance was due to the overweight position in
technology, particularly semi-conductor companies, early in the period.
Q: What was the general investment environment like during the period?
A: The overall market sentiment appeared to be turning negative late in the
six-month period.
The stock market surge that that had begun in March 2003 appeared to lose
some energy. Several major corporations, including the retail and
semi-conductor industries, began to report earnings disappointments, and we
saw some weakening in profit trends, notably in the consumer and technology
sectors. Consumer spending trends, in particular, appeared weak as
over-extended consumers finally began to retrench from their high-spending
patterns. As stock market investors anticipated the June 30 announcement by
the Federal Reserve Board that it would begin to tighten monetary policy by
raising short-term interest rates, the share prices of some consumer-oriented
financial institutions began to fade. Industrial stocks, however, tended to
outperform the overall market.
Q: What were your principal strategies during the period?
A: We restructured the Portfolio during the period, focusing on large-cap
companies that we believed offered long-term value, above-average revenue
growth, strong returns on capital and reasonable valuations in relation to
their earnings potential. This strategy led to a reduced emphasis on the
semi-conductor industry and increased weightings in the software, consumer
discretionary and financial services areas.
We reduced our semi-conductor holdings, eliminating positions in Applied
Materials, Cypress Semiconductor, Texas Instruments and Maxim Technology. We
did add Taiwan Semiconductor, a major manufacturer with an attractive stock
valuation. Overall, however, semiconductor stocks went from an overweight to
an underweight position relative to the benchmark S&P 500. The reduced
weightings in technology tended to support performance.
Conversely, we increased the Portfolio's emphasis on software companies,
adding companies such as Macrovision, which has developed a technology to
protect DVDs, CDs and other disc-based products from piracy, as well as
Take-Two Interactive, the developer of video games, including Grand Theft
Auto - the most successful game in history, with a new version soon to be
introduced. We also added Fair Isaac, which has developed software to help
credit card companies analyze the credit-worthiness of applicants. Fair
Isaac tended to detract from performance late in the six-month period as it
reported disappointing earnings, but we continued to hold it because of its
attractive valuation.
We moved from an underweight to an overweight in the consumer discretionary
sector, taking advantage of attractive valuations of Disney, whose media and
theme park properties have improved earnings outlooks, and Viacom, the owner
of the CBS and MTV television networks among other properties. Among
retailers, we sold our Wal-Mart position before the stock fell hard,
investing in Target, Kohl's and Ross Stores.
In addition, we increased the emphasis on financial services stocks, focusing
on insurance companies with excellent valuations that were not as vulnerable
to interest-rate increases as banks and other lenders. We continued to
de-emphasize consumer staples, although we added Altria (the former Philip
Morris), which offered a high dividend yield and an attractive stock price
that we believed was the result of overly pessimistic market evaluations of
the company's tobacco liability.
In addition, we invested in First Data, the leader in processing of credit
card transactions and owner of the Western Union system, and Accenture, an
information technology services consulting firm.
Q: What were some of the investments that influenced performance?
A: Among newer holdings, Macrovision rose significantly during the period as
its revenue grew faster than had been expected. Sepracor, a pharmaceutical
company and a new holding, also advanced on positive news of a drug under
development. Zimmer Holdings, a world leader in orthopedic products,
including hip and knee replacements, was another health care position that
did very well. The timely sale of Wal-Mart also supported performance.
The overweight position in the semiconductor industry early during the
six-month period held back performance, as valuations in that group fell
hard. Corinthian Colleges, operator of adult vocational educational
colleges and programs, was another detractor, as the SEC began an
investigation of its financial records. However, we took advantage of the
price decline to add to the position in Corinthian because of its goods
long-term fundamentals.
Lexar and Sandisk, two manufacturers of flash memories for cameras and cell
phones, also fell on disappointing sales.
Freeport-McMoRan, a leader in the copper mining industry and a strong support
for performance in 2003, also declined both because of problems at one of its
mines and because of fears of an economic slowdown in China, an important
importer of copper. We increased our investment in the company because of its
attractive price. We also believed it experienced some short-term production
problems that would be resolved.
Q: What is your investment outlook?
A: We are cautions about the near-term opportunities in the domestic stock
market, as stock valuations appear relatively expensive and the Federal
Reserve Board has moved to a less accommodating monetary policy. The home
refinancing boom of the past two years may hurt the future earnings of banks,
while the technology industry faces a number of challenges, from pricing
pressure on its products to calls to change the way many companies have
treated stock options in their accounting. Health care stocks, however,
appear to be more reasonably valued.
Given this outlook, we are paying very strict attention to our analysis and
selection of individual companies. We also have somewhat reduced our exposure
to the domestic stock market with investments in Europe and the emerging
markets. We have, for example, increased our position in Vodafone, the
world's largest wireless communications service company, and we have added
small holdings from Korea, Taiwan and Israel.
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.
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
3
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 99.6%
Energy - 1.0%
Integrated Oil & Gas - 1.0%
2,500 ConocoPhillips $ 190,725
4,200 Occidental Petroleum Corp. 203,322
-----------
$ 394,047
-----------
Total Energy $ 394,047
-----------
Materials - 3.5%
Diversified Metals & Mining - 3.5%
19,700 Freeport-McMoRan Copper & Gold, Inc.
(Class B) $ 653,055
8,900 Phelps Dodge Corp.* 689,839
-----------
$ 1,342,894
-----------
Total Materials $ 1,342,894
-----------
Capital Goods - 6.9%
Aerospace & Defense - 1.1%
6,200 L-3 Communications Holdings, Inc. $ 414,160
-----------
Electrical Component & Equipment - 1.3%
15,200 General Electric Co. $ 492,480
-----------
Industrial Conglom - 4.5%
16,900 American Standard Companies, Inc.* $ 681,239
21,400 Tyco International Ltd. 709,196
4,000 United Technologies Corp. 365,920
-----------
$ 1,756,355
-----------
Total Capital Goods $ 2,662,995
-----------
Commercial Services & Supplies - 2.0%
Employment Services - 2.0%
31,300 Corinthian Colleges, Inc.* $ 774,362
-----------
Total Commercial Services &
Supplies $ 774,362
-----------
Transportation - 1.2%
Trucking - 1.2%
5,900 United Parcel Service $ 443,503
-----------
Total Transportation $ 443,503
-----------
Hotels, Restaurants & Leisure - 3.0%
Casinos & Gaming - 1.3%
13,400 International Game Technology $ 517,240
-----------
Hotels, Resorts & Cruise Lines - 0.8%
6,400 Carnival Corp. $ 300,800
-----------
Restaurants - 0.9%
9,100 Tricon Global Restaurants, Inc.* $ 338,702
-----------
Total Hotels, Restaurants & Leisure $ 1,156,742
-----------
Shares Value
Media - 3.3%
Broadcasting & Cable TV - 0.9%
9,300 Clear Channel Communications, Inc. $ 343,635
-----------
Movies & Entertainment - 2.4%
21,300 The Walt Disney Co. $ 542,937
10,400 Viacom, Inc. (Class B) 371,488
-----------
$ 914,425
-----------
Total Media $ 1,258,060
-----------
Retailing - 8.2%
Apparel Retail - 2.3%
5,400 Liz Claiborne, Inc. $ 194,292
3,900 Nike, Inc. 295,425
15,200 Ross Stores, Inc. 406,752
-----------
$ 896,469
-----------
Department Stores - 2.1%
7,500 J.C. Penney Co., Inc. $ 283,200
12,300 Kohl's Corp.* 520,044
-----------
$ 803,244
-----------
General Merchandise Stores - 2.4%
9,900 Family Dollar Stores, Inc. $ 301,158
14,700 Target Corp. 624,309
-----------
$ 925,467
-----------
Home Improvement Retail - 1.4%
10,000 Lowe's Companies, Inc. $ 525,500
-----------
Total Retailing $ 3,150,680
-----------
Food & Drug Retailing - 2.1%
Drug Retail - 0.6%
5,900 Walgreen Co. $ 213,639
-----------
Food Distributors - 1.5%
8,500 Cardinal Health, Inc. $ 595,425
-----------
Total Food & Drug Retailing $ 809,064
-----------
Food, Beverage & Tobacco - 5.5%
Soft Drinks - 3.6%
17,000 The Coca-Cola Co. $ 858,160
9,800 PepsiCo, Inc. 528,024
-----------
$ 1,386,184
-----------
Tobacco - 1.9%
14,500 Altria Group, Inc. $ 725,725
-----------
Total Food, Beverage & Tobacco $ 2,111,909
-----------
4 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Health Care Equipment & Services - 10.8%
Health Care Distributors - 5.7%
47,400 Bristol-Myers Squibb Co. $ 1,161,300
6,203 Teva Pharmaceutical Industries, Ltd. 417,400
17,100 Wyeth 618,336
-----------
$ 2,197,036
-----------
Health Care Equipment - 4.3%
16,700 Guidant Corp. $ 933,196
5,400 St. Jude Medical, Inc.* 408,510
3,500 Zimmer Holdings, Inc.* 308,700
-----------
$ 1,650,406
-----------
Managed Health Care - 0.8%
2,800 Wellpoint Health Networks, Inc.* $ 313,628
-----------
Total Health Care Equipment &
Services $ 4,161,070
-----------
Pharmaceuticals & Biotechnology - 11.9%
Biotechnology - 2.8%
12,758 Amgen, Inc.* $ 696,204
35,400 Cubist Pharmaceuticals, Inc.* 392,940
-----------
$ 1,089,144
-----------
Pharmaceuticals - 9.1%
16,000 Merck & Co., Inc. $ 760,000
27,851 Pfizer, Inc. 954,732
17,200 Sepracor, Inc.* 909,880
23,400 Schering-Plough Corp. 432,432
14,400 Sanofi-Synthelabo SA (A.D.R.)* 460,656
-----------
$ 3,517,700
-----------
Total Pharmaceuticals &
Biotechnology $ 4,606,844
-----------
Banks - 2.3%
Diversified Banks - 1.1%
4,900 Bank of America Corp. $ 414,638
-----------
Thrifts & Mortgage Finance - 1.2%
7,400 Freddie Mac $ 468,420
-----------
Total Banks $ 883,058
-----------
Diversified Financials - 1.3%
Consumer Finance - 0.6%
15,900 Providian Financial Corp.* $ 233,253
-----------
Investment Banking & Brokerage - 0.7%
2,800 Goldman Sachs Group, Inc. $ 263,648
-----------
Total Diversified Financials $ 496,901
-----------
Shares Value
Insurance - 5.0%
Insurance Brokers - 0.8%
8,200 Willis Group Holdings, Ltd. $ 307,090
-----------
Multi-Line Insurance - 2.4%
13,000 American International Group, Inc. $ 926,640
-----------
Property & Casualty Insurance - 1.8%
9,000 ACE, Ltd. $ 380,520
7,400 Safeco Corp. 325,600
-----------
$ 706,120
-----------
Total Insurance $ 1,939,850
-----------
Software & Services - 11.6%
Application Software - 8.4%
9,200 Fair Isaac & Co., Inc. $ 307,096
74,000 Microsoft Corp. 2,113,440
21,500 Macrovision Corp.* 538,145
9,500 Veritas Software Corp.* 263,150
-----------
$ 3,221,831
-----------
Data Processing & Outsourced Services - 1.5%
12,600 First Data Corp. $ 560,952
-----------
Home Entertainment Software - 0.7%
9,300 Take-Two Interactive Software, Inc.* $ 284,952
-----------
IT Consulting & Other Services - 1.0%
14,100 Accenture, Ltd.* $ 387,468
-----------
Total Software & Services $ 4,455,203
-----------
Technology Hardware & Equipment - 13.0%
Communications Equipment - 1.8%
16,600 Nokia Corp. (A.D.R.) $ 241,364
15,100 Utstarcom, Inc.* 456,775
-----------
$ 698,139
-----------
Computer Hardware - 4.3%
21,800 Dell, Inc.* $ 780,876
41,600 Hewlett-Packard Co. 877,760
-----------
$ 1,658,636
-----------
Computer Storage & Peripherals - 4.1%
61,800 Lexar Media, Inc.* $ 412,824
53,900 Sandisk Corp.* 1,169,091
-----------
$ 1,581,915
-----------
Electronic Equipment &
Instruments - 2.8%
5,300 Samsung Electronics Co., Ltd.* $ 1,091,126
-----------
Total Technology Hardware &
Equipment $ 5,029,816
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Semiconductors - 5.5%
61,300 Intel Corp. $ 1,691,880
51,100 Taiwan Semiconductor
Manufacturing Co. (A.D.R.) 424,641
-----------
$ 2,116,521
-----------
Total Semiconductors $ 2,116,521
-----------
Telecommunication Services - 1.6%
Wireless Telecommunication Services - 1.6%
27,100 Vodafone Group Plc (A.D.R.) $ 598,911
-----------
Total Telecommunication Services $ 598,911
-----------
TOTAL COMMON STOCKS
(Cost $38,249,059) $38,392,430
-----------
TOTAL INVESTMENT
IN SECURITIES - 99.6%
(Cost $38,249,059) $38,392,430
-----------
OTHER ASSETS AND
LIABILITIES - 0.4% $ 169,200
-----------
TOTAL NET ASSETS - 100.0% $38,561,630
===========
* Non-income producing security.
(A.D.R.) American Depository Receipt
6 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year 5/1/00
6/30/04 Ended Ended Ended to
Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00
Net asset value, beginning of period $12.10 $ 9.70 $ 14.94 $18.50 $21.68
------ ------ ------- ------ ------
Increase (decrease) from investment operations:
Net investment income (loss) $(0.01) $(0.02) $ (0.13) $(0.05) $(0.03)
Net realized and unrealized gain (loss) on investments (0.13) 2.42 (5.11) (3.51) (1.23)
------ ------ ------- ------ ------
Net increase (decrease) from investment operations $(0.14) $ 2.40 $ (5.24) $(3.56) $(1.26)
Distributions to shareowners:
Net investment income -- -- -- -- --
Net realized gain -- -- -- -- (1.92)
------ ------ ------- ------ ------
Net increase (decrease) in net asset value $(0.14) $ 2.40 $ (5.24) $(3.56) $(3.18)
------ ------ ------- ------ ------
Net asset value, end of period $11.96 $12.10 $ 9.70 $14.94 $18.50
====== ====== ======= ====== ======
Total return* (1.16)% 24.74% (35.07)% 19.24% (6.36)%
Ratio of net expenses to average net assets+ 1.16%** 1.44% 1.63% 1.58% 1.03%**
Ratio of net investment income (loss) to average net assets+ (0.17)%** (0.40)% (0.64)% (0.61)% (0.33)%**
Portfolio turnover rate 208%** 58% 86% 111% 95%**
Net assets, end of period (in thousands) $5,592 $3,049 $ 263 $ 658 $ 203
Ratios with no waiver of management fees and assumption of expenses
by PIM and reduction for fees paid indirectly:
Net expenses 1.16%* * 1.44% 1.63% 1.58% 0.73%**
Net investment income (loss) (0.17)%** (0.40)% (0.64)% (0.61)% (0.11)%**
(a) Class 2 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.
The accompanying notes are an integral part of these financial statements. 7
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Growth
Shares
VCT Portfolio
ASSETS:
Investment in securities, at value (Cost $38,249,059) $ 38,392,430
Cash 166,266
Foreign currencies, at value --
Receivables --
Investment securities sold 350,395
Fund shares sold --
Variation margin --
Dividends, interest and foreign taxes withheld 44,334
Forward foreign currency settlement contracts, net --
Due from Pioneer Investment Management, Inc. --
Other 470
------------
Total assets $ 38,953,895
------------
LIABILITIES:
Payables --
Investment securities purchased $ 328,381
Fund shares repurchased 8,488
Dividends --
Upon return of securities loaned --
Forward foreign currency settlement contracts, net --
Reserve for repatriation taxes --
Due to bank --
Due to affiliates 27,887
Accrued expenses 27,509
------------
Total liabilities $ 392,265
------------
NET ASSETS:
Paid-in capital $ 78,004,905
Accumulated net investment income (loss) 2,672
Accumulated undistributed net realized gain (loss) (39,589,318)
Net unrealized gain (loss) on:
Investments 143,371
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
------------
Total net assets $ 38,561,630
------------
NET ASSET VALUE PER SHARE:
Class I:
No par value (unlimited number of shares authorized)
Net assets $ 32,969,391
Shares outstanding 2,724,557
------------
Net asset value per share $ 12.10
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 5,592,239
Shares outstanding 467,443
------------
Net asset value per share $ 11.96
8 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer
Growth
Shares
VCT Portfolio
Six Months
Ended
6/30/04
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $1,046) $ 179,113
Interest 2,776
Income on securities loaned, net --
Other --
-----------
Total investment income $ 181,889
-----------
EXPENSES:
Management fees $ 135,655
Transfer agent fees 1,508
Distribution fees (Class II) 5,230
Administrative fees 9,250
Custodian fees 11,802
Professional fees 14,662
Printing 30
Fees and expenses of nonaffiliated trustees --
Miscellaneous 1,080
-----------
Total expenses $ 179,217
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. --
-----------
Net expenses $ 179,217
-----------
Net investment income (loss) $ 2,672
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 1,809,705
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$ 1,809,705
-----------
Change in net unrealized gain or loss from:
Investments $(2,214,548)
Futures contracts --
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies --
-----------
$(2,214,548)
-----------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ (404,843)
===========
Net increase (decrease) in net assets resulting
from operations $ (402,171)
===========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
Pioneer Growth
Shares VCT Portfolio
Six Months
Ended Year
6/30/04 Ended
(unaudited) 12/31/03
FROM OPERATIONS:
Net investment income (loss) $ 2,672 $ (20,270)
Net realized gain (loss) on investments 1,809,705 (3,697,565)
Change in net unrealized gain or loss on
investments, futures contracts and
foreign currency transactions (2,214,548) 11,680,101
----------- -----------
Net increase (decrease) in net assets
resulting from operations $ (402,171) $ 7,962,266
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ -- $ (4,477)
Class II -- --
Net realized gain
Class I -- --
Class II -- --
Tax return of capital
Class I -- --
Class II -- --
----------- -----------
Total distributions to shareowners $ -- $ (4,477)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 3,453,095 $ 4,104,812
Reinvestment of distributions -- 4,477
Cost of shares repurchased (3,287,636) (8,277,302)
----------- -----------
Net increase (decrease) in net assets
resulting from fund share transactions $ 165,459 $(4,168,013)
----------- -----------
Net increase (decrease) in net assets $ (236,712) $ 3,789,776
----------- -----------
NET ASSETS:
Beginning of period $38,798,342 $35,008,566
----------- -----------
End of period $38,561,630 $38,798,342
=========== ===========
Accumulated/(distributions in excess of)
net investment income (loss) $ 2,672 $ --
=========== ===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Growth Shares 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 nineteen 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)
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 Growth Shares Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Trust, which are in conformity with those generally accepted in
the investment company industry:
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for the
portfolio are computed once daily, on each day the New York Stock Exchange is
open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
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. As of June 30, 2004 there were no securities fair valued.
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. Temporary
cash investments are valued at amortized cost.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes in
interest rates, securities prices, and currency rates or to seek to increase
total
11
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
return. Upon entering into a futures contract, the Portfolio is required to
deposit with a broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the associated futures exchange. Subsequent
payments for futures contracts ("variation margin") are paid or received by
the Portfolio, depending on the daily fluctuation in the value of the
contracts, and are recorded by the Portfolio as unrealized gains or losses.
When the contract is closed, the Portfolio realize a gain or loss equal to
the difference between the opening and closing value of the contract. The use
of futures contracts involves, to varying degrees, elements of market risk
which may exceed the amounts recognized by the Portfolio. Changes in the
value of the contracts may not directly correlate to the changes in the value
of the underlying securities. These risks may decrease the effectiveness of
the Portfolio's hedging and trading strategies and potentially result in a
loss. As of June 30, 2004, Growth Shares Portfolio had no open contracts.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign currencies are translated into U.S. dollars
using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
D. Forward Foreign Currency Contracts
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolio's
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering into
these contracts from the potential inability of counterparties to meet the
terms of the contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
E. Taxes
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of each Portfolio's distributions may be shown in the
accompanying financial statements as either from, or in excess of, net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2003, Growth Shares VCT Portfolio had a capital loss
carryforward of $40,517,554, of which the following amounts will expire
between 2008 and 2011 if not utilized: $4,132,928 in 2008, $9,820,202 in
2009, $19,245,183 in 2010 and $7,319,241 in 2011.
The portfolio elected to defer $85,372 in capital losses recognized between
November 1, 2003 and December 31, 2003 to its fiscal year ending December 31,
2004.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the components
of distributable earnings (accumulated losses) as of December 31, 2003 and
the distributions paid during the year ended December 31, 2003 on a tax basis
as of December 31, 2003.
12
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pioneer
Growth Shares
VCT Portfolio
2003
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 4,477
Long-Term capital gain --
------------
4,477
Return of Capital --
------------
Total distributions $ 4,477
============
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/
(Capital loss carryforward) (40,517,554)
Unrealized appreciation (depreciation) 1,561,822
------------
Total $(38,955,732)
============
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
F. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio shares as of
trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc.
(PFD), the principal underwriter for the Trust and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in
commissions on the sale of Trust shares for the six months ended June 30,
2004. Distribution fees are calculated based on the average daily net asset
values attributable to Class I and Class II shares of the Portfolio,
respectively.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for
its services, which are allocated based on the number of accounts in each
class and the ratable allocation of related out-of-pocket expenses (see Note
3). Income, common expenses and realized and unrealized gains and losses are
calculated at the Portfolio level and allocated daily to each class of shares
based on the respective percentage of adjusted net assets at the beginning of
the day. Distributions paid by the Portfolio with respect to each class of
shares are calculated in the same manner, at the same time, and in the same
amount, except that Class I and Class II shares can bear different transfer
agent and distribution fees. Income, expenses (excluding 12b-1 fees) and
gains and losses are calculated at the Portfolio level and are allocated
daily based on the respective percentage of adjusted net assets at the
beginning of the day. Dividends and distributions to shareowners are recorded
on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Trust. The loans are secured by collateral of at least 102%,
at all times, of the fair value of the securities loaned. The fair value of
the collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand. The
Trust invests cash collateral in the Securities Lending Investment Fund which
is managed by Brown Brothers Harriman & Co., the Trust's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase. The
collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at least
equal to the repurchase price.
2. Management Agreement
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.70% of the Portfolio's average daily net assets.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2004, $26,397 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
13
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
3. Transfer Agent
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004
4. Distribution Plans
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is
$1,232 payable to PFD at June 30, 2004.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2004, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ---------------------------------------------------------------------------------------------------
Growth Shares Portfolio $39,045,156 $1,123,103 $(1,775,829) $(652,726)
=========== ========== =========== =========
- ---------------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2004, were $39,697,597 and $38,914,354, respectively.
7. Capital Shares
At June 30, 2004, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- ---------------------------------------------------------------------------------------------------
Growth Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount
- ---------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 50,359 $ 618,962 91,892 $ 1,012,931
Reinvestment of distributions -- -- 403 4,477
Shares repurchased (251,629) (3,068,841) (731,375) (7,757,809)
----------------------------------------------------------------
Net increase (201,270) $(2,449,879) (639,080) $(6,740,401)
================================================================
CLASS II:
Shares sold 233,502 $ 2,834,133 271,796 $ 3,091,881
Reinvestment of distributions -- -- -- --
Shares repurchased (18,080) (218,795) (46,885) (519,493)
----------------------------------------------------------------
Net increase 215,422 $ 2,615,338 224,911 $ 2,572,388
================================================================
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17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers
John F. Cogan, Jr., President
Osbert M. Hood, Executive Vice President
Vincent Nave, Treasurer
Dorothy E. Bourassa, Secretary
Christopher J. Kelley, Assistant Secretary
David C. Phelan, Assistant Secretary
Luis I. Presutti, Assistant Treasurer
Gary Sullivan, Assistant Treasurer
Katherine Kim Sullivan, Assistant Treasurer
Trustees
John F. Cogan, Jr., Chairman
Mary K. Bush
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Osbert M. Hood
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Offering Legend
Please consider the fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the fund and should be read carefully before you invest or send money. To
obtain a prospectus and for other information on any Pioneer fund, call
1-800-225-6292 or visit our website www.pioneerfunds.com.
16076-00-0804
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
N/A
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
N/A
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
N/A
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
N/A
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognizes the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognizes that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
N/A
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
N/A
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
N/A
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Variable Contracts Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date August XX, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date August XX, 2004
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date August XX, 2004
* Print the name and title of each signing officer under his or her signature.