-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Iy+eXgjnc7Yj1KcYniYANsiRDAebqBWyo9VIGbU27bRcOZlJyGoZWYlK+cvK5E2u pilWfxdqgCxgAV+zH46SoQ== 0000930709-06-000079.txt : 20060829 0000930709-06-000079.hdr.sgml : 20060829 20060829111705 ACCESSION NUMBER: 0000930709-06-000079 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060829 DATE AS OF CHANGE: 20060829 EFFECTIVENESS DATE: 20060829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER VARIABLE CONTRACTS TRUST /MA/ CENTRAL INDEX KEY: 0000930709 IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08786 FILM NUMBER: 061060900 BUSINESS ADDRESS: STREET 1: 60 STATE ST STREET 2: 19TH FLOOR CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6177427825 MAIL ADDRESS: STREET 1: 60 STATE ST STREET 2: 19TH FLOOR CITY: BOSTON STATE: MA ZIP: 021091820 FORMER COMPANY: FORMER CONFORMED NAME: VARIABLE INSURANCE CONTRACTS TRUST DATE OF NAME CHANGE: 19940929 0000930709 S000010158 Pioneer America Income VCT Portfolio C000028180 Pioneer America Income VCT Portfolio: Class I C000028181 Pioneer America Income VCT Portfolio: Class II 0000930709 S000010159 Pioneer Fund VCT Portfolio C000028182 Pioneer Fund VCT Portfolio: Class I C000028183 Pioneer Fund VCT Portfolio: Class II 0000930709 S000010160 Pioneer Real Estate Shares VCT Portfolio C000028184 Pioneer Real Estate Shares VCT Portfolio: Class I C000028185 Pioneer Real Estate Shares VCT Portfolio: Class II 0000930709 S000010161 Pioneer Small Cap Value VCT Portfolio C000028186 Pioneer Small Cap Value VCT Portfolio: Class I C000028187 Pioneer Small Cap Value VCT Portfolio: Class II 0000930709 S000010162 Pioneer Small Company VCT Portfolio C000028188 Pioneer Small Company VCT Portfolio: Class I C000028189 Pioneer Small Company VCT Portfolio: Class II 0000930709 S000010163 Pioneer Strategic Income VCT Portfolio C000028190 Pioneer Strategic Income VCT Portfolio: Class I C000028191 Pioneer Strategic Income VCT Portfolio: Class II 0000930709 S000010164 Pioneer Money Market VCT Portfolio C000028192 Pioneer Money Market VCT Portfolio: Class I 0000930709 S000010165 Pioneer Value VCT Portfolio C000028193 Pioneer Value VCT Portfolio: Class II C000030378 Pioneer Value VCT Portfolio: Class I 0000930709 S000010166 Pioneer AmPac Growth VCT Portfolio C000028194 Pioneer AmPac Growth VCT Portfolio: Class II 0000930709 S000010167 Pioneer Small and Mid Cap Growth VCT Portfolio C000028195 Pioneer Small and Mid Cap Growth VCT Portfolio: Class II 0000930709 S000010168 Pioneer Oak Ridge Large Cap Growth VCT Portfolio C000028196 Pioneer Oak Ridge Large Cap Growth VCT Portfolio: Class II 0000930709 S000010169 Pioneer Balanced VCT Portfolio C000028197 Pioneer Balanced VCT Portfolio: Class I C000028198 Pioneer Balanced VCT Portfolio: Class II 0000930709 S000010170 Pioneer Growth Opportunities VCT Portfolio C000028199 Pioneer Growth Opportunities VCT Portfolio: Class II C000030379 Pioneer Growth Opportunities VCT Portfolio: Class I 0000930709 S000010171 Pioneer Small Cap Value II VCT Portfolio C000028200 Pioneer Small Cap Value II VCT Portfolio: Class II C000030380 Pioneer Small Cap Value II VCT Portfolio: Class I 0000930709 S000010172 Pioneer Bond VCT Portfolio C000028201 Pioneer Bond VCT Portfolio: Class II C000030381 Pioneer Bond VCT Portfolio: Class I 0000930709 S000010173 Pioneer Cullen Value VCT Portfolio C000028202 Pioneer Cullen Value VCT Portfolio: Class II 0000930709 S000010174 Pioneer Equity Opportunity VCT Portfolio C000028203 Pioneer Equity Opportunity VCT Portfolio: Class II C000030382 Pioneer Equity Opportunity VCT Portfolio: Class I 0000930709 S000010175 Pioneer Global High Yield VCT Portfolio C000028204 Pioneer Global High Yield VCT Portfolio: Class II 0000930709 S000010176 Pioneer Ibbotson Agressive Allocation VCT Portfolio C000028205 Pioneer Ibbotson Agressive Allocation VCT Portfolio: Class II 0000930709 S000010177 Pioneer Ibbotson Moderate Allocation VCT Portfolio C000028206 Pioneer Ibbotson Moderate Allocation VCT Portfolio: Class II 0000930709 S000010178 Pioneer Ibbotson Growth Allocation VCT Portfolio C000028207 Pioneer Ibbotson Growth Allocation VCT Portfolio: Class II 0000930709 S000010179 Pioneer Core Bond VCT Portfolio C000028208 Pioneer Core Bond VCT Portfolio: Class II 0000930709 S000010180 Pioneer Emerging Markets VCT Portfolio C000028209 Pioneer Emerging Markets VCT Portfolio: Class I C000028210 Pioneer Emerging Markets VCT Portfolio: Class II 0000930709 S000010181 Pioneer Equity Income VCT Portfolio C000028211 Pioneer Equity Income VCT Portfolio: Class I C000028212 Pioneer Equity Income VCT Portfolio: Class II 0000930709 S000010182 Pioneer Europe VCT Portfolio C000028213 Pioneer Europe VCT Portfolio: Class I C000028214 Pioneer Europe VCT Portfolio: Class II 0000930709 S000010183 Pioneer Growth Shares VCT Portfolio C000028215 Pioneer Growth Shares VCT Portfolio: Class I C000028216 Pioneer Growth Shares VCT Portfolio: Class II 0000930709 S000010184 Pioneer High Yield VCT Portfolio C000028217 Pioneer High Yield VCT Portfolio: Class I C000028218 Pioneer High Yield VCT Portfolio: Class II 0000930709 S000010185 Pioneer International Value VCT Portfolio C000028219 Pioneer International Value VCT Portfolio: Class I C000028220 Pioneer International Value VCT Portfolio: Class II 0000930709 S000010186 Pioneer Mid Cap Value VCT Portfolio C000028221 Pioneer Mid Cap Value VCT Portfolio: Class I C000028222 Pioneer Mid Cap Value VCT Portfolio: Class II N-CSR 1 ncsr.txt OMB APPROVAL OMB Number: 3235-0570 Expires: September 30, 2007 Estimated average burden hours per response.....19.4 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-08786 Pioneer Variable Contracts Trust (Exact name of registrant as specified in charter) 60 State Street, Boston, MA 02109 (Address of principal executive offices) (ZIP code) Dorothy E. Bourassa, Pioneer Investment Management, Inc., 60 State Street, Boston, MA 02109 (Name and address of agent for service) Registrant's telephone number, including area code: (617) 742-7825 Date of fiscal year end: December 31 Date of reporting period: January 1, 2006 through June 30, 2006 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO SHAREOWNERS. [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Variable Contracts Trust -- Class I Shares Pioneer Emerging Markets VCT Portfolio Pioneer Europe VCT Portfolio Pioneer International Value VCT Portfolio Pioneer Small Cap Value VCT Portfolio Pioneer Mid Cap Value VCT Portfolio Pioneer Growth Shares VCT Portfolio Pioneer Real Estate Shares VCT Portfolio Pioneer Fund VCT Portfolio Pioneer Equity Income VCT Portfolio Pioneer Balanced VCT Portfolio Pioneer High Yield VCT Portfolio Pioneer Strategic Income VCT Portfolio Pioneer America Income VCT Portfolio Pioneer Money Market VCT Portfolio SEMIANNUAL REPORT June 30, 2006 Allmerica Financial Life Insurance and Annuity Company PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================ Table of Contents Letter to Shareowners 1 Comparing Ongoing Portfolio Expenses 2 Pioneer Emerging Markets VCT Portfolio Portfolio and Performance Update 4 Portfolio Management Discussion 5 Pioneer Europe VCT Portfolio Portfolio and Performance Update 6 Portfolio Management Discussion 7 Pioneer International Value VCT Portfolio Portfolio and Performance Update 8 Portfolio Management Discussion 9 Pioneer Small Cap Value VCT Portfolio Portfolio and Performance Update 10 Portfolio Management Discussion 11 Pioneer Mid Cap Value VCT Portfolio Portfolio and Performance Update 13 Portfolio Management Discussion 14 Pioneer Growth Shares VCT Portfolio Portfolio and Performance Update 15 Portfolio Management Discussion 16 Pioneer Real Estate Shares VCT Portfolio Portfolio and Performance Update 17 Portfolio Management Discussion 18 Pioneer Fund VCT Portfolio Portfolio and Performance Update 19 Portfolio Management Discussion 20 Pioneer Equity Income VCT Portfolio Portfolio and Performance Update 22 Portfolio Management Discussion 23 Pioneer Balanced VCT Portfolio Portfolio and Performance Update 25 Portfolio Management Discussion 26 Pioneer High Yield VCT Portfolio Portfolio and Performance Update 28 Portfolio Management Discussion 29 Pioneer Strategic Income VCT Portfolio Portfolio and Performance Update 30 Portfolio Management Discussion 31 Pioneer America Income VCT Portfolio Portfolio and Performance Update 33 Portfolio Management Discussion 34 Pioneer Money Market VCT Portfolio Portfolio and Performance Update 36 Schedules of Investments Pioneer Emerging Markets VCT Portfolio 37 Pioneer Europe VCT Portfolio 41 Pioneer International Value VCT Portfolio 43 Pioneer Small Cap Value VCT Portfolio 47 Pioneer Mid Cap Value VCT Portfolio 51 Pioneer Growth Shares VCT Portfolio 54 Pioneer Real Estate Shares VCT Portfolio 56 Pioneer Fund VCT Portfolio 57 Pioneer Equity Income VCT Portfolio 61 Pioneer Balanced VCT Portfolio 64 Pioneer High Yield VCT Portfolio 72 Pioneer Strategic Income VCT Portfolio 78 Pioneer America Income VCT Portfolio 89 Pioneer Money Market VCT Portfolio 94 Financial Statements 96 Notes to Financial Statements 120
PIONEER VARIABLE CONTRACTS TRUST ================================================================================ LETTER TO SHAREOWNERS 6/30/06 ================================================================================ Dear Shareowner, We know from the history of the capital markets that sudden shifts in investor sentiment can occur with little warning, based on an assortment of events. We believe such a shift in sentiment is occurring in reaction to the possibility that U.S. economic growth may slow in the second half of 2006. While U.S. markets fell in late May and early June, the economic events of the six- and 12-month periods ending June 30, 2006, have actually been characterized by continued low inflation at home and strong growth prospects abroad with rising commodity and stock prices. According to the International Monetary Fund, international economic growth in 2004-5 was the fastest of any two-year period in more than 30 years, and 2006 growth is projected to match the healthy growth of 2005. The growth has been broad-based, with Europe, Japan, and emerging market economies all showing strength. The result has been rising prices across a broad range of commodities, increasing corporate profits, and higher interest rates. The U.S. bond markets' concern has been that strong economic growth would spark inflation - we have already seen commodity prices rise, and U.S. labor costs are threatening to increase, since we are close to full employment. This may also be a reason why public sentiment is becoming uneasy. Despite strong first quarter economic growth, the U.S. economy for the second half of the year may slow in reaction to past increases in interest rates and energy costs. Thus far the only sign of such a slowdown has been a cooling housing market. Yet many observers believe a slower growing economy could be welcomed by the markets. The U.S. Federal Reserve has continued its program of measured short-term interest rate increases. However, the Fed Chairman, Ben Bernanke, indicated that inflation may moderate, which would permit the Fed to stop raising interest rates. Such action could have positive effects for both consumers and investors over the intermediate-to-longer term. By restraining inflation, the Fed may also limit upward pressure on longer-maturity bond yields and downward pressure on stocks' price/earnings ratios. In summary, we think security market valuations remain reasonable, and yet there are no guarantees in investing. The unpredictability reinforces the importance of Pioneer's message that investors should remain diversified, take a long-term view, and base investment decisions on economic and market fundamentals, rather than on emotion. Our investment philosophy and approach continue to be based on the use of fundamental research to identify a range of opportunities that offer an attractive balance of risk and reward to help shareowners work toward their long-term goals. Respectfully, /s/ OSBERT M. HOOD Osbert M. Hood President Pioneer Investment Management, Inc. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolios' historical or future performance are statements of the opinion of portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 1 PIONEER VARIABLE CONTRACTS TRUST ================================================================================ COMPARING ONGOING PORTFOLIO EXPENSES ================================================================================ As a beneficial owner of one or more Portfolios, you incur two types of costs: (1) transactions costs, including sales charges (loads) at the time of purchase and redemption fees upon redemption of your shares, and (2) ongoing costs including management fees and other Portfolio expenses. The examples below are based on an investment of $1,000 at the beginning of the period and held for the entire period (January 1, 2006 - June 30, 2006). These examples are intended to help you understand your ongoing costs (in dollars), of investing in a Portfolio and to compare these costs to investing in other variable annuity portfolios. Actual Expenses The first line of the table below for each Portfolio provides information about the actual account values and actual expenses. You may use the information in the line, together with amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line for a Portfolio under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during the period. Hypothetical Example for Comparison Purposes The second line of the table below for each Portfolio provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each Portfolio. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other variable annuities. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher.
Class I Shares ----------------------------------------------------- Beginning Ending Account Account Expenses Paid Value Value During Period 1/1/06 6/30/06 (1/1/06 - 6/30/06) - -------------------------------------------------------------------------------------------------- Pioneer Emerging Markets VCT Portfolio Actual $ 1,000.00 $ 1,091.40 $ 8.14 Hypothetical $ 1,000.00 $ 1,017.01 $ 7.85 Pioneer Europe VCT Portfolio Actual $ 1,000.00 $ 1,124.10 $ 8.06 Hypothetical $ 1,000.00 $ 1,017.21 $ 7.65 Pioneer International Value VCT Portfolio Actual $ 1,000.00 $ 1,079.90 $ 7.43 Hypothetical $ 1,000.00 $ 1,017.65 $ 7.20 Pioneer Small Cap Value VCT Portfolio Actual $ 1,000.00 $ 1,054.30 $ 4.99 Hypothetical $ 1,000.00 $ 1,019.93 $ 4.91 Pioneer Mid Cap Value VCT Portfolio Actual $ 1,000.00 $ 1,011.80 $ 3.58 Hypothetical $ 1,000.00 $ 1,021.17 $ 3.60 Pioneer Growth Shares VCT Portfolio Actual $ 1,000.00 $ 972.90 $ 4.89 Hypothetical $ 1,000.00 $ 1,019.84 $ 5.01 Pioneer Real Estate Shares VCT Portfolio Actual $ 1,000.00 $ 1,148.30 $ 4.74 Hypothetical $ 1,000.00 $ 1,020.38 $ 4.46
2 PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Class I Shares ----------------------------------------------------- Beginning Ending Account Account Expenses Paid Value Value During Period 1/1/06 6/30/06 (1/1/06 - 6/30/06) - ----------------------------------------------------------------------------------------------- Pioneer Fund VCT Portfolio Actual $ 1,000.00 $ 1,051.10 $ 3.56 Hypothetical $ 1,000.00 $ 1,021.32 $ 3.51 Pioneer Equity Income VCT Portfolio Actual $ 1,000.00 $ 1,086.20 $ 3.57 Hypothetical $ 1,000.00 $ 1,021.37 $ 3.46 Pioneer Balanced VCT Portfolio Actual $ 1,000.00 $ 1,001.30 $ 4.42 Hypothetical $ 1,000.00 $ 1,020.38 $ 4.46 Pioneer High Yield VCT Portfolio Actual $ 1,000.00 $ 1,015.20 $ 3.70 Hypothetical $ 1,000.00 $ 1,021.12 $ 3.71 Pioneer Strategic Income VCT Portfolio Actual $ 1,000.00 $ 1,011.60 $ 4.34 Hypothetical $ 1,000.00 $ 1,020.48 $ 4.36 Pioneer America Income VCT Portfolio Actual $ 1,000.00 $ 989.70 $ 3.70 Hypothetical $ 1,000.00 $ 1,021.08 $ 3.76 Pioneer Money Market VCT Portfolio Actual $ 1,000.00 $ 1,020.50 $ 3.06 Hypothetical $ 1,000.00 $ 1,021.77 $ 3.06
Expenses are equal to the annualized expense ratio of a Portfolio's Class I shares (as indicated in the table below), multiplied by 181/365 (to reflect the one-half year period.)
Annualized Expense Ratio - ------------------------------------------------------------ Pioneer Emerging Markets VCT Portfolio 1.57% Pioneer Europe VCT Portfolio 1.53% Pioneer International Value VCT Portfolio 1.44% Pioneer Small Cap Value VCT Portfolio 0.98% Pioneer Mid Cap Value VCT Portfolio 0.72% Pioneer Growth Shares VCT Portfolio 1.00% Pioneer Real Estate Shares VCT Portfolio 0.89% Pioneer Fund VCT Portfolio 0.70% Pioneer Equity Income VCT Portfolio 0.69% Pioneer Balanced VCT Portfolio 0.89% Pioneer High Yield VCT Portfolio 0.74% Pioneer Strategic Income VCT Portfolio 0.87% Pioneer America Income VCT Portfolio 0.75% Pioneer Money Market VCT Portfolio 0.61%
3 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] International Common Stocks 59.5% Depositary Receipts for International Stocks 27.1% U.S. Common Stocks 7.7% Temporary Cash Investment 3.2% International Preferred Stocks 2.5%
Geographical Distribution Portfolio (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] South Korea 18.1% Brazil 16.9% South Africa 11.7% Russia 9.6% Taiwan 8.1% People's Republic of China 7.0% India 3.7% Israel 3.7% Mexico 3.4% Turkey 2.6% Hong Kong 1.6% Philippines 1.5% Malaysia 1.5% Thailand 1.5% Indonesia 1.5% Peru 1.2% Argentina 1.1% Other (individually less than 1%) 5.3%
Five Largest Holdings (As a percentage of equity holdings) 1. Petrobras Brasileiro (A.D.R.) 4.43% 2. Gazprom (A.D.R.) 3.31 3. Lukoil Holding (A.D.R.) 2.27 4. Kookmin Bank (A.D.R.) 1.88 5. Teva Pharmaceutical Industries, Ltd. 1.84
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $27.54 $28.09 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.1586 $ - $2.7694
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Emerging Markets VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) Emerging Markets Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Emerging Markets MSCI Emerging VCT Portfolio Markets Index - ------------------------------------------ 10/98 10,000 10,000 14,120 14,930 6/00 17,323 16,344 11,777 12,124 6/02 12,194 12,282 13,062 13,137 6/04 17,019 17,539 22,451 23,659 6/06 32,057 32,154
The Morgan Stanley Capital International (MSCI) Emerging Markets Index measures the performance of emerging market stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 16.41% (10/30/98) 5 Years 22.17% 1 Year 42.78%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ In the following interview, Christopher Smart, Pioneer Emerging Market VCT Portfolio's portfolio manager, discusses the factors that influenced performance during the six months ended June 30, 2006. Q. How did emerging markets equities perform during the Portfolio's semiannual reporting period? A. The performance of the emerging markets was essentially flat over the full six months, masking a high level of volatility in the asset class. Returns were very strong in the first four months of the period, during which emerging markets stocks remained supported by improving fundamentals and investors' robust appetite for risk. In May and June, however, the investment backdrop shifted rapidly once it became apparent that rising inflation might force the U.S. Federal Reserve to increase interest rates more than had been expected. The possibility of reduced liquidity and a slower U.S. economy prompted many investors to take profits in the emerging markets, leading to a sharp downturn. While this drop may have been unexpected for many investors, a pullback was inevitable given the strong recent performance of the asset class. Q. How did the Portfolio perform? A. For the six months ended June 30, 2006, Class I shares rose 9.14% at net asset value. We are pleased to report that the Portfolio outpaced both the 7.33% return of the Morgan Stanley Capital International (MSCI) Emerging Markets Index and the 7.09% average return of the 32 portfolios in Lipper's Emerging Markets Funds category. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What factors helped and hurt performance? A. From a broader standpoint, we believe a key factor behind the Portfolio's strong relative performance is our disciplined approach to investing. We combine top-down country analysis - which is designed to identify the most attractive markets within the asset class - with bottom-up fundamental research that seeks to find companies that are undervalued relative to their growth prospects. In terms of specific contributors to performance during the past six months, the Portfolio's return was helped by its above-benchmark weighting in Brazil, where we benefited from rising consumer spending through holdings in companies such as the supermarket chain Lojas Renner. Also helping performance was the Portfolio's higher weighting in South Africa relative to the benchmark. We have sought to take advantage of two important trends in the country: the growing middle class and rising government spending on infrastructure projects. With respect to the former, we benefited from holdings in Ellerines, a furniture company, and Standard Bank, which has benefited from rapid growth in the demand for loans and savings vehicles. The Portfolio's positions in South Korea and Russia also boosted performance. Two Korean stocks were among the Portfolio's leading contributors during the period: the shipbuilding companies Samsung Heavy Industries and Hyundai Heavy Industries. In Russia, rising energy prices boosted shares of the gas giant Gazprom, which has become one of the largest listed companies in the world. The Portfolio's holdings in Turkey, which underperformed the broader market by a wide margin, weighed on performance. We remain cautiously optimistic on Turkey, however, since we believe valuations remain reasonable and the country's growth story is intact. The Portfolio also was hurt by below-benchmark weighting in Taiwan, which performed well behind a surprisingly strong rebound in the domestic economy. We did not foresee this recovery taking place as soon as it did and were, therefore, not fully positioned to take advantage of the rally in Taiwanese equities. Q. What is your broad view regarding the emerging markets? A. We believe the long-term investment story remains very positive despite the recent downturn. Government finances continue to improve, and corporations are adopting increasingly shareholder-friendly management practices. Additionally, the rate of economic growth in the emerging markets is stronger than that of the industrialized nations - at about 6.5% versus 2.5% - yet valuations are less expensive. It should also be noted that the emerging markets asset class makes up just 7% of the total global stock market capitalization despite having 40% of its gross domestic product and 60% of its population. With these factors forming the investment backdrop, we believe the foundation is in place for continued long-term performance of emerging markets equities. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 5 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] International Common Stocks 94.7% International Preferred Stocks 2.9% U.S. Common Stocks 2.4%
Geographical Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] United Kingdom 34.2% France 18.5% Switzerland 11.6% Germany 11.4% Ireland 5.6% Netherlands 4.1% Sweden 4.0% Spain 3.1% Italy 3.0% Panama 2.4% Norway 2.1%
Five Largest Holdings (As a percentage of equity holdings) 1. BP Amoco Plc 5.43% 2. Royal Bank of Scotland Group Plc 5.18 3. BNP Paribas SA 4.89 4. CS Group 4.29 5. TNT NV 4.14
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $12.75 $11.42 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.0843 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Europe VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) Europe Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Europe MSCI Europe VCT Portfolio Index - ------------------------------------------ 10/98 10,000 10,000 10,426 10,748 6/00 13,341 12,405 8,883 9,750 6/02 8,179 9,028 7,589 8,594 6/04 9,393 11,120 10,827 13,056 6/06 13,339 16,364
The Morgan Stanley Capital International (MSCI) Europe Index measures the performance of stocks in European developed markets. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 3.83% (10/30/98) 5 Years 8.47% 1 Year 23.20%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 6 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ Despite a volatile second quarter as investors reacted to increased concerns over inflation and interest rates, European stocks posted strong positive returns over the first half of 2006, supported by solid company earnings growth, ongoing merger and acquisition activity and an improving economic backdrop. In the discussion below, Andrew Arbuthnott, who is responsible for the day-to-day management of the Europe VCT Portfolio, discusses the factors that influenced the Portfolio's performance over the period. Q. How did the Portfolio perform? A. For the six months ended June 30, 2006, Class I shares returned 12.41% at net asset value. In comparison, the Portfolio's benchmark, the Morgan Stanley Capital International (MSCI) Europe Index, posted a return of 13.58% while the 137 International Core funds in the Lipper peer group generated an average return of 8.95%. European equity returns for the period were strong relative to U.S. domestic equity indices. In addition, with Portfolio holdings denominated in euros, returns for the Portfolio and the Index reflect the positive impact for U.S. investors of the U.S. dollar's decline over the period versus the euro. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. Would you review the Portfolio's overall approach? A. The Portfolio takes a focused approach to investing, holding around 30 stocks that reflect our strongest investment ideas. We believe this focus helps to maximize the benefits of our bottom-up stock selection process while at the same time giving us the ability to construct a diversified, multi-cap portfolio. Despite the Portfolio's relatively high degree of focus, we expect its overall level of volatility to remain broadly comparable to that of its benchmark due to the consistent application of our rigorous investment process. The goal is to invest in those securities with strong upside potential and - critically - limited downside risk. Q. What positions most influenced the Portfolio's relative performance? A. Among positive contributors, a position in French supermarket group Carrefour strongly outperformed during the period amid improving sales volumes at its stores. We decided to take profits in this holding late in the second quarter of 2006, reinvesting in other stocks where we believed more upside potential remained. Holdings in the materials sector contributed positively to performance, in particular Lafarge, a French building materials company. Lafarge advanced on the strength of better-than-expected full year results and its management team's restructuring and cost control plans. Other key holdings in the materials sector such as St.Gobain and Rio Tinto also outperformed, with the latter benefiting from exceptional increases in commodity metal prices during the first half of 2006. We saw a strong contribution from our holdings in the automotive sector where positions in Porsche and Continental rose sharply. On the negative side of the ledger, Portfolio returns were held back by weakness in the share price of Carnival Corporation, a cruise ship operator, as renewed strength in the price of oil and slower bookings on Caribbean routes eroded the company's profits. We continue to believe that, as the global market leader in the cruise industry, Carnival is well positioned to be a key beneficiary from this area's attractive long-term growth potential, and we used this period of weakness to add to the Portfolio's position. Investments in Repsol YPF, a Spanish oil company, held back performance, as the company unexpectedly lowered its oil reserves in the first quarter. In addition, the Bolivian government's nationalization of oil assets dented investor sentiment toward Repsol YPF in the second quarter, although the financial impact of this move on the company was minimal. Q. What is your outlook? A. In our view, European equity market weakness in the second quarter was driven by technical factors, such as investors adjusting their portfolios ahead of potential interest rate rises, rather than deteriorating underlying fundamentals. We believe European equities continue to trade at attractive levels in absolute terms and also look well supported relative to bonds. In general, company fundamentals remain healthy and management teams continue to look to enhance shareholder value through acquisitions, restructuring, and returning excess cash through dividends or share buybacks. While investor sentiment has been improving, we do expect volatility to remain a significant factor in equity markets over the coming months, as uncertainties linger over future inflation and interest rates. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest a substantial amount of its assets in issuers located in a limited number of countries and therefore is susceptible to adverse economic, political or regulatory developments affecting those countries. The Portfolio invests in a limited number of securities and, as a result, the Portfolio's performance may be more volatile than the performance of other portfolios holding more securities. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 7 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] International Common Stocks 83.4% Depositary Receipts for International Stocks 11.1% Temporary Cash Investment 2.6% U.S. Common Stocks 2.0% International Preferred Stocks 0.9%
Geographical Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] Japan 30.2% France 11.5% United Kingdom 11.3% Switzerland 7.9% Germany 6.6% Brazil 4.7% South Korea 4.0% Russia 3.4% Australia 2.4% Singapore 2.2% People's Republic of China 2.0% Spain 1.9% Sweden 1.8% United States 1.5% Turkey 1.3% Italy 1.0% Austria 1.0% Other (individually less than 1%) 5.3%
Five Largest Holdings (As a percentage of equity holdings) 1. BNP Paribas SA 2.31% 2. Royal Bank of Scotland Group Plc 2.25 3. Total SA 2.13 4. CS Group 2.11 5. Toyota Motor Co. 2.01
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $14.73 $13.71 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.0713 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer International Value VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.) Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer MSCI All Country International Value World (ex. U.S.) VCT Portfolio Index 6/96 10,000 10,000 11,724 11,414 6/98 10,877 11,572 10,960 12,675 6/00 13,888 14,969 9,569 11,406 6/02 8,823 10,474 8,072 10,035 6/04 10,226 13,297 11,280 15,551 6/06 14,637 19,967
The Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.) Index measures the performance of developed and emerging market stock markets. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ 10 Years 3.88% 5 Years 8.87% 1 Year 29.76%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 8 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ International stocks rallied considerably during the first half of the Portfolio's fiscal year - despite a retreat this spring, when global inflationary concerns sparked a more cautionary undercurrent and a general flight to quality. Lead portfolio manager Christopher Smart discusses these developments in the following interview. Q. How did the Portfolio perform during the first half of fiscal 2006? A. For the six months ended June 30, 2006, Class I shares rose 7.99% at net asset value. Three factors - an emphasis on emerging markets, stock selection in Japan and financial stocks in Europe - contributed to this return. Despite these successes, however, the Portfolio lagged the 9.99% return of the Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.) Index and the 8.95% average return for the 137 International Large-Cap Core funds in its Lipper category for the same period. We attribute this relative underperformance in part to the disappointing performance of two stocks in the telecom sector. Wireless provider Vodafone Group and telecommunications provider France Telecom encountered some headwinds during the fiscal year. Vodafone's stock fell in response to the company's announcement in November 2005 that it was facing substantially new competition in Europe. We believe the competition, combined with the difficulties that Vodafone is experiencing with the restructuring of its subsidiary in Japan, will generate much slower growth in the next few years. Consequently, we sold the entire position. Investments in France Telecom also fell during the year, but we believe the company's prospects are more attractive longer term and retained the stock in the Portfolio. Spanish oil giant Repsol also detracted from performance, as it was forced to reduce the estimated size of its oil reserves in Argentina and Bolivia. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. The Portfolio's exposure to key emerging markets helped performance. Could you mention some of those holdings? A. Certainly. The Portfolio's positions in South Korea and Russia were strong contributors to performance. We remain positive on the Korean market, based on our confidence in the continued health of both the consumer and export sectors. Two Korean shipbuilding companies stood out during the period - Daewoo Heavy Industries & Machinery and Hyundai Heavy Industries, which are benefiting from trade and globalization trends. In Russia, rising energy prices boosted shares of Lukoil and the natural gas giant Gazprom, which has become one of the largest listed companies in the world. Q. Europe is experiencing new signs of growth. Are the Portfolio's European investments benefiting? A. With the exception of the telecommunications sector, holdings across Europe fared well - particularly in the financial services sector. Societe Generale is focused on lowering costs to improve its profit margins. In addition, this diversified bank is expanding financial services businesses outside of France to increase its market share. Credit Suisse, which is domiciled in Switzerland, has initiated substantial internal restructuring and cost reductions that may contribute to its future profitability and growth prospects. Q. Are you concerned that the market's reversal this spring could be signaling a shift in investor sentiment, or do you see it a temporary correction? A. We do not anticipate a wholesale shift in investor sentiment at this time. High oil and commodity prices are understandably causing concerns for investors, but global growth remains solid and is supported by strong economic numbers. The correction appears to reflect a general reduction in risk appetite rather than a response to specific fundamental deterioration. As long as global inflationary pressures remain tame, we are upbeat about growth prospects worldwide. In Japan, domestic forces, including rising wages and climbing property values, are driving the recovery there. Europe may face some headwinds if the Central Bank tightens significantly, but consumers appear optimistic. New signs of growth in Germany suggest that the rest of the continent may see economic improvement. And in emerging markets, increasing prosperity and rising consumer demand are driving economic growth. We'll be keeping a sharp eye on valuations to ensure that stock prices remain reasonable relative to earnings prospects, but we still believe that the long-term outlook for international markets remains bright. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest a substantial amount of its assets in issuers located in a limited number of countries and therefore is susceptible to adverse economic, political or regulatory developments affecting those countries. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 9 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Common Stocks 81.6% Temporary Cash Investment 14.3% Exchange Traded Fund 0.7% Preferred Stocks 0.4% International Common Stocks 3.0%
Sector Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] Financials 24.8% Information Technology 20.4% Industrials 17.1% Energy 10.2% Health Care 9.0% Consumer Discretionary 7.3% Consumer Staples 3.8% Materials 3.1% Utilities 2.6% Telecommunication Services 1.7%
Five Largest Holdings (As a percentage of equity holdings) 1. Insight Enterprises, Inc. 1.93% 2. Apollo Investment Corp. 1.92 3. Assured Guaranty, Ltd. 1.84 4. Pacer International, Inc. 1.69 5. Alaska Communications Systems Group, Inc. 1.67
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $16.51 $16.19 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.0213 $0.1027 $0.4162
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Small Cap Value VCT Portfolio at net asset value, compared to that of the Russell 2000 Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Russell Small Cap Value 2000 VCT Portfolio Index - ----------------------------------------------- 11/01 10,000 10,000 11,061 10,118 10,078 9,952 6/04 13,133 13,273 14,858 14,526 6/06 17,159 16,644
The Russell 2000 Index measures the performance of U.S. small-cap stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ Life-of-Class 13.01% (11/8/01) 1 Year 15.49%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 10 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ In the following discussion, portfolio managers David Adams and John McPherson review the economic background and describe some of the decisions that contributed to the performance of Pioneer Small Cap Value VCT Portfolio over the six months ended June 30, 2006. Q. How did the Portfolio perform over this period? A. For the six months ended June 30, 2006, Class I shares of the Portfolio returned 5.43% at net asset value. These results were behind the 8.21% return on the Russell 2000 Index, the Fund's benchmark. The Portfolio's 39 Lipper Small-Cap Value peers returned 8.09% over the six months. The first four months of the year were characterized by strong performance from the lower-quality, more speculative names that comprise the Russell 2000 Index. Our more conservative style leads us to invest in higher-quality issues with strong fundamentals and this focus contributed to the Portfolio's underperformance versus the benchmark. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. Please describe the investment background over the past year and how it affected small-cap stocks. A. An extended surge in the nation's growth rate fueled strong equity markets through most of the period. But the economy's strength also raised fears of inflation, dampening hopes for an end to the Federal Reserve Board's long campaign of interest rate hikes. Burdensome energy costs and geopolitical tensions centering on Iran, combined with rising interest rates and soaring commodity prices, cut the rally short, setting off a sharp downtrend beginning in mid-May. Q. Which of your investment decisions had the most favorable impact on results? A. Although we were slightly underweight among health-care issues, successful stock selection enabled us to outperform the benchmark comfortably in this sector. In the consumer discretionary sector, our slightly underweight stance also aided results. The Portfolio outperformed among industrials as well, the Russell 2000 Index's best- performing sector. Only three of the Portfolio's industry sectors showed declines over the past six months; any underperformance was relative to the benchmark sector. For example, information technology was slightly down, lagging benchmark returns. Energy showed net positive results, but still trailed the benchmark as the result of selling which trimmed gains in several issues that had been rising for several quarters. We have been pruning energy holdings as valuations bumped into the upper parameters set by our value-based approach. We are still overweight in this volatile sector, but by a smaller margin than in the last few years. Aspen Technology, the Portfolio's strongest contributor during the period, moved higher as new management aggressively put the corporate house in order. Aspen's design and process management software is widely used in the petrochemical and refining industries. Internal issues at Aspen had left customers wary of committing to new products, but a revamped infrastructure and other changes have begun to boost sales. Flowserve, which fabricates high-tolerance valves and pipes for the harsh conditions found in refineries, also contributed. Initiatives by new management to address financial and operational issues coincided with growth in Flowserve's markets, including new petrochemical facilities in China and elsewhere. Sharply higher metals prices, the result of the global boom in commodities, drove up shares of Carpenter Technology, a leading metals processor. We sold a large portion of the Portfolio's position to lock in profits. We also took profits in Piper Jaffray, a regional brokerage firm that recently bounced back after a period of disappointment. Amerigroup, an HMO focused on Medicaid patients, rebounded sharply after a sell-off last fall, thanks to improved earnings expectations. Q. Which of your choices held back results? A. North Sea supply boat operator Gulfmark Offshore disappointed during this period following an extended upward run. Demand for Gulfmark's boats is strong and the North Sea drilling outlook remains favorable over the longer term. However, the energy group was the target of profit-takers amid concerns about slackening global energy demand. We have been bullish on natural gas price trends in North America for some time. That thesis aided Portfolio returns considerably over the past three years, but hurt results this year as the relatively mild winter caused demand to weaken and prices to slide. In particular, Southwestern Energy, Swift Energy and Forest Oil, all long-time holdings, started to drop in February as a result of the weakening pricing environment. However, we believe that, over time, supply/demand imbalances will cause gas prices to rebound, which we think may benefit the Portfolio's holdings. A Word About Risk: Investments in small companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 11 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 (continued) ================================================================================ Casualty insurer Quanta Capital Holdings fell when ratings service AM Best withdrew its favorable rating, curtailing Quanta's ability to write new business. We are awaiting an announcement from the company regarding its strategy for the eventual "run-off" of the company's book of business. Run-off is an industry term used to describe when a company lets its existing book of insurance contracts lapse without writing new contracts. Avid Technology, a leader in the digitization of film and other media, slumped amid difficulties integrating Pinnacle Software, its first consumer acquisition, into the company. Until acquiring Pinnacle, Avid had worked exclusively in professional markets. Based on recent reports from the company, we are retaining our holdings. Symmetricom is the leading provider of precision atomic clocks used to send voice and data on telecom networks as well as in defense and space applications. Shares declined when what we believe to be a short-term cutback in government business diluted the benefit of increased sales to telecom companies. Q. What is your outlook for the economy and how have you positioned the Portfolio? A. We believe stocks in general should hold up well over the next several months, although returns are likely to be subdued and volatile. Underlying business fundamentals remain strong, and we believe the economy, though perhaps moderating in its growth rate, is healthy. The imponderables are macroeconomic forces that include geopolitical tensions, higher inflation driven by energy costs, and rising interest rates. As always, we remain disciplined and sensitive to valuations, both in terms of current holdings and possible new commitments. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 12 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Common Stocks 94.7% Temporary Cash Investment 4.5% Depositary Receipts for International Stocks 0.8%
Sector Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] Financials 23.9% Information Technology 12.4% Consumer Discretionary 12.0% Utilities 10.3% Industrials 10.2% Materials 9.3% Consumer Staples 9.2% Health Care 7.4% Energy 5.1% Telecommunication Services 0.2%
Five Largest Holdings (As a percentage of equity holdings) 1. Safeway, Inc. 2.54% 2. Xerox Corp. 2.39 3. CIGNA Corp. 2.33 4. W.W. Grainger, Inc. 2.29 5. NCR Corp. 2.24
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $18.26 $25.00 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.2648 $1.8961 $4.7000
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Mid Cap Value VCT Portfolio at net asset value, compared to that of the Russell Midcap Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Russell Mid Cap Value Midcap Value VCT Portfolio Index - ------------------------------------------ 6/96 10,000 10,000 11,489 12,797 6/98 13,475 16,092 13,908 16,997 6/00 13,757 15,653 17,218 19,398 6/02 16,657 19,771 17,026 19,645 6/04 22,514 25,698 26,345 31,299 6/06 27,570 35,760
The Russell Midcap Value Index measures the performance of U.S. mid-cap value stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ 10 Years 10.67% 5 Years 9.87% 1 Year 4.65%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 13 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ The domestic stock market produced generally modest, but positive, returns over the first six months of 2006. A vibrant rally in the early months faded in May, as investors grew concerned about the direction of the nation's monetary policy. Worries intensified when Ben Bernanke, the new chairman of the Federal Reserve Board, appeared to hint that the central bank might raise short-term interest rates more than had been anticipated. This raised concerns among many investors that the Fed could move too aggressively in fighting inflation and controlling growth. As a consequence, stock prices fell hard beginning in May and continued to slump through most of June. In the following discussion, Rod Wright, leader of the team that manages Pioneer Mid Cap Value VCT Portfolio, provides an update on the Portfolio, his investment strategies and the economic environment during the six months. Q. How did the Portfolio perform? A. The Portfolio had disappointing results. Class I shares had a total return of 1.18%, at net asset value, over the six months ended June 30, 2006. During that time, the Standard & Poor's 500 Index, which broadly reflects the overall market, returned 2.71%, while the benchmark Russell Midcap Value Index rose 7.02%. The Portfolio's 62 Mid-Cap Value Lipper peers returned 3.81% over the same six months. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What were the principal factors influencing performance? A. The Portfolio's underperformance relative to the market benchmarks was related to several factors. Our emphasis on higher-quality companies with strong fundamentals did not help in a period when lower-quality value stocks tended to do well. We generally avoid lower-quality companies that are asset-intensive, have low operating profit margins and whose businesses are highly cyclical. In particular, our underweighting of real estate investments trusts (REITs), utility stocks, and steel and mining companies held back results when in fact these types of stocks performed relatively well. Performance also was held back by some underperforming holdings. These included Expedia, the on-line travel service, which changed its business model as it made heavy investments in system upgrades, and Boston Scientific, the producer of cardiac devices whose stock fell because of concerns that it was paying too much in acquiring Guidant, another cardiac device corporation. We have liquidated the position in Expedia, but have retained the investment in Boston Scientific because of the company's longer-term prospects. Q. What were some of the investments that contributed positively to performance during the six months? A. Our investment in Tellabs had a major positive influence on results. This long-term holding had been an earlier disappointment, but its stock appreciated sharply during the six months on the expectations that the communications industry would be making significant new capital expenditures. We sold the position on strength, taking profits. Deere, the manufacturer of farm and heavy construction equipment, was another significant performer, as rising commodity prices encouraged farmers to invest in new equipment. Two energy holdings also did particularly well: Weatherford International, which provides oil field services to exploration and production companies; and Questar, a gas utility that also is involved in gas and oil exploration and production. Another holding that performed well was H.J. Heinz, the well-known food company. Q. What is your investment outlook? A. While we are encouraged about the health of the general economy, we are more cautious about the stock market. Leading economic indicators, including rising interest rates and high energy costs, indicate that some slowing in the rate of economic growth may occur. In this environment, we will maintain our focus on company-by-company stock selection, emphasizing fundamental research. We intend to continue to invest in high-quality companies with strong balance sheets and high profitability. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investments in mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 14 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Common Stocks 89.3% Depositary Receipts for International Stocks 5.9% Temporary Cash Investment 4.8%
Sector Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] Information Technology 30.5% Health Care 23.4% Industrials 11.9% Consumer Discretionary 11.8% Consumer Staples 10.5% Financials 5.4% Utilities 2.8% Energy 1.9% Materials 1.8%
Five Largest Holdings (As a percentage of equity holdings) 1. Microsoft Corp. 5.22% 2. Cisco Systems, Inc. 4.16 3. Altria Group, Inc. 4.10 4. Amgen, Inc. 4.00 5. Boston Scientific Corp. 4.00
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $13.00 $13.39 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.0272 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Growth Shares VCT Portfolio at net asset value, compared to that of the Russell 1000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Russell 1000 Growth Shares Growth VCT Portfolio Index - ---------------------------------------------- 10/97 10,000 10,000 12,574 12,690 14,970 16,150 6/00 14,576 20,294 12,281 12,953 6/02 8,155 9,522 8,083 9,802 6/04 8,883 11,554 9,359 11,749 6/06 9,638 12,467
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ Life-of-Class -0.42% (10/31/97) 5 Years -4.73% 1 Year 2.98%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 15 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ The domestic stock market produced modest returns over the first half of 2006. The stock market began the year with a strong rally, but the bull market faded in May and June as investors focused more on the possibility that rising interest rates might stall the economy. As they have done in the two previous years, value stocks tended to outperform growth, and highly cyclical companies, including those with exposures to commodities, outperformed traditional growth companies. In the following interview, Christopher M. Galizio and Stephen A. Balter, co-managers of Growth Shares VCT Portfolio, discuss the markets and the factors that influenced performance over the six months. Q. How did the Fund perform during the six months ended June 30, 2006? A. Pioneer Growth Shares VCT Portfolio, Class I, had a total return of -2.71% for the six months, at net asset value. During the same period, the Russell 1000 Growth Index produced a total return of -0.93%, while the average return of the 199 funds in Lipper's Large-Cap Growth variable annuity fund category was -2.44%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What were your principal strategies, and how did they influence performance? A. The Portfolio was positioned to benefit from a growth environment, with an emphasis on those companies, including health care companies and information technology corporations, that were likely beneficiaries of long-term trends. While, we thought - and we continue to believe - that the best investment values can be found in those areas, the emphasis hurt results during the six months, when cyclical companies in sectors such as materials and industrials tended to lead the market. We have favored health care because of the opportunities created as the large baby boomer generation ages and requires more health care services and products, including medical devices as well as pharmaceuticals. These companies have underperformed recently, however, and have begun to offer very attractive prices. We favored information technology corporations because of the growth of the Internet and demand for more complex files, including video, which generates more demand for hardware, such as switches, routers and other devices. Companies such as Cisco Systems and F5 Networks are potential beneficiaries of this multi-year trend. As we increased the exposure to those areas, we reduced positions in energy and materials, both of which looked very expensive. However, these decisions did not help results for the six months, as energy and materials continued to gain, while health care and information technology continued to underperform. Q. What were some of the individual investments that most affected results for the six months? A. Two of the most significant detractors were health care companies, Boston Scientific and Teva Pharmaceuticals. Each declined for a company-specific reason. Boston Scientific, a leading producer of devices used in cardiac therapies, won a bidding war against Johnson & Johnson and acquired another cardiac device company, Guidant. Investors generally believed Boston Scientific overpaid for Guidant. We tend to agree with that opinion, but we think that the combination of Boston Scientific and Guidant will be a powerful company with excellent prospects over the longer term. Several holdings had positive impacts on results. One was TXU, the Texas-based utility, which lowered its costs by placing greater emphasis on coal-fired plants at the same time it received favorable regulatory rulings regarding rate structures. Cisco Systems contributed as its routers remained in strong demand from Internet activity, while pharmacy chain CVS successfully integrated two acquisitions into its operations and exceeded earnings expectations. Q. What is your investment outlook? A. At the midpoint of 2006, the financial markets are encountering a number of challenges that are worsened by rising geopolitical tensions. The economy appears to be slowing, primarily as a result of hikes in interest rates, but also because of rising energy and commodity prices. In this environment, stock prices are likely to move unevenly, and individual stock selection will be important in influencing results. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 16 ================================================================================ Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 Portfolio Diversification (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Common Stocks 84.1% Temporary Cash Investment 15.9%
Sector Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] Office 20.0% Apartment 19.5% Regional Mall 13.3% Industrial 13.2% Shopping Center 12.8% Hotel 8.9% Self Storage 4.9% Diversified 4.6% Triple-Net Lease 1.4% Health Care 1.1% Manufactured Homes 0.3%
Five Largest Holdings (As a percentage of equity holdings) 1. Simon DeBartolo Group, Inc. 7.24% 2. Boston Properties, Inc. 5.49 3. ProLogis Trust 5.29 4. AvalonBay Communities, Inc. 4.88 5. Equity Residential Property Trust 4.78
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $28.06 $26.13 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.3800 $ - $1.4942
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Real Estate Shares VCT Portfolio at net asset value, compared to that of the Wilshire Real Estate Securities Index. Portfolio returns are based on net asset value and do not reflect applicable insurance fees and surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Wilshire Real Real Estate Shares Estate Securities VCT Portfolio Index - ------------------------------------------------- 6/96 10,000 10,000 13,702 13,355 6/98 14,698 14,223 13,328 13,244 6/00 13,947 13,834 16,679 17,231 6/02 19,096 19,603 19,546 20,182 6/04 25,195 26,073 34,027 35,100 6/06 42,100 42,769
The Wilshire Real Estate Securities Index is a market-capitalization weighted measure of the performance of real estate investment trusts (equity and hybrid) and real estate operating companies. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ 10 Years 15.46% 5 Years 20.34% 1 Year 23.72%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 17 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ Real estate investments enjoyed strong performance during the six months ended June 30, 2006 - the first half of the Portfolio's fiscal year. Investments in the apartment and office sectors proved particularly rewarding, as portfolio manager Matthew Troxell of AEW Capital management, L.P., the Portfolio's Sub-Advisor, explains in the following interview. Q. How well did the Portfolio perform during the six months ended June 30, 2006? A. The Portfolio posted strong performance, both on an absolute basis and relative to its benchmark and peer group. For the first half of fiscal 2006, Class I shares generated a return of 14.83% at net asset value. In comparison, the Wilshire Real Estate Securities Index returned 14.08% for the same six-month period. The average return for the 52 real estate funds in the Portfolio's Lipper category was 13.19%. We think effective stock selection and the Portfolio's greater-than-benchmark weighting in the apartment sector contributed to these results. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What is contributing to the rally in the apartment sector? A. The sector's outlook has improved, as many of the negative factors that had overshadowed this group of stocks and depressed investor demand have dissipated. With the return of higher interest rates, renting has become a more attractive option relative to buying a home. In addition, property values appear to have leveled off or even declined in some markets - thereby discouraging potential homebuyers who might have been drawn to the rising equity value offered by owning a home. On the other hand, the growth in supply of apartments has remained in check, in part due to the escalating cost of new construction. Also, during the last few years, many apartments were converted into condominiums to meet the high demand for home ownership, reducing the supply of apartments in the face of today's rising demand in some markets. This is benefiting the bottom line of the apartment real estate investment trust (REIT) operators, since landlords are better able to maintain full occupancy. With stronger demand, landlords have greater pricing power and are able to push through rent increases. Investments in Camden Properties outperformed dramatically for the six months ended June 30. We have a high level of confidence in the management team at this REIT, which is embracing technological innovations to improve efficiency and maximize revenue. The company also owns high-quality properties, which they manage very effectively in our opinion. Q. Did office REITs also experience a resurgence? A. Yes, and for similar reasons, albeit with somewhat of a lag to the multifamily sector. With the U.S. economy prospering and job growth expanding, demand for office space is increasing occupancy as existing tenants expand their businesses or new tenants arrive. The increased demand has allowed landlords to raise rents. Highwoods Properties rose dramatically in the final weeks of the reporting period in response to an unsolicited offer for the company at a value substantially higher than the trading price. While the offer was rejected by the board, we think it corroborated the inherent value that we'd seen in the stock for some time. One of the Portfolio's holdings, Equity Office Properties, also was a stronger performer for the semiannual period. However, we'd limited the Portfolio's exposure to this REIT, because we had concerns about the ability of the company to participate in the nascent office recovery. Our decision was a drawback, however, since it performed well. Q. Is the mall sector still benefiting from the economic recovery? A. Yes, but to a lesser degree than apartment or office REITs, because regional malls and shopping centers have enjoyed strong outperformance relative to other property types for some time. Two holdings produced contrasting results and contributed to weaker, albeit positive, results during the reporting period. Mills Corp. turned in disappointing performance, because of questions surrounding the company's financial reporting and a proposed large-scale project in New Jersey. In contrast, Taubman Centers delivered strong performance, and its considerable weighting in the Portfolio magnified this result. Q. What is your outlook for balance of the fiscal year? A. We think that the fundamentals across most property types should continue to improve for the foreseeable future - although to varying degrees since their respective lease terms make them respond differently to the economic recovery. Our research-driven investment approach will be critical to determining which companies offer the most attractive value and are in the best position to capitalize on the positive fundamentals within their industries. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: The Portfolio invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 18 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Common Stocks 92.7% Depositary Receipts for International Stocks 3.7% Temporary Cash Investment 2.2% International Common Stocks 1.4%
Sector Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] Financials 18.4% Industrials 14.1% Consumer Discretionary 13.0% Information Technology 12.8% Health Care 12.5% Consumer Staples 10.7% Energy 7.9% Materials 5.2% Telecommunication Services 4.4% Utilities 1.0%
Five Largest Holdings (As a percentage of equity holdings) 1. Norfolk Southern Corp. 2.41% 2. Chevron Corp. 2.27 3. McGraw-Hill Co., Inc. 1.93 4. Wells Fargo & Co. 1.92 5. T. Rowe Price Associates, Inc. 1.92
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $22.50 $21.55
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.1500 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Fund VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Fund S&P 500 VCT Portfolio Index 10/97 10,000 10,000 11,964 12,528 14,728 15,378 6/00 16,018 16,493 14,760 14,049 6/02 12,688 11,523 12,067 11,552 6/04 14,220 13,758 15,399 14,627 6/06 17,303 15,889
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure of the broad U.S. stock market. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ Life-of-Class 6.53% (10/31/97) 5 Years 3.23% 1 Year 12.36%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 19 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ In the following discussion, portfolio manager John Carey discusses the performance of Pioneer Fund VCT Portfolio, as well as the investment environment over the six-month period ended June 30, 2006. Q. Please discuss the stock market of the last six months and the investment results of Pioneer Fund VCT Portfolio. A. Stocks showed modest gains in the first half of 2006. For the six months ended June 30, 2006, Pioneer Fund VCT Portfolio achieved a total return of 5.11% at net asset value, versus 2.71% for the Standard & Poor's 500, our benchmark index. The Portfolio's 222 Lipper Large-Cap Core peers returned 1.25% over the same period. Gains across the board had been significantly greater through the first week of May, but an ensuing correction pared them back. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. As we write, the market remains shaky. In our 2005 annual management discussion, we stated that our outlook on 2006 was cautious, and that view has been borne out by events. Despite good earnings reports from companies and strong economic data, investors appear to be focusing on what comes next. A common expectation is that the combination of higher interest rates, record-high oil prices, and a slowing housing market will restrain consumer spending, which in turn will lead, eventually, to reduced industrial production and capital spending. Adding to the worries are the troubling international events in the Middle East, the Far East, Latin America, and Africa. Without enumerating all of the risks in the present world situation, suffice it to say that together they weigh heavily on near-term economic and market forecasts. Only a year ago, investors appeared almost oblivious to risk as they bid up the prices of low-quality debt issues and emerging-markets stocks to levels that seemed not to factor in risk at all. Now the pendulum is swinging the other way, as investors seek safety and stability. It should be noted, however, that there is no altogether "safe haven" in the capital markets. Even U.S. Treasuries fluctuate in market price with changes in interest rates, and even the bluest of the blue chip companies will occasionally have their earnings shortfalls. Q. Which stocks contributed to the outperformance of Pioneer Fund VCT Portfolio during the period? Were there also some weak spots in the Portfolio? A. Our outperformance can be largely explained by our good stock selection in a number of key market sectors: industrials, information technology, materials, financials, consumer staples, telecommunications services, and health care. Detracting from performance were stock selections in consumer discretionary and energy. Our largest positive contributors were: Inco and Rio Tinto in materials; Norfolk Southern, Deere, Caterpillar, and PACCAR in industrials; BellSouth in telecommunications services; and Canon in information technology. Both Inco and BellSouth were recipients of take-over bids. Among detractors, our long-term holding John Wiley & Sons was caught in the general downward move of media stocks; Barr Pharmaceuticals, St. Jude Medical, and Biomet each had some particular ailments, though none that appeared terminal; and Target fell in sympathy with other large retailers at a time of investor concern about consumer spending. As usual, there were also some poor performers in the S&P 500 that we managed to avoid, and some strong performers that we likewise missed. On the whole, however, it was a good period for us with respect to our investment positioning. Q. What changes did you make in the Portfolio over the past two quarters? A. We did a bit of spring cleaning in the portfolio, liquidating twelve holdings and adding only three. We took advantage of the ebullient market for metals and mining stocks to realize gains in BHP Billiton, Newmont Mining, and Allegheny Technologies. We sold Keyspan after the company received a premium take-over bid from an English company. Our other sales reflected either our disappointment with the progress being made by the company or our judgment that we had more attractive alternatives. Those sales included PPG Industries, MeadWestvaco, Gap, Home Depot, Stryker, Ameriprise Financial, ACE, and Axis Capital Holdings. New entries were Lockheed Martin, Zimmer Holdings, and MetLife. Lockheed Martin is a leading aerospace and defense manufacturer. The company has made impressive progress in improving its profit margins, and it has a good order book looking out into next year and potentially beyond. Zimmer Holdings is a leader in orthopedic implants, namely artificial hips and knees. The implant industry has been under a cloud due to government investigations of sales practices, but we concluded that the price of Zimmer stock took that into account and that growth prospects for the company were otherwise attractive. MetLife, finally, is a large life and group-health insurer. Its recent acquisition of Travelers Life and Annuity greatly expanded its international business, bringing longer-term opportunities to enhance profit growth. A Word About Risk: At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 20 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================ Q. What is your outlook for the remainder of the year? A. Looking ahead, we can see a slower economy and less robust corporate earnings. As always, there are those who say "it's different this time" and that there is no reason why the economy should not continue growing steadily. However, the business cycle takes an inexorable course, and downturns are actually essential in keeping the economy growing in the long term. During downturns, the good businesses are separated from the bad, the sound loans from the unsound, and the strong managements from the weak. Downturns also renew the investor base by providing opportunities to get solid value at discounted prices. People who had not wanted to step in and buy when prices were high will often buy aggressively when prices fall. We are not, mind you, predicting any particular starting point for the coming downturn, and there could still be some strength in the market before it happens. But we are thinking that it is already time to be positioning oneself appropriately, in stocks of resilient, well managed, and financially solid companies. Of course, those are characteristics we always emphasize in our stock selection, but now we shall be putting double weight on them. Thank you as ever for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 21 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Common Stocks 93.3% Temporary Cash Investment 6.2% Convertible Preferred Stocks 0.5%
Sector Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] Financials 27.9% Utilities 15.9% Industrials 9.9% Consumer Staples 9.7% Telecommunication Services 9.5% Consumer Discretionary 8.8% Health Care 7.0% Energy 5.9% Materials 4.5% Information Technology 0.9%
Five Largest Holdings (As a percentage of equity holdings) 1. PACCAR, Inc. 3.43% 2. Washington Mutual, Inc. 3.09 3. T. Rowe Price Associates, Inc. 2.87 4. Questar Corp. 2.76 5. Merck & Co., Inc. 2.57
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $22.41 $21.25
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.2800 $ - $0.3749
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Equity Income VCT Portfolio at net asset value, compared to that of the Russell 1000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Russell 1000 Equity Income Value VCT Portfolio Index 6/96 10,000 10,000 13,095 13,319 6/98 16,796 17,159 19,570 19,967 6/00 18,382 18,187 20,322 20,066 6/02 18,615 18,270 17,929 18,083 6/04 21,126 21,905 24,117 24,985 6/06 27,161 28,007
The Russell 1000 Value Index measures the performance of large-cap U.S. value stocks. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ 10 Years 10.51% 5 Years 5.97% 1 Year 12.62%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 22 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ In the following discussion, portfolio manager John Carey discusses the performance of Pioneer Equity Income VCT Portfolio, as well as the investment environment over the six-month period ended June 30, 2006. Q. How did the Portfolio perform relative to its benchmark, the Russell 1000 Value Index? A. Pioneer Equity Income VCT Portfolio recorded a total return of 8.62% at net asset value for the six months ended June 30, 2006. By comparison, the Russell 1000 Value Index, an unmanaged index of stocks, rose 6.56%. The average return for the 59 portfolios in the Lipper Equity Income variable-account category was 5.23%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. While the stock market was positive for the first half as a whole, it began showing signs of stress in the second half of May and continues to be shaky as we write this letter. Investor concerns about inflation and interest rates, high oil and other commodity prices, the slowdown in housing, and the unsettled international situation, particularly in the Middle East, have started to weigh heavily on the market. For the moment, corporate earnings remain strong, but investors are apparently worrying about what may lie ahead if the economy stalls. Q. What were the reasons for the outperformance of the portfolio versus its benchmark? A. The portfolio benefited from good stock selection in a number of sectors, principally financials, health care, industrials, and consumer staples. Individual stocks that contributed importantly to performance were PACCAR, BellSouth, Campbell Soup, Whitney Holding, H. J. Heinz, Roanoke Electric Steel, and Gorman-Rupp. BellSouth and Roanoke Electric Steel both received premium take-over bids. H. J. Heinz attracted the attention of some aggressive private investors intent on getting more value from the company. Whitney Holding, a bank based in New Orleans, continued its post-Katrina hurricane recovery. PACCAR, Campbell Soup, and Gorman-Rupp all showed strong business results. On the negative side, our underweight in the strong energy sector and weak stock selection in consumer discretionary hurt results. We had scaled back our energy exposure due to our view that oil and natural-gas prices would moderate. That has certainly been the case with natural gas, which has come down considerably in price, but it has not been true of oil, which continues to sell at near record prices. With respect to consumer discretionary, we had three stocks that underperformed. Cedar Fair sold off following its acquisition of another large amusement-park operator and the anticipation of near-term dilution of earnings. We are retaining our position, however, because we think that the acquisition will ultimately work out well for the company. McGraw-Hill was soft because of a legislative push in Washington, D.C., to facilitate more competition in the credit-rating industry, where McGraw-Hill's highly profitable Standard & Poor's is a leader. Finally, Tupperware traded down due to a disappointing first quarter, marked by higher expenses. Q. Did you make changes to the portfolio during the past six months? If so, please describe. A. We were busy in the first half, adding seven positions and selling fourteen. We are excluding from those totals our receipt of shares in Lincoln National in exchange for our shares of Jefferson Pilot following the merger of those two life insurance companies. The seven new names were: Mine Safety Appliances, expert in industrial safety equipment including respiratory gear; Kellogg, leading breakfast cereal maker; J. M. Smucker, successful producer of jams and jellies, toppings and peanut butter; Regions Financial, Alabama-based retail and commercial bank; Liberty Property Trust, a real-estate investment trust (REIT) specializing in suburban office and industrial properties; and AGL Resources and Duke Energy, utilities operating generally in the southern part of the United States. All of the additions are dividend-paying companies with valuations we found attractive. Among liquidations from the portfolio, we sold Keyspan after it accepted a premium-priced take-over bid from an English firm. We also sold Roanoke Electric Steel in the wake of its acceptance of a take-over bid. Likewise, Albertson's. We took advantage of the strong investor interest in materials and other cyclical stocks to realize substantial percentage gains on Vulcan Materials, Nucor, and Burlington Northern. We took big gains as well on our sales of Becton Dickinson and Johnson & Johnson. Other sales were of companies with which we were fundamentally less confident or which seemed less compelling than other stocks in the portfolio. Those sales included PPG Industries, MeadWestvaco, Coca Cola, Comerica, Citigroup, and Sara Lee. A Word About Risk: At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 23 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 (continued) ================================================================================ Q. What is your outlook for the remainder of the year? A. Looking ahead, we anticipate a slower economy and less robust corporate earnings. As always, there are those who say "it's different this time" and that there is no reason why the economy should not continue growing steadily. However, the business cycle takes an inexorable course, and downturns are actually essential in keeping the economy growing in the long term. During downturns, the good businesses are separated from the bad, the sound loans from the unsound, and the strong managements from the weak. Downturns also renew the investor base by providing opportunities to get solid value at discounted prices. People who had not wanted to step in and buy when prices were high will often buy aggressively when prices fall. We are not, mind you, predicting any particular starting point for the coming downturn, and there could still be some strength in the market before it happens. But we are thinking that it is already time to be positioning oneself appropriately, in stocks of resilient, well managed, and financially solid companies. Of course, those are characteristics we always emphasize in our stock selection, but now we shall be putting double weight on them. Thank you as ever for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 24 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of long-term holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Common Stocks 60.7% U.S. Government Agency Obligations 23.6% U.S. Corporate Bonds 10.1% Temporary Cash Investment 2.6% Depositary Receipts for International Stocks 1.2% Collateralized Mortgage Obligations 1.0% Asset Backed Securities 0.8%
Sector Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] Government Obligations 24.5% Financials 14.5% Information Technology 12.0% Consumer Staples 11.2% Health Care 9.1% Consumer Discretionary 8.6% Industrials 7.7% Energy 5.8% Materials 5.0% Telecommunication Services 1.1% Utilities 0.5%
Five Largest Holdings (As a percentage of long-term holdings) 1. Berkshire Hathaway, Inc. (Class B) 3.60% 2. PepsiCo, Inc. 3.34 3. CVS Corp. 3.30 4. First Data Corp. 3.29 5. Microsoft Corp. 3.10
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 14.59 $ 14.71
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.1400 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Balanced VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index and the Lehman Brothers Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Lehman Brothers Balanced S&P 500 Aggregate Bond VCT Portfolio Index Index 6/96 10,000 10,000 10,000 11,966 13,468 10,815 6/98 13,605 17,532 11,955 13,508 21,520 12,331 6/00 13,829 23,081 12,894 14,297 19,660 14,342 6/02 12,922 16,126 15,579 13,593 16,165 17,200 6/04 14,822 19,253 17,255 15,249 20,469 18,428 6/06 15,880 22,234 18,280
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure of the broad U.S. stock market. The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ 10 Years 4.73% 5 Years 2.12% 1 Year 4.14%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 25 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ The economy grew at a healthy pace during the first six months of 2006, although some early signs emerged to indicate the rate of economic growth might be slowing. Stocks generally delivered modest returns over the six months, despite slumping in May and June on worries that the Federal Reserve might raise interest rates further than had been anticipated and hold back economic growth. Small- and mid-cap stocks continued to outperform large-caps, and benchmarks for value stocks recorded higher gains than growth stock indexes. In the fixed income market, interest rates across the yield curve - among securities of all maturities - rose, and bond prices generally declined. Shorter-duration strategies tended to produce better returns than long-duration strategies, especially in high-grade securities. High-yield, below-investment grade bonds outperformed higher-quality securities early in the year, but slumped along with stocks in the final two months. In the following interview, Timothy Mulrenan, who is responsible for the equity portfolio of Pioneer Balanced VCT Portfolio, and Richard Schlanger, who is responsible for the Portfolio's fixed-income management, discuss the factors that influenced the Portfolio's performance over the six months ending June 30, 2006. Q. How did the Portfolio perform during the first half of 2006? A. Class I shares of Pioneer Balanced VCT Portfolio had a total return of 0.13% at net asset value, during the six months ending June 30, 2006. Over the same time period, the S&P 500 Index and the Lehman Brothers Aggregate Bond Index returned 2.71% and -0.72%, respectively. During the same six months, the average return of 114 funds in Lipper's Mixed-Asset Target Allocation Growth Variable Annuity category was 2.14%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What were the Portfolio's principal investment strategies during the six months? A. We maintained a slight overweighting in equities, which comprised about 63% of assets on June 30, 2006, compared to a typical allocation of 60%. Within the equity portfolio, we maintained our focus on large-cap, consistent growth companies. This emphasis, however, did not help performance as value stocks and small-company stocks outperformed the stable growth companies that we believed offered the most attractive relative values. We made no major sector changes among our equity investments, although we modestly reduced our overweight in energy companies. While we still are impressed by the long-term prospects for the energy sector, we thought near-term growth may begin to slow. We were overweighted in consumer staples and, to a lesser extent, in information technology and health care. We were underweighted in financials, especially banks, because of the vulnerability of their earnings margins as the difference between interest rates of short-term and long-term securities flattens. Moreover, we believe some banks may need to add to their reserves against loan losses. We added to our information technology positions when we invested in Corning, a leader in producing flat-screen panels for televisions and computer monitors. In media, we sold shares of CBS because of concerns that growth in traditional media would slow. At the same time, we invested in cable company Comcast. We also reduced our position in the U.K.-based Vodafone, a major telecommunications service provider, because of our concerns about competitive pressure in Europe. We made no significant changes in our fixed income strategy during the six months, although duration - or sensitivity to interest rate changes - increased somewhat, partly because of the natural lengthening of duration in mortgage securities as mortgage prepayment rates declined. The portfolio's duration was 4.88 years on June 30, 2006. We invested opportunistically, buying bonds of Sevan Marine, a Norwegian oil field services company, partly because we favored the prospects of the Norwegian currency, the krone. We also invested in collateralized mortgage obligations. As we did this, we sold bonds of Bausch & Lomb, the eye products company, and of Sunsage, a Korean auto parts company. We also slightly upgraded the overall credit quality of the portfolio. On June 30, average credit quality was AA- with 69.6% of fixed income assets invested in AAA or the equivalent, while just 9.7% of fixed income assets were invested in high-yield corporates. A Word About Risk: When interest rates rise, the prices of fixed income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-Backed securities are also subject to pre-payments. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 26 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================ Q. What types of equity investments most influenced performance? A. Among our stock positions, pharmacy chain CVS was a particularly strong performer. The company's sales and profit growth exceeded expectations as the company continued to execute its strategy of buying underperforming assets and increasing their profitability. Cable company Comcast, in which we invested when its stock price was low, succeeded in taking more market share of household expenditures by offering television, Internet and telephone service. Several information technology investments also helped, including Cisco, Hewlett-Packard and First Data, all of which gained while other tech stocks were declining. The Portfolio's performance was helped because we had very limited exposure to the poor-performing semiconductor industry. Several health-care investments held back results, including biotechnology leader Amgen and generic pharmaceutical manufacturer Teva. Investors were concerned about a patent dispute over rights to an anemia drug in which Amgen is involved, while Teva declined after reporting disappointing earnings. We have retained both positions. Also detracting from performance was Wrigley, which lowered its earnings forecasts because of investments in new marketing initiatives. We also continue to hold the position in Wrigley, which has a very attractive franchise. Q. What types of fixed income investments most influenced performance? A. Our relatively short maturity helped in a rising interest rate environment, as did the quality emphasis. In addition, our overweights in mortgage securities helped support results during the period. Holding back results were our positions in some long-duration assets, which were vulnerable to price losses as long-term interest rates rose. We had no major credit problems. Q. What is your investment outlook? A. We anticipate that economic growth will slow in the coming months. The U.S. Federal Reserve Board probably is near the end of its cycle of interest-rate hikes, but other major central banks may continue to raise rates. One consequence could be a further weakening of the U.S. dollar versus other currencies. One positive for fixed income markets is that there still is a lot of liquidity in world markets, which should guard against any dramatic increase in long-term interest rates. Returns of between 5% and 51/2% are still very attractive to foreign investors. We expect continued volatility in the domestic equity market over the next several months against a backdrop of a slowing economy, high energy prices, high interest rates and the current slowdown in residential real estate. As a consequence, we believe investors' expectations for corporate profit growth probably needs to be softened. Offsetting these negative influences, however, is the widespread expectation that the Federal Reserve will stop raising interest rates soon. In addition, stock price increases over the past two years have not kept pace with increases in profits. As a consequence, current stock prices, as reflected in price/earnings ratios, are reasonable and may provide some downside protection in a volatile environment. The stock market over the past two years has not distinguished between cyclical profits and consistent profits. As a result, we believe that higher-quality growth stocks of companies with good earnings, high returns on equity and high reinvestment rates should perform well. We believe that these companies are trading at valuations that we do not believe reflect their potential. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 27 PIONEER VARIABLE CONTRACTS TRUST Pioneer High Yield VCT Portfolio ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of total investment in securities) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Corporate Bonds 73.3% U.S. Common Stocks 14.1% Convertible Corporate Bonds 7.2% Convertible Preferred Stocks 2.0% U.S. Preferred Stocks 1.8% Temporary Cash Investment 1.6%
Maturity Distribution (As a percentage of total investment in securities) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] 0-1 years 1.8% 1-3 years 16.5% 3-4 years 20.4% 4-6 years 49.8% 6-8 years 8.1% 8+ years 3.4%
Five Largest Holdings (As a percentage of long-term holdings) 1. Mueller Industries, Inc., 6.0%, 11/1/14 4.20% 2. DRS Technologies, Inc., 6.875%, 11/1/13 3.70 3. Wesco Distribution, Inc., 7.5%, 10/15/17 (144A) 3.37 4. Forest City Enterprises, 7.625%, 6/1/15 3.33 5. Allegheny Energy Supply, 7.8%, 3/15/11 3.29
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $10.58 $10.88 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.3111 $0.0731 $0.0801
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch (ML) High Yield Master II Index and of the ML Index of Convertible Bonds (Speculative Quality). Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer ML High Yield ML Convertible Bonds High Yield Master II (Speculative Quality) VCT Portfolio Index Index 5/00 10,000 10,000 10,000 10,692 10,193 10,511 11,854 10,099 8,075 6/02 12,499 9,658 7,378 14,804 11,803 9,201 6/04 16,254 13,006 11,096 17,393 14,387 11,243 6/06 18,131 15,064 12,329
Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a commonly accepted measure of the performance of high yield securities. The ML Index of Convertible Bonds (speculative quality) is a commonly accepted measure of the performance of speculative grade convertible bond securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ Life-of-Class 9.78% (5/1/00) 5 Years 8.87% 1 Year 4.24%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 28 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ During the six months ended June 30, 2006, sustained economic growth helped high-yield bonds provide positive returns driven by healthy interest income. Below, Portfolio Manager Margaret Patel describes the high-yield market and explains why the Portfolio underperformed its benchmark. Q. How did the Portfolio perform? A. During the six months ended June 30, 2006, the Portfolio's Class I shares had a total return based on net asset value of 1.52%. By comparison, the Merrill Lynch High Yield Master II Index returned 3.07%, and the average return for the 103 Lipper Variable Annuity High Current Yield Funds was 2.39%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What factors drove the high-yield market during the past six months? A. Positive economic fundamentals and low default rates helped high-yield bonds post generally positive returns during the period, driven largely by coupon income. However, these returns were muted due to price declines, as yields moved higher in reaction to rising Treasury rates. (Bond prices and yields move in opposite directions.) Treasury yields increased because the Federal Reserve Board continued its program of gradually withdrawing liquidity from the marketplace through a steady program of short-term interest rate hikes. Overall, two areas of the high-yield market outperformed: lower-quality CCC-rated issues and bonds in the automotive sector. Q. Why did the Portfolio lag the Merrill Lynch High Yield Master II Index? A. Because of our credit-quality positioning. We continued to emphasize the higher-quality segments of the high-yield market, because we felt that the extra yield offered by lower-quality bonds did not adequately compensate the Portfolio for the greater level of risk of potential future bankruptcies or erosion in credit quality inherent in lower-quality issues. During the period, lower-quality CCC-rated bonds significantly outperformed higher-quality securities, leading to our underperformance. Our decision generally to avoid the automotive sector also held back relative returns, as bonds from this group offered strong relative performance. Q. Which investments performed best during the period? Which disappointed? A. One of the Portfolio's top performers was a company that was acquired, leading to the substantial appreciation of its price. Hotel real estate investment trust (REIT) MeriStar Hospitality was bought by private equity firm The Blackstone Group, with our holdings of the company's common stock purchased at a premium. The convertible bonds of Coeur D'Alene Mines rose due to gains in silver prices. On the down side, the common stock of PDL BioPharma declined due to lower-than-expected royalty revenues from its leading products. Convertible securities issued by Lyondell, listed in the Portfolio's holdings as Millennium Chemical, depreciated along with the underlying stock price because of concerns about slowing end demand, softer prices, and the negative impact of a lead paint suit. Advertising agency Interpublic Group declined as investors became impatient with the pace of the company's reorganization as well as slow growth in its advertising businesses. Finally, Canadian paper and forest products manufacturer Abitibi Consolidated fell because the strength of the Canadian dollar increased its costs and due to concerns about declining demand for newsprint. Q. What is your outlook? A. We expect the fundamentals of the U.S. economy to remain strong, with growth in U.S. gross domestic product near its long-term trend rate of about 3% per year. We also anticipate that default rates should remain low (compared to historical averages) because of the strong economy and ample liquidity in the markets, which has made access to capital to even the most marginal of borrowers rather easy. In terms of the Portfolio, we feel it is best to maintain a relatively high credit quality, as lower-rated securities historically have proved more vulnerable during economic slowdowns. We also have moved some assets into equities to gain exposure to a wider range of industries and because, in some cases, they offer greater capital appreciation potential than bonds, whose prices would decline should rates continue to rise. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investments in high-yield or lower-rated securities are subject to greater-than-average risk. When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 29 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Government Securities 49.9% U.S. Corporate Bonds 36.6% Foreign Government Bonds 6.3% Asset Backed Securities 3.5% Temporary Cash Investment 1.6% Municipal Bonds 1.2% Collateralized Mortgage Obligations 0.6% Convertible Corporate Bonds 0.3%
Maturity Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] 0-1 year 5.1% 1-3 years 12.5% 3-4 years 13.9% 4-6 years 43.5% 6-8 years 14.9% 8+ years 10.1%
Five Largest Holdings (As a percentage of long-term holdings) 1. U.S. Treasury Bonds, 5.25%, 11/15/28 3.75% 2. U.S. Treasury Strip, 0.0%, 11/15/13 2.22 3. U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 2.09 4. U.S. Treasury Notes, 5.0%, 2/15/11 2.01 5. U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 1.98
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $10.52 $10.76 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.3117 $0.0270 $0.0254
================================================================================ Performance of a $10,000 Investment ================================================================================ The following chart shows the change in value of an investment made in Pioneer Strategic Income VCT Portfolio at net asset value, compared to that of the Lehman Brothers U.S. Universal Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Strategic Income Lehman U.S. VCT Portfolio Universal Index 7/99 10,000 10,000 10,180 10,520 10,913 11,652 6/02 11,780 12,551 14,225 13,995 6/04 15,152 14,137 16,929 15,186 6/06 17,306 15,146
Index comparison begins July 31, 1999. The Lehman Brothers U.S. Universal Index is the union of the U.S. Aggregate Index, the U.S. High Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, the non-ERISA portion of the CMBS Index and the CMBS High Yield Index. Municipal debt, private placements and non-dollar-denominated issues are excluded from the Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ Life-of-Class 8.24% (7/29/99) 5 Years 9.66% 1 Year 2.22%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 30 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ Against a backdrop of strong economic growth throughout the globe, inflation concerns grew steadily during the first six months of 2006. With dramatic increases in commodity prices - most notably in energy prices - fears built that inflationary pressures would start to spread throughout the general economy. Given these concerns, the U.S. Federal Reserve Board continued to raise short-term interest rates to relieve inflationary pressures and control economic growth. The Fed raised its Fed funds rate four successive times over the six months, from 4.25% to 5.25%. As the Fed acted, rates across the yield curve - among securities of all maturities - also rose, and bond prices generally declined. While lower-rated bonds tended to outperform early in the period, worries grew in the final two months that the Fed might become too aggressive and stall the global economic resurgence. As a result, lower-quality, higher-yielding bonds - most notably emerging market debt - suffered price declines in the final two months of the period. In the following interview, Kenneth J. Taubes discusses the factors that influenced Pioneer Strategic Income VCT Portfolio's performance during the six months ended June 30, 2006. Mr. Taubes, Director of Pioneer's Fixed Income Group, oversees the team responsible for the daily management of the Portfolio. Q. How did the Portfolio perform during the six months ended June 30, 2006? A. Pioneer Strategic Income VCT Portfolio, Class I shares, had a total return of 1.16% for the six months at net asset value. During the same six months, the benchmark Lehman Brothers U.S. Universal Index fell by 0.46%. The average return of the 52 portfolios in the Lipper General Bond variable annuity fund category was 0.09%. The Portfolio also continued to deliver a competitive yield. On June 30, 2006, the Portfolio's 30-day SEC yield was 4.98%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What was the investment environment during the six-months? A. The global fixed-income markets operated in a challenging environment during the first six months of the year. Among the primary factors influencing investors were the persistent actions of the U.S. Federal Reserve Board and other central banks to control economic growth and rein in inflationary pressures by raising short-term interest rates. Early in the period, the healthy economic and corporate profit growth resulted in continued good performance by lower-rated bonds, including emerging market debt and domestic high-yield bonds. The U.S. Treasury market was relatively stable. That environment abruptly changed in the second quarter of this year, when investors grew increasingly risk averse because of concerns that the Fed and other central banks might raise rates too far and cause an economic slowdown. After the Federal Reserve raised the Fed funds rate to 5.00% on May 10 (the rate subsequently would be raised again, to 5.25% in late June), Treasury securities declined as longer-term interest rates rose. High yield bonds and commodities-exposed emerging market debt performed worse, as investors sought to lower their risk profiles. In this environment, the U.S. dollar lost value against most major currencies. Q. What were your principal strategies during the period, and how did they influence performance? A. Throughout the six months, we upgraded overall credit quality. Relative to competitive funds, we were significantly underweighted in emerging market debt over the entire period. While this deemphasis initially detracted from results early in 2006, it was a significant help as the period progressed. As domestic high-yield bonds rallied in the first quarter, we sold into strength, reducing our high-yield exposure. Taking profits in high yield holdings also proved helpful as volatility increased in the second quarter and high-yield bonds slumped. Average credit quality of the Portfolio was a solid A on June 30, 2006, up from A- six months earlier and from BBB 12 months earlier. On June 30, 2006, 55% of the Portfolio's assets were invested in U.S. Treasury and government agency securities, while 19% were invested in U.S. high yield bonds and just 13.6% were invested in emerging market debt. As interest rates rose, we gradually increased the Portfolio's duration - or sensitivity to interest changes - to take advantage of the improving values in longer-maturity securities. Within our Treasury holdings, we had a greater-than-benchmark weighting in Treasury Inflation Protected Securities (TIPS) for most of the period. Those securities, which tend to do well in rising-interest rate environments, outperformed straight Treasuries and contributed to performance results. The Portfolio's effective duration on June 30, 2006, was 5.07 years, compared to 4.72 years six months earlier. The Portfolio also had an above-usual foreign currency exposure, at 11.4% of assets on June 30, which helped results as the U.S. dollar lost relative value. The euro, Norwegian krone and Swedish krona all gained more than 5% against the dollar, while the Canadian dollar and the Japanese yen also were strong. A Word About Risk: When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed-income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. The securities issued by U.S. Government sponsored entities (i.e., FNMA, Freddie Mac) are neither guaranteed nor issued by the U.S. Government. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-Backed securities are also subject to pre-payments. Investments in high yield or lower-rated securities are subject to greater-than-average risk. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 31 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 (continued) ================================================================================ Q. What individual investments had the greatest impact on results? A. Several high-yield issuers bought back their bonds - or tendered their debt - resulting in profits for the Portfolio. These issues included Stone Energy, an oil and gas exploration company that was acquired; Resolution Performance, a chemical company; J. Ray McDermott, an oil field services firm; and Indo Coal, an Indonesian corporation that was acquired. Among high-yield investments that detracted from results were bonds of two forest product companies, Ainsworth Lumber and Abitibi-Consolidated, a global paper products company. Securities issued by Bowater, a newsprint producer, also held back results, as did our positions in two Kazakh banks. Q. What is your investment outlook? A. By the midpoint of 2006, we have modestly increased duration - or interest-rate sensitivity - to an essentially neutral position relative to the Portfolio's benchmark. We anticipate increasing duration in the second half of the year when we have seen clear signs that the Federal Reserve Board has been successful in slowing the pace of economic growth and moderating inflationary pressures. By late June, we had only seen persuasive evidence of slowing in the housing sector. We anticipate keeping the Portfolio's credit quality relatively high, as we believe the Fed's actions have limited the potential for price appreciation in lower-rated, high-yield bonds. Among investment-grade securities, we prefer mortgage securities to corporate bonds, which offer little yield advantage for their added credit risk. In this environment, we believe it makes sense to position the Portfolio conservatively while being well diversified to take advantage of opportunities throughout the fixed-income markets. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 32 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO UPDATE 6/30/06 ================================================================================ Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] U.S. Government Agency Obligations 97.7% Collateralized Mortgage Obligations 1.7% U.S. Corporate Bonds 0.6%
Maturity Distribution (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT] 0-1 year 2.6% 1-3 years 10.7% 3-4 years 33.5% 4-6 years 30.0% 6-8 years 13.8% 8+ years 9.4%
Five Largest Holdings (As a percentage of long-term holdings) 1. U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 7.91% 2. U.S. Treasury Notes, 6.25%, 8/15/23 5.68 3. U.S. Treasury Bond, 5.125%, 5/15/16 4.64 4. U.S. Treasury Notes, 6.5%, 2/15/10 3.54 5. U.S. Treasury Notes, 6.375%, 8/15/27 3.28
The Portfolio is actively managed, and current holdings may be different. ================================================================================ PERFORMANCE UPDATE 6/30/06 ================================================================================ Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $9.51 $9.84 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.2290 $ - $ -
================================================================================ Performance of a $10,000 Investment ================================================================================ The following chart shows the change in value of an investment made in Pioneer America Income VCT Portfolio at net asset value, compared to that of the Lehman Brothers Fixed-Rate Mortgage-Backed Securities Index and of Lehman Brothers Government Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Lehman Brothers Lehman Brothers America Income Government Bond Fixed-Rate Mortgage-Backed VCT Portfolio Index Index 6/96 10,000 10,000 10,000 10,607 10,740 10,910 6/98 11,597 11,948 11,884 11,839 12,312 12,360 6/00 12,331 12,929 12,982 13,570 14,264 14,447 6/02 14,696 15,521 15,744 15,850 17,281 16,645 6/04 15,860 17,047 17,016 16,694 18,180 18,060 6/06 16,535 17,968 18,131
The Lehman Brothers Government Bond Index measures the performance of the U.S. government bond market. The Lehman Brothers Fixed-Rate Mortgage- Backed Index measures the performance of the government and mortgage securities markets. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ 10 Years 5.16% 5 Years 4.03% 1 Year -0.95%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 33 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 ================================================================================ During a period of solid economic growth and steadily rising interest rates, yields on Treasury securities rose, and shareholders in Pioneer America Income Trust VCT Portfolio earned a relatively high level of income during the first half of 2006. In the interview below, Richard Schlanger, a member of Pioneer's fixed-income team, discusses the factors that affected the fixed-income market and the Trust over the semiannual period. Q. How did the Trust perform during the period? A. For the six months ended June 30, 2006, Class I shares of Pioneer America Income Trust VCT Portfolio produced a total return of -1.03% at net asset value. For the same period, the Trust underperformed its benchmark, the Lehman Brothers Government Bond Index, which returned -0.89%, and the Lehman Brothers Fixed-Rate Mortgage-Backed Index which returned -0.06%. The Trust surpassed the average -1.25% return generated by the 65 funds in the U.S. Government Underlying Funds category of Lipper Inc., an independent monitor of mutual fund performance. At the end of the period, the Trust's 30-day SEC yield was 4.38%. The Trust had 227 issues, and the average credit quality of the Portfolio was AAA. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What was the investment environment like during the six months? A. In a period of relatively strong economic growth and higher prices for commodities, concerns about the prospect of accelerating inflation dominated the fixed-income markets. At the Federal Reserve, Ben Bernanke became chairman in early February. When Mr. Bernanke took office, the Federal funds target rate was 4.50%. In the first five months of his chairmanship, the Federal funds rate rose to 5.25%, with the latest increase occurring on June 29. (The Federal funds rate is the rate banks charge for overnight loans. Since June 2004, the Federal Reserve has raised interest rates 17 times, taking the Federal funds rate from a 40-year low of 1% to the current 5.25%.) In the most recent six-month period, yields across the maturity spectrum moved higher in a parallel fashion. Q. How did you manage the Trust in this environment? A. As higher interest rates boosted mortgage rates, we became concerned about the duration (sensitivity to interest-rate changes) of our mortgage holdings because as interest rates go up, mortgage duration tends to lengthen when refinancing and prepayment activity slows. To limit this drift in duration, we trimmed our mortgage position from 55% to about 52% of net assets. Instead, we chose to concentrate on longer-term Treasury securities. We thought that if the Federal Reserve went too far in raising rates, economic growth would slow, and the central bank would have to reverse course and begin lowering rates. If this were to occur, we believed the Treasury market would rally, and longer-term Treasuries would outperform their short-term counterparts. As conditions warranted, we opportunistically added to or sold holdings in Treasury Inflation Protected Securities (TIPS). TIPS are securities whose principal is tied to the consumer price index. When inflation accelerates, the principal on TIPS increases in value. At the end of the six-month period, 52.1% of the Portfolio was in mortgage pass-through securities issued by the Government National Mortgage Association (Ginnie Mae); 46.4% was in Treasury Issues, TIPS and agency securities issued by the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal Home Loan Bank, and the Federal Farm Credit Bank. Q. What contributed to performance? A. The shorter-duration assets aided returns as interest rates went up. Returns on longer-term, fixed-rate Treasuries were negative; however, our positions in TIPS and agency securities contributed to performance. Mortgage holdings also did well, with mortgages issued by Fannie Mae and Freddie Mac outperforming those issued by Ginnie Mae. Q. What detracted from performance? A. Because the Federal Reserve was determined to fight inflation by raising interest rates, long-duration assets vastly underperformed short-duration assets. As a result, the Portfolio's longer-duration assets were the biggest detractor from performance. For the six months, five-year and 10-year Treasuries returned -1.35% and -3.90%, respectively. We view the underperformance of longer-duration assets as a relatively short-term event, because we believe that once the Federal Reserve stops raising interest rates, securities with longer durations have the potential to outperform. A Word About Risk: When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed-income securities in the Portfolio will generally rise. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed--income securities. Mortgage-backed securities are also subject to pre-payments. Government guarantees apply to the underlying securities only and not to the prices and yields of the Portfolio. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 34 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================ Q. What is your outlook? A. We believe that rising interest rates and oil prices have begun to affect the mortgage market and consumer spending. We have seen a shift away from adjustable-rate mortgages to fixed-rate mortgages and a decline in refinance activity as mortgage rates have risen. If these trends continue, economic growth is likely to slow, and the Federal Reserve may take a breather from raising interest rates. The Portfolio is positioned to take advantage of this type of environment. Should rates stabilize or decline, we believe the Portfolio's intermediate-term and longer-term holdings could outperform. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 35 Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ PORTFOLIO AND PERFORMANCE UPDATE 6/30/06 ================================================================================ Short-term interest rates continued to rise throughout the first six months of 2006 as the U.S. Federal Reserve Board hiked the key Fed Funds rate four successive times in an effort to reduce inflationary pressures produced by solid economic growth. As a consequence, the yields of money market and short-term fixed income assets rose through the half year, leading to higher yields for money market investors. Pioneer Money Market Portfolio primarily invests in high-quality money market instruments issued by the U.S. government, corporations, and national and international banks. All issues have the highest ratings from the two nationally recognized ratings organizations: A1 by Standard & Poor's Investors Services and P1 by Moody's Investor Services. (Ratings apply to underlying securities, not Portfolio shares.) In the following discussion, Seth Roman reviews the investment environment and the strategies that affected Pioneer Money Market VCT Portfolio over the six months ended June 30, 2006. Mr. Roman is a member of Pioneer's Fixed Income Group, which is responsible for the daily management of the Portfolio. Q. How did the Portfolio perform? A. Class I shares of Pioneer Money Market VCT Portfolio had a total return of 2.05%, at net asset value, for the six months ended June 30, 2006. During the same half-year, the average return of the 110 funds in Lipper's Variable Annuity Money Market Fund category was also 2.05%. The Portfolio's net asset value remained stable at $1.00 throughout the 12 months. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What were your principal strategies and how did they affect Portfolio performance for the six months? A. The Federal Reserve Board's actions in hiking the Fed Funds rate from 4.25% to 5.25% in four successive actions over the six months had an immediate impact on yields of short-term investments. Given the Fed's actions, and the fact that there was very little incremental yield available by extending maturity, we kept the average maturity of the Portfolio's holdings within the 30-to-35 day range. This enabled the Portfolio quickly to capture the higher yields as they became available with each rate hike. To keep the Portfolio's overall duration short, we focused primarily on investing in securities with maturities of 60 to 90 days. With the effect of the natural roll-down as older holdings reached their maturity dates, the overall average maturity of Portfolio investments remained in the targeted 30-to-35 day range. The short maturity also enabled the Portfolio to provide shareholders with a high degree of liquidity. Q. What is your investment outlook? A. While the national economy remains fairly firm, markets expect that the Federal Reserve will end its tightening cycle quite soon. We believe that any future Fed action will continue to be "data dependent" and will focus on upcoming economic and inflation reports. Thus, we will seek opportunities that position the portfolio to take advantage of any upward moves in short-term yields. These include longer-term securities with better than projected return profiles. As always, we intend to invest only in very high-quality securities. Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $1.00 $1.00 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.020 $ - $ -
A Word About Risk: Although the Portfolio seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Portfolio. Portfolio shares are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
================================================================================ Net Asset Value ================================================================================ 10 Years 3.39% 5 Years 1.62% 1 Year 3.57%
All total returns shown assume reinvestment of distributions at net asset value. * Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 36 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value PREFERRED STOCKS - 3.2% Materials - 0.6% Steel - 0.6% 15,990 Cia Vale Do Rio Doce* $ 325,724 ----------- Total Materials $ 325,724 ----------- Media - 0.9% Broadcasting & Cable TV - 0.9% 893,700 Net Servicos de Comunicacao SA* $ 482,992 ----------- Total Media $ 482,992 ----------- Banks - 1.1% Diversified Banks - 1.1% 21,330 Banco Itau Holding Financeira $ 621,702 ----------- Total Banks $ 621,702 ----------- Telecommunication Services - 0.6% Integrated Telecommunication Services - 0.6% 27,701 Tele Norte Leste Participacoes (A.D.R.)(a) $ 353,188 ----------- Total Telecommunication Services $ 353,188 ----------- TOTAL PREFERRED STOCKS (Cost $1,119,971) $ 1,783,606 ----------- COMMON STOCKS - 96.3% Energy - 20.7% Integrated Oil & Gas - 16.6% 755,600 China Petroleum & Chemical $ 432,779 44,100 Gazprom (A.D.R.)* 1,859,918 15,300 Lukoil Holding (A.D.R.) 1,278,315 2,900 Mol Magyar Olaj* 298,519 31,200 Petrobras Brasileiro (A.D.R.) 2,491,008 710,400 PetroChina Co., Ltd. 766,170 45,000 PTT Public Co., Ltd.* 266,789 14,600 Repsol SA (A.D.R.) 409,676 23,600 Sasol, Ltd. (A.D.R.)* 911,904 9,100 Surgutneftegaz (A.D.R.)*(a) 664,300 ----------- $ 9,379,378 ----------- Oil & Gas Equipment & Services - 1.1% 15,200 TelecomAsia Corp. Public Co., Ltd.* $ 615,448 ----------- Oil & Gas Exploration & Production - 1.2% 852,700 Cnooc, Ltd.* $ 684,496 26,600 Reliance Natural Resources, Ltd.* 11,499 ----------- $ 695,995 ----------- Oil & Gas Refining & Marketing - 1.8% 26,000 Polski Koncern Naftowy Orlen SA $ 432,319 12,300 Reliance Industries, Ltd. (144A)* 570,720 ----------- $ 1,003,039 ----------- Total Energy $11,693,860 ----------- Shares Value Materials - 11.4% Construction Materials - 1.9% 2,460 Asia Cement Co., Ltd.* $ 96,071 884,900 PT Indocement Tunggal Prakarsa Tbk* 400,662 91,400 Siam Cement Co., Ltd. 553,775 ----------- $ 1,050,508 ----------- Diversified Metals & Mining - 2.7% 833,900 Aneka Tambang Tbk* $ 417,730 8,400 Freeport-McMoRan Copper & Gold, Inc. (Class B)(a) 465,444 5,100 Norilsk Nickel* 663,000 ----------- $ 1,546,174 ----------- Gold - 2.9% 13,500 Anglogold Ashanti, Ltd. (A.D.R.) (a) $ 649,620 50,200 IAMGOLD Corp.* 446,780 1,123,100 Zijin Mining Group Co., Ltd.* 566,467 ----------- $ 1,662,867 ----------- Precious Metals & Minerals - 2.3% 5,700 Anglo American Platinum Corp., Ltd. $ 598,361 25,200 Compania de Minas Buenaventura SA* 687,456 ----------- $ 1,285,817 ----------- Steel - 1.6% 42,700 Companhia Vale do Rio Doce (A.D.R.) $ 878,766 ----------- Total Materials $ 6,424,132 ----------- Capital Goods - 12.8% Aerospace & Defense - 0.9% 18,200 Elbit Systems, Ltd. $ 486,581 ----------- Construction & Engineering - 4.0% 124,500 Aveng, Ltd. $ 377,552 865,320 Continental Engineering Corp. 500,152 162,117 Empressa ICA Sociedad Controladora SA de CV* 457,917 7,700 GS Engineering & Construction Corp.* 496,998 13,240 Kyeryong Construction Industrial Co., Ltd.* 419,982 ----------- $ 2,252,601 ----------- Construction, Farm Machinery & Heavy Trucks - 4.8% 27,000 Daewoo Heavy Industries & Machinery, Ltd.* $ 791,883 8,930 Hyundai Heavy Industries* 1,003,200 41,200 Samsung Heavy Industries Co., Ltd.* 948,063 ----------- $ 2,743,146 ----------- Industrial Conglomerates - 2.1% 24,200 Barloworld* $ 406,267 55,000 Keppel Corp.* 510,738 92,153 KOC Holding AS* 273,999 ----------- $ 1,191,004 -----------
The accompanying notes are an integral part of these financial statements. 37 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Industrial Machinery - 1.0% 32,500 Doosan Heavy Industries & Construction Co.* $ 538,325 ----------- Total Capital Goods $ 7,211,657 ----------- Transportation - 2.5% Airlines - 0.8% 13,400 Gol-Linhas Aereas Inteligentes SA* $ 476,604 ----------- Marine - 1.7% 807,300 China Shipping Development Co., Ltd.* $ 586,221 165,800 Malaysia International Shipping Bhd. 347,145 ----------- $ 933,366 ----------- Total Transportation $ 1,409,970 ----------- Automobiles & Components - 1.7% Automobile Manufacturers - 1.7% 11,100 Hyundai Motor Co., Ltd.* $ 946,678 ----------- Total Automobiles & Components $ 946,678 ----------- Consumer Durables & Apparel - 2.0% Homebuilding - 0.8% 28,720 Cyrela Brazil Realty SA $ 475,593 ----------- Household Appliances - 0.5% 49,340 Arcelik AS* $ 282,178 ----------- Housewares & Specialties - 0.7% 17,000 Woongjin Coway Co., Ltd.* $ 371,578 ----------- Total Consumer Durables & Apparel $ 1,129,349 ----------- Consumer Services - 0.9% Hotels, Resorts & Cruise Lines - 0.9% 19,400 Indian Hotels Co. Ltd.* $ 484,941 ----------- Total Consumer Services $ 484,941 ----------- Media - 2.6% Broadcasting & Cable TV - 2.1% 29,088 Grupo Televisa SA (A.D.R.)* $ 561,689 102,800 Television Broadcasts, Ltd. 636,204 ----------- $ 1,197,893 ----------- Publishing - 0.5% 133,716 Hurriyet Gazetecilik ve Matbaacilik AS* $ 272,680 ----------- Total Media $ 1,470,573 ----------- Retailing - 3.3% Apparel Retail - 1.0% 61,800 Edgars Consolidated Stores, Ltd.* $ 250,044 112,400 Truworths International, Ltd. 337,624 ----------- $ 587,668 ----------- Department Stores - 1.7% 5,800 Hyundai Department Store Co., Ltd.* $ 449,747 10,000 Lojas Renner SA* 537,900 ----------- $ 987,647 ----------- Shares Value Homefurnishing Retail - 0.6% 35,400 Ellerine Holdings, Ltd. $ 318,348 ----------- Total Retailing $ 1,893,663 ----------- Food & Drug Retailing - 2.0% Food Retail - 0.7% 185,000 President Chain Store Corp. $ 406,444 ----------- Hypermarkets & Supercenters - 1.3% 12,200 Brasil Distr Pao Acu (A.D.R.)* $ 379,908 48,500 Massmart Holdings, Ltd. 318,666 ----------- $ 698,574 ----------- Total Food & Drug Retailing $ 1,105,018 ----------- Food, Beverage & Tobacco - 3.4% Packaged Foods & Meats - 1.9% 5,080 CJ Corp.* $ 558,126 25,200 Tiger Brands, Ltd.* 506,839 ----------- $ 1,064,965 ----------- Soft Drinks - 1.5% 10,400 Fomento Economico Mexicano SA de CV* $ 870,688 ----------- Total Food, Beverage & Tobacco $ 1,935,653 ----------- Household & Personal Products - 1.6% Personal Products - 1.6% 44,650 Natura Cosmeticos SA* $ 462,401 14,200 Oriflame Cosmetics SA* 471,439 ----------- $ 933,840 ----------- Total Household & Personal Products $ 933,840 ----------- Pharmaceuticals & Biotechnology - 1.8% Pharmaceuticals - 1.8% 32,700 Teva Pharmaceutical Industries, Ltd. $ 1,032,993 ----------- Total Pharmaceuticals & Biotechnology $ 1,032,993 ----------- Banks - 10.7% Diversified Banks - 10.3% 20,332 Banco Bradesco SA(a) $ 632,122 23,200 Banco do Brasil SA 535,607 124,200 Bank Hapoalim, Ltd. 535,476 295,400 Bumiputra-Commerce Holdings Bhd.* 477,277 13,110 Hana Financial Holdings* 618,450 12,700 Kookmin Bank (A.D.R.)* 1,054,862 13,100 Shinhan Financial Group Co., Ltd.* 617,610 44,549 Standard Bank Group, Ltd. 477,765 13,600 State Bank of India 216,104 44,325 Turkiye Is Bankasi (Isbank)* 217,241 6,262 Uniao de Bancos Brasileiros SA (Unibanco) (G.D.R.) (144A) 415,734 ----------- $ 5,798,248 -----------
38 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value Thrifts & Mortgage Finance - 0.4% 21,900 Banco De Oro (G.D.R.) (144A)* $ 256,033 ----------- Total Banks $ 6,054,281 ----------- Diversified Financials - 2.4% Investment Banking & Brokerage - 0.9% 9,600 Samsung Securities Co., Ltd.* $ 515,121 ----------- Diversified Financial Services - 1.5% 213,406 FirstRand, Ltd.* $ 512,248 388,000 Fubon Group 335,351 26,600 Reliance Capital Ventures* 14,383 ----------- $ 861,982 ----------- Total Diversified Financials $ 1,377,103 ----------- Insurance - 5.1% Life & Health Insurance - 3.6% 32,600 Cathay Financial Holding Co., Ltd., (144A) (G.D.R.) $ 702,204 309,800 China Life Insurance Co., Ltd.* 490,098 134,500 Ping An Insurance Company of China, Ltd.* 410,010 226,590 Sanlam, Ltd.* 458,499 ----------- $ 2,060,811 ----------- Property & Casualty Insurance - 1.5% 141,734 Aksigorta AS* $ 390,754 3,200 Samsung Fire & Marine Insurance* 428,267 ----------- $ 819,021 ----------- Total Insurance $ 2,879,832 ----------- Real Estate - 0.6% Real Estate Management & Development - 0.6% 1,456,600 Ayala Land, Inc.* $ 315,109 ----------- Total Real Estate $ 315,109 ----------- Software & Services - 1.1% IT Consulting & Other Services - 1.1% 9,532 Infosys Technologies, Ltd. $ 643,003 ----------- Total Software & Services $ 643,003 ----------- Technology Hardware & Equipment - 3.2% Computer Hardware - 1.0% 125,240 ACER Sertek, Inc. $ 219,858 212,900 Quanta Computer, Inc. 341,434 ----------- $ 561,292 ----------- Computer Storage & Peripherals - 1.0% 84,000 Asustek Computer, Inc. $ 205,918 297,800 LITE-ON IT Corp. 348,674 ----------- $ 554,592 ----------- Shares Value Electronic Manufacturing Services - 1.2% 109,358 Hon Hai Precision Industry $ 673,453 ----------- Total Technology Hardware & Equipment $ 1,789,337 ----------- Semiconductors - 0.7% Semiconductors - 0.7% 229,383 Taiwan Semiconductor Manufacturing Co. $ 413,003 ----------- Total Semiconductors $ 413,003 ----------- Telecommunication Services - 4.7% Integrated Telecommunication Services - 1.2% 13,000 Brasil Telecom Participacoes SA* $ 423,410 7,700 Philippine Long Distance Telephone Co. 266,290 ----------- $ 689,700 ----------- Wireless Telecommunication Services - 3.5% 14,600 Mobile Telesystems (A.D.R.) $ 429,824 64,600 MTN Group, Ltd.* 477,448 26,600 Reliance Communication Ventures, Ltd.* 145,122 416,000 Taiwan Mobile Co., Ltd 414,093 10,800 Vimpel-Communications (A.D.R.)* 494,856 ----------- $ 1,961,343 ----------- Total Telecommunication Services $ 2,651,043 ----------- Utilities - 1.1% Electric Utilities - 0.0% 26,600 Reliance Energy Ventures, Ltd.* $ 19,609 ----------- Gas Utilities - 1.1% 627,100 Panva Gas Holdings, Ltd.* $ 286,975 3,300 Samchully Co., Ltd.* 338,177 ----------- $ 625,152 ----------- Total Utilities $ 644,761 ----------- TOTAL COMMON STOCKS (Cost $38,430,727) $54,439,799 ----------- TEMPORARY CASH INVESTMENT - 3.2% Security Lending Collateral - 3.2% 1,829,705 Securities Lending Investment Fund, 5.16% $ 1,829,705 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,829,705) $ 1,829,705 ----------- TOTAL INVESTMENT IN SECURITIES - 102.7% (Cost $41,380,403)(b) $58,053,110 ----------- OTHER ASSETS AND LIABILITIES - (2.7)% $(1,512,067) ----------- TOTAL NET ASSETS - 100.0% $56,541,043 ===========
The accompanying notes are an integral part of these financial statements. 39 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================ (A.D.R.) American Depositary Receipt. (G.D.R.) Global Depositary Receipt. * Non-income producing security. (144A) Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $1,944,691 or 3.4% of total net assets. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 13,350 Anglogold Ashanti, Ltd. (A.D.R.) $ 642,402 2,829 Banco Bradesco SA 87,954 8,316 Freeport-McMoRan Copper & Gold, Inc. (Class B) 460,790 8,639 Surgutneftegaz (A.D.R.) * 630,647 1,543 Tele Norte Leste Participacoes (A.D.R.) 19,673 ---------- Total $1,841,466 ==========
(b) Distributions of investments by country of issue, as a percentage of total equity holdings (excluding temporary cash investments) is as follows: South Korea 18.1% Brazil 16.9 South Africa 11.7 Russia 9.6 Taiwan 8.1 People's Republic of China 7.0 India 3.7 Israel 3.7 Mexico 3.4 Turkey 2.6 Hong Kong 1.6 Philippines 1.5 Malaysia 1.5 Thailand 1.5 Indonesia 1.5 Peru 1.2 Argentina 1.1 Other (individually less than 1%) 5.3 ----- 100.0% =====
40 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value PREFERRED STOCK - 2.9% Automobiles & Components - 2.9% Automobile Manufacturers - 2.9% 601 Porsche AG* $ 579,712 ----------- TOTAL PREFERRED STOCK (Cost $384,137) $ 579,712 ----------- COMMON STOCKS - 95.7% Energy - 11.4% Integrated Oil & Gas - 11.4% 92,816 BP Amoco Plc $ 1,074,177 20,168 Eni SpA* 592,511 21,728 Repsol SA 613,977 ----------- $ 2,280,665 ----------- Total Energy $ 2,280,665 ----------- Materials - 7.6% Construction Materials - 5.4% 21,189 CRH Plc $ 687,712 3,081 Lafarge Br* 386,161 ----------- $ 1,073,873 ----------- Diversified Metals & Mining - 2.2% 8,503 Rio Tinto Plc $ 445,835 ----------- Total Materials $ 1,519,708 ----------- Capital Goods - 7.7% Building Products - 2.9% 8,064 Compagnie de Saint Gobain* $ 575,280 ----------- Industrial Conglomerates - 2.6% 6,139 Siemens $ 533,937 ----------- Trading Companies & Distributors - 2.2% 20,233 Wolseley* $ 444,485 ----------- Total Capital Goods $ 1,553,702 ----------- Transportation - 4.1% Air Freight & Couriers - 4.1% 22,922 TNT NV $ 820,291 ----------- Total Transportation $ 820,291 ----------- Automobiles & Components - 7.4% Automobile Manufacturers - 2.1% 6,723 PSA Peugeot* $ 417,529 ----------- Tires & Rubber - 5.3% 8,850 Compagnie Generale des Etablissements Michelin* $ 530,758 5,301 Continental AG* 540,526 ----------- $ 1,071,284 ----------- Total Automobiles & Components $ 1,488,813 ----------- Shares Value Consumer Durables & Apparel - 7.1% Apparel, Accessories & Luxury Goods - 3.0% 12,484 Adidas-Salomon AG* $ 599,897 ----------- Homebuilding - 4.1% 21,596 Persimmon Plc. $ 491,915 38,793 Wimpey (George) Plc* 325,662 ----------- $ 817,577 ----------- Total Consumer Durables & Apparel $ 1,417,474 ----------- Consumer Services - 2.4% Hotels, Resorts & Cruise Lines - 2.4% 11,547 Carnival Corp. $ 481,972 ----------- Total Consumer Services $ 481,972 ----------- Media - 3.3% Advertising - 3.3% 54,988 WPP Group Plc $ 662,778 ----------- Total Media $ 662,778 ----------- Retailing - 1.7% Department Stores - 1.7% 11,321 Next Plc $ 342,379 ----------- Total Retailing $ 342,379 ----------- Food & Drug Retailing - 2.7% Drug Retail - 1.5% 21,694 Boots Group Plc $ 307,580 ----------- Hypermarkets & Supercenters - 1.2% 4,016 Carrefour Supermarch* $ 235,045 ----------- Total Food & Drug Retailing $ 542,625 ----------- Pharmaceuticals & Biotechnology - 8.5% Pharmaceuticals - 8.5% 10,691 Astrazeneca Plc $ 639,900 4,787 Roche Holdings AG 790,000 19,449 Shire PLC* 285,583 ----------- $ 1,715,483 ----------- Total Pharmaceuticals & Biotechnology $ 1,715,483 ----------- Banks - 21.1% Diversified Banks - 21.1% 17,413 Allied Irish Banks Plc $ 418,736 63,745 Barclays Plc 724,904 10,136 BNP Paribas SA* 968,348 32,910 Dnb Nor Asa* 407,774 31,220 Royal Bank of Scotland Group Plc 1,026,484 11,376 Skand Enkilda Banken* 270,459 2,893 Societe Generale* 424,482 ----------- $ 4,241,187 ----------- Total Banks $ 4,241,187 -----------
The accompanying notes are an integral part of these financial statements. 41 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Diversified Financials - 7.5% Diversified Capital Markets - 7.5% 15,233 CS Group* $ 850,279 6,087 UBS AG* 665,248 ----------- $ 1,515,527 ----------- Total Diversified Financials $ 1,515,527 ----------- Technology Hardware & Equipment - 2.6% Communications Equipment - 2.6% 157,002 Ericsson LM* $ 518,677 ----------- Total Technology Hardware & Equipment $ 518,677 ----------- Telecommunication Services - 0.6% Integrated Telecommunication Services - 0.6% 5,536 France Telecom SA* $ 118,802 ----------- Total Telecommunication Services $ 118,802 ----------- TOTAL COMMON STOCKS (Cost $15,714,456) $19,220,083 ----------- TOTAL INVESTMENT IN SECURITIES - 98.6% (Cost $16,098,593)(a) $19,799,795 ----------- OTHER ASSETS AND LIABILITIES - 1.4% $ 275,050 ----------- TOTAL NET ASSETS - 100.0% $20,074,845 ===========
* Non-income producing security. (a) Distributions of investments by country of issue (excluding temporary cash investments), as a percentage of total investment in equity securities, is as follows: United Kingdom 34.2% France 18.5 Switzerland 11.6 Germany 11.4 Ireland 5.6 Netherlands 4.1 Sweden 4.0 Spain 3.1 Italy 3.0 Panama 2.4 Norway 2.1 ----- 100.0% =====
42 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value PREFERRED STOCK - 0.9% Utilities - 0.9% Multi-Utilities - 0.9% 3,360 RWE AG - Non-Voting $ 252,525 ----------- TOTAL PREFERRED STOCK (Cost $203,729) $ 252,525 ----------- COMMON STOCKS - 97.2% Energy - 9.9% Integrated Oil & Gas - 8.0% 7,875 Gazprom - Reg S, (A.D.R.)* $ 332,128 3,930 Lukoil Holding (A.D.R.) 328,352 4,020 Petrobras Brasileiro (A.D.R.) 320,957 18,950 Repsol SA 535,478 5,000 Statoil ASA* 142,302 8,980 Total SA* 588,753 ----------- $ 2,247,970 ----------- Oil & Gas Equipment & Services - 1.1% 3,500 Saipem S.p.A.* $ 79,452 4,080 Technip* 225,444 ----------- $ 304,896 ----------- Oil & Gas Exploration & Production - 0.8% 299,630 CNOOC, Ltd.* $ 240,525 ----------- Total Energy $ 2,793,391 ----------- Materials - 8.9% Construction Materials - 2.0% 3,720 CRH Plc $ 121,777 4,310 Holcim, Ltd.* 330,330 900 Lafarge Br* 112,803 ----------- $ 564,910 ----------- Diversified Metals & Mining - 3.1% 16,722 Broken Hill Proprietary Co., Ltd. $ 360,335 5,140 Freeport-McMoRan Copper & Gold, Inc. (Class B)(b) 284,807 4,650 Rio Tinto Plc 243,812 ----------- $ 888,954 ----------- Specialty Chemicals - 0.9% 4,500 Shin-Etsu Chemical Co., Ltd. $ 245,738 ----------- Steel - 2.9% 15,380 Companhia Vale do Rio Doce (A.D.R.) $ 316,520 25,600 Hitachi Metals, Ltd.* 253,081 5,800 JFE Holdings, Inc.* 246,269 ----------- $ 815,870 ----------- Total Materials $ 2,515,472 ----------- Shares Value Capital Goods - 11.2% Building Products - 1.1% 4,270 Compagnie de Saint Gobain* $ 304,618 ----------- Construction & Farm Machinery & Heavy Trucks - 3.1% 11,770 Daewoo Heavy Industries & Machinery, Ltd.* $ 345,202 2,380 Hyundai Heavy Industries* 267,370 12,800 Komatsu, Ltd.* 256,352 ----------- $ 868,924 ----------- Electrical Component & Equipment - 0.4% 1,100 Schneider Electric SA* $ 114,619 ----------- Heavy Electrical Equipment - 1.7% 59,000 Mitsubishi Electric Corp.* $ 474,742 ----------- Industrial Conglomerates - 2.8% 33,000 Keppel Corp* $ 306,443 61,711 KOC Holding AS* 183,487 3,560 Siemens 309,630 ----------- $ 799,560 ----------- Industrial Machinery - 1.1% 8,900 AB SKF* $ 139,855 14,220 Nabtesco Corp.* 160,157 ----------- $ 300,012 ----------- Trading Companies & Distributors - 1.0% 21,000 Sumitomo Corp.* $ 278,211 ----------- Total Capital Goods $ 3,140,686 ----------- Commercial Services & Supplies - 0.3% Office Services & Supplies - 0.3% 6,200 Buhrmann NV* $ 89,644 ----------- Total Commercial Services & Supplies $ 89,644 ----------- Transportation - 2.4% Air Freight & Couriers - 0.8% 700 Panalpina Welttransport Holding AG* $ 65,053 4,820 TNT NV 172,489 ----------- $ 237,542 ----------- Railroads - 1.6% 60 East Japan Railway Co.* $ 446,891 ----------- Total Transportation $ 684,433 ----------- Automobiles & Components - 4.5% Auto Parts & Equipment - 0.9% 8,120 Denso Corp.* $ 266,498 -----------
The accompanying notes are an integral part of these financial statements. 43 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Automobile Manufacturers - 3.0% 3,260 Hyundai Motor Co., Ltd.* $ 278,033 10,600 Toyota Motor Co. 554,409 ----------- $ 832,442 ----------- Tires & Rubber - 0.6% 1,660 Continental AG* $ 169,265 ----------- Total Automobiles & Components $ 1,268,205 ----------- Consumer Durables & Apparel - 3.3% Apparel, Accessories & Luxury Goods - 0.4% 2,300 Adidas-Salomon AG* $ 110,523 ----------- Consumer Electronics - 1.5% 9,800 Sony Corp.* $ 431,856 ----------- Footwear - 0.2% 140 Puma AG Rudolf Dassler Sport* $ 54,300 ----------- Homebuilding - 0.4% 5,350 Persimmon Plc. $ 121,863 ----------- Leisure Products - 0.8% 5,800 Sega Sammy Holdings, Inc.* $ 214,461 ----------- Total Consumer Durables & Apparel $ 933,003 ----------- Consumer Services - 0.4% Hotels, Resorts & Cruise Lines - 0.4% 2,370 Carnival Corp. $ 98,924 ----------- Total Consumer Services $ 98,924 ----------- Media - 1.5% Broadcasting & Cable TV - 0.8% 230 Jupiter Telecommunications Co., Ltd.* $ 159,392 6,100 Mediaset S.p.A* 71,816 ----------- $ 231,208 ----------- Movies & Entertainment - 0.7% 5,700 Vivendi SA* $ 199,381 ----------- Total Media $ 430,589 ----------- Retailing - 1.5% Apparel Retail - 0.8% 74,800 Truworths International, Ltd. $ 224,682 ----------- Department Stores - 0.7% 15,140 Takashimaya Co., Ltd.* $ 190,719 ----------- Total Retailing $ 415,401 ----------- Food & Drug Retailing - 2.4% Drug Retail - 0.3% 6,900 Boots Group Plc $ 97,829 ----------- Shares Value Hypermarkets & Supercenters - 2.1% 13,200 Aeon Co., Ltd.* $ 289,230 4,100 Brasil Distr Pao Acu (A.D.R.)* 127,674 2,770 Carrefour Supermarch* 162,120 ----------- $ 579,024 ----------- Total Food & Drug Retailing $ 676,853 ----------- Food, Beverage & Tobacco - 3.0% Brewers - 0.6% 9,700 South African Breweries Plc* $ 174,079 ----------- Packaged Foods & Meats - 1.1% 1,020 Nestle SA (Registered Shares)* $ 319,798 ----------- Soft Drinks - 0.5% 1,600 Fomento Economico Mexicano SA de C.V.* $ 133,952 ----------- Tobacco - 0.8% 8,300 British American Tobacco Plc $ 208,973 ----------- Total Food, Beverage & Tobacco $ 836,802 ----------- Household & Personal Products - 0.3% Household Products - 0.3% 2,000 Reckitt Benckiser Plc $ 74,514 ----------- Total Household & Personal Products $ 74,514 ----------- Health Care Equipment & Services - 0.8% Health Care Equipment - 0.5% 1,160 Synthes, Inc.* $ 139,657 ----------- Health Care Services - 0.3% 700 Fresenius Medical Care AG* $ 80,371 ----------- Total Health Care Equipment & Services $ 220,028 ----------- Pharmaceuticals & Biotechnology - 7.4% Pharmaceuticals - 7.4% 12,300 Astellas Pharma, Inc. $ 452,422 7,672 Astrazeneca Plc 459,200 14,000 Daiichi Sankyo Co., Ltd.* 384,878 3,028 Roche Holdings AG 499,712 4,340 Shire Pharmaceuticals Group Plc (A.D.R.) 191,958 1,640 UCB SA* 88,643 ----------- $ 2,076,813 ----------- Total Pharmaceuticals & Biotechnology $ 2,076,813 -----------
44 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value Banks - 15.8% Diversified Banks - 15.8% 39,325 Barclays Plc $ 447,201 6,670 BNP Paribas SA* 637,222 8,850 Commonwealth Bank of Australia 291,867 5,700 Depfa Bank Plc* 94,744 25,200 Development Bank of Singapore, Ltd. 287,692 2,700 Kookmin Bank (A.D.R.)* 224,262 34 Mitsubishi UFJ Financial Group, Inc.* 475,627 18,910 Royal Bank of Scotland Group Plc 621,743 3,229 Societe Generale* 473,782 41 Sumitomo Mitsui Financial Group, Inc.* 435,056 37,210 Turkiye Is Bankasi (Isbank)* 182,371 4,090 Uniao de Bancos Brasileiros SA (Unibanco) (G.D.R.) (144A) 271,535 ----------- $ 4,443,102 ----------- Total Banks $ 4,443,102 ----------- Diversified Financials - 4.3% Asset Management & Custody Banks - 0.9% 1,940 Julius Baer Holding* $ 168,015 1,970 Man Group Plc 92,685 ----------- $ 260,700 ----------- Diversified Capital Markets - 2.8% 10,410 CS Group* $ 581,068 1,800 Deutsche Bank AG* 202,097 ----------- $ 783,165 ----------- Investment Banking & Brokerage - 0.6% 12,000 Nikko Cordinal Corp.*(b) $ 154,383 ----------- Total Diversified Financials $ 1,198,248 ----------- Insurance - 4.4% Life & Health Insurance - 1.1% 4,820 China Life Insurance Co. (A.D.R.)*(b) $ 305,106 ----------- Multi-Line Insurance - 2.3% 16,900 Aviva Plc $ 239,292 5,770 AXA* 188,874 1,020 Zurich Financial Services* 223,042 ----------- $ 651,208 ----------- Property & Casualty Insurance - 1.0% 21,840 Mitsui Sumitomo Insurance Co.* $ 273,481 ----------- Total Insurance $ 1,229,795 ----------- Real Estate - 1.5% Real Estate Management & Development - 1.5% 18,700 Mitsui Fudosan Co $ 408,238 ----------- Total Real Estate $ 408,238 ----------- Shares Value Software & Services - 0.5% Application Software - 0.5% 630 Sap AG* $ 132,677 ----------- Total Software & Services $ 132,677 ----------- Technology Hardware & Equipment - 3.6% Communications Equipment - 1.2% 104,050 Ericsson LM Tel Sur B* $ 343,743 ----------- Electronic Equipment & Instruments - 1.1% 1,200 Keyence Corp.* $ 306,789 ----------- Office Electronics - 1.3% 7,650 Canon, Inc. $ 374,047 ----------- Total Technology Hardware & Equipment $ 1,024,579 ----------- Semiconductors - 1.6% Semiconductor Equipment - 0.7% 2,800 Tokyo Electron, Ltd. $ 196,675 ----------- Semiconductors - 0.9% 20,570 Hon Hai Precision Industry (G.D.R.) $ 248,475 ----------- Total Semiconductors $ 445,150 ----------- Telecommunication Services - 4.6% Alternative Carriers - 0.9% 2,700 Fastweb* $ 117,180 23,100 Inmarsat Plc* 146,110 ----------- $ 263,290 ----------- Integrated Telecommunication Services - 2.7% 7,700 Brasil Telecom Participacoes SA* $ 250,789 8,400 France Telecom SA* 180,264 11,880 Telekom Austria AG* 264,126 10,430 Telekomunikacja Polska SA* 65,508 ----------- $ 760,687 ----------- Wireless Telecommunication Services - 1.0% 9,320 Mobile Telesystems (A.D.R.) $ 274,381 ----------- Total Telecommunication Services $ 1,298,358 ----------- Utilities - 3.3% Electric Utilities - 1.8% 4,433 E.On AG* $ 509,405 ----------- Gas Utilities - 1.5% 86,000 Tokyo Gas Co., Ltd. $ 404,964 ----------- Total Utilities $ 914,369 ----------- TOTAL COMMON STOCKS (Cost $23,129,164) $27,349,274 -----------
The accompanying notes are an integral part of these financial statements. 45 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value TEMPORARY CASH INVESTMENT - 2.6% Security Lending Collateral - 2.6% 743,621 Securities Lending Investment Fund, 5.2% $ 743,621 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $743,621) $ 743,621 ----------- TOTAL INVESTMENT IN SECURITIES - 100.7% (Cost $24,076,514)(a) $28,345,420 ----------- OTHER ASSETS AND LIABILITIES - (0.7)% $ (221,874) ----------- TOTAL NET ASSETS - 100.0% $28,123,546 ===========
* Non-income producing security (A.D.R.) American Depositary Receipt (G.D.R.) Global Depositary Receipt 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $271,535 or 1.0% of net assets. (a) Distributions of investments by country of issue, as percentage of total equity holdings (excluding temporary cash investments) is as follows: Japan 30.2% France 11.5 United Kingdom 11.3 Germany 6.6 Switzerland 7.9 Brazil 4.7 South Korea 4.0 Russia 3.4 Australia 2.4 Singapore 2.2 People's Republic of China 2.0 Spain 1.9 Sweden 1.8 United States 1.5 Turkey 1.3 Italy 1.0 Austria 1.0 Other (individually less than 1%) 5.3 ----- 100.0% =====
(b) At June 30, 2006, the following securities were out on loan:
Shares Security Value 11,000 Nikko Cordinal Corp.* $145,974 4,764 China Life Insurance Co. (A.D.R.)* 301,561 5,089 Freeport-McMoRan Copper & Gold, Inc. (Class B) 281,981 -------- Total $729,516 ========
46 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value PREFERRED STOCKS - 0.4% Insurance - 0.4% Multi-Line Insurance - 0.4% 18,640 Quanta Capital Holdings, 10.25%, 12/1/49 $ 347,822 ----------- Total Insurance $ 347,822 ----------- TOTAL PREFERRED STOCKS (Cost $466,000) $ 347,822 ----------- COMMON STOCKS - 90.3% Energy - 9.4% Coal & Consumable Fuels - 1.0% 24,687 Massey Energy Co.(a) $ 888,732 ----------- Integrated Oil & Gas - 1.0% 11,175 CNX Gas Corp.* $ 335,250 19,914 CNX Gas Corp. (144A)* 597,420 ----------- $ 932,670 ----------- Oil & Gas Drilling - 0.8% 15,617 Bronco Drilling Co., Inc.* $ 326,239 5,974 Todco 244,038 3,532 Unit Corp.* 200,935 ----------- $ 771,212 ----------- Oil & Gas Equipment & Services - 3.5% 39,235 Dresser-Rand Group, Inc.* $ 921,238 44,028 Gulfmark Offshore, Inc.* 1,137,243 74,311 Key Energy Services, Inc.* 1,133,243 ----------- $ 3,191,724 ----------- Oil & Gas Exploration & Production - 2.9% 18,726 Forest Oil Corp.* $ 620,954 10,917 Penn Virginia Corp. 762,880 32,107 Riata Energy, Inc. (144A)* 593,980 2,175 Rosetta Resources, Inc.*(a) 36,149 12,658 Rosetta Resources, Inc. (144A)* 210,376 13,890 Southwestern Energy Co.* 432,812 ----------- $ 2,657,151 ----------- Oil & Gas Storage & Transportation - 0.2% 6,859 Arlington Tankers, Ltd. $ 155,562 ----------- Total Energy $ 8,597,051 ----------- Materials - 2.9% Gold - 1.7% 82,876 Cambior, Inc.*(a) $ 222,936 18,153 Glamis Gold, Ltd.* 687,273 71,819 IAMGOLD Corp.* 639,189 ----------- $ 1,549,398 ----------- Paper Products - 0.4% 61,740 Domtar, Inc. $ 381,553 ----------- Shares Value Specialty Chemicals - 0.3% 23,401 Chemtura Corp. $ 218,565 ----------- Steel - 0.5% 1,961 Carpenter Technology $ 226,496 20,843 NN, Inc. 257,411 ----------- $ 483,907 ----------- Total Materials $ 2,633,423 ----------- Capital Goods - 7.3% Building Products - 0.1% 5,397 Goodman Global, Inc.* $ 81,926 ----------- Construction & Engineering - 0.5% 20,241 Insituform Technologies, Inc.* $ 463,316 ----------- Construction, Farm Machinery & Heavy Trucks - 3.4% 39,361 Commercial Vehicle Group, Inc.* $ 813,985 39,452 Federal Signal Corp. 597,303 3,071 Joy Global, Inc. 159,968 2,531 Nacco Industries, Inc. 347,785 32,101 Wabtec Corp. 1,200,577 ----------- $ 3,119,618 ----------- Electrical Component & Equipment - 2.3% 53,700 C&D Technologies, Inc. $ 403,824 105,167 Graftech International, Ltd.* 609,969 173,224 Power-One, Inc.* 1,143,278 ----------- $ 2,157,071 ----------- Industrial Machinery - 0.7% 7,900 Basin Water, Inc.*(a) $ 79,158 9,147 Flowserve Corp.* 520,464 ----------- $ 599,622 ----------- Trading Companies & Distributors - 0.3% 12,867 Applied Industrial Technologies, Inc. $ 312,797 ----------- Total Capital Goods $ 6,734,350 ----------- Commercial Services & Supplies - 3.2% Diversified Commercial Services - 1.3% 23,998 Cornell Companies, Inc.* $ 368,609 3,670 Corrections Corporation of America* 194,290 18,684 School Specialty, Inc.* 595,085 ----------- $ 1,157,984 ----------- Human Resource & Employment Services - 1.9% 24,649 Korn/Ferry International* $ 482,874 38,330 On Assignment, Inc.* 352,253 26,638 Watson Wyatt Worldwide, Inc. 936,059 ----------- $ 1,771,186 ----------- Total Commercial Services & Supplies $ 2,929,170 -----------
The accompanying notes are an integral part of these financial statements. 47 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Transportation - 5.1% Air Freight & Couriers - 2.1% 12,351 Forward Air Corp. $ 503,056 43,544 Pacer International, Inc. 1,418,664 ----------- $ 1,921,720 ----------- Marine - 1.0% 4,569 Dryships, Inc.(a) $ 49,300 24,826 Excel Maritime Carriers, Ltd.*(a) 256,949 12,232 Genco Shipping & Trading, Ltd. 212,348 45,905 Quintana Maritime, Ltd.(a) 376,421 ----------- $ 895,018 ----------- Railroads - 1.1% 29,891 Genesee & Wyoming, Inc.* $ 1,059,935 ----------- Trucking - 0.9% 11,590 Dollar Thrifty Automotive Group* $ 522,361 8,501 Universal Truckload Services, Inc.* 290,139 ----------- $ 812,500 ----------- Total Transportation $ 4,689,173 ----------- Automobiles & Components - 0.8% Tires & Rubber - 0.8% 70,050 Cooper Tire & Rubber*(a) $ 780,357 ----------- Total Automobiles & Components $ 780,357 ----------- Consumer Durables & Apparel - 1.1% Housewares & Specialties - 1.1% 31,841 Jarden Corp.* $ 969,558 ----------- Total Consumer Durables & Apparel $ 969,558 ----------- Consumer Services - 1.5% Casinos & Gaming - 0.5% 28,243 Bally Technologies, Inc.*(a) $ 465,162 ----------- Restaurants - 1.0% 19,375 AFC Enterprises, Inc.*(a) $ 247,031 37,277 O'Charley's, Inc.* 633,709 ----------- $ 880,740 ----------- Total Consumer Services $ 1,345,902 ----------- Retailing - 3.3% Apparel Retail - 1.0% 28,049 Stage Stores, Inc.* $ 925,617 ----------- Computer & Electronics Retail - 0.3% 37,715 Tweeter Home Entertainment Group, Inc.* $ 267,777 ----------- General Merchandise Stores - 0.5% 35,527 Fred's, Inc. $ 474,285 ----------- Internet Retail - 0.4% 66,104 1-800-FLOWERS.COM, Inc.* $ 381,420 ----------- Shares Value Specialty Stores - 1.1% 64,781 Hancock Fabrics, Inc.(a) $ 216,369 101,898 Rent-Way, Inc.* 752,007 ----------- $ 968,376 ----------- Total Retailing $ 3,017,475 ----------- Food, Beverage & Tobacco - 1.1% Agricultural Products - 0.4% 20,007 Fresh Del Monte Produce, Inc.*(a) $ 345,521 ----------- Packaged Foods & Meats - 0.7% 43,912 B & G Foods, Inc. $ 711,814 ----------- Total Food, Beverage & Tobacco $ 1,057,335 ----------- Household & Personal Products - 2.3% Personal Products - 2.3% 13,795 Herbalife, Ltd.* $ 550,421 87,412 Nu Skin Enterprises, Inc. 1,298,068 29,736 Reliv' International, Inc.* 293,792 ----------- $ 2,142,281 ----------- Total Household & Personal Products $ 2,142,281 ----------- Health Care Equipment & Services - 8.0% Health Care Equipment - 1.1% 21,618 Analogic Corp.* $ 1,007,615 ----------- Health Care Facilities - 0.7% 9,950 Lifepoint Hospitals, Inc.* $ 319,694 1 Sunrise Senior Living, Inc.* 28 7,765 Triad Hospitals, Inc.* 307,339 ----------- $ 627,061 ----------- Health Care Services - 4.0% 15,497 Chemed Corp. $ 845,051 69,362 Cross Country Healthcares, Inc.* 1,261,695 18,008 Pediatrix Medical Group, Inc.* 815,762 27,349 Providence Service Corp.* 744,713 ----------- $ 3,667,221 ----------- Health Care Supplies - 0.9% 61,120 Merit Medical Systems, Inc.* $ 841,011 ----------- Managed Health Care - 1.3% 40,150 AMERIGROUP Corp.* $ 1,246,256 ----------- Total Health Care Equipment & Services $ 7,389,164 ----------- Pharmaceuticals & Biotechnology - 0.2% Biotechnology - 0.1% 5,625 Cubist Pharmaceuticals, Inc.* $ 141,638 ----------- Pharmaceuticals - 0.1% 5,100 Connetics Corp.* $ 59,976 ----------- Total Pharmaceuticals & Biotechnology $ 201,614 -----------
48 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value Banks - 5.5% Regional Banks - 4.5% 15,483 Alliance Bankshares Corp.* $ 253,916 21,650 Cadence Financial Corp.* 482,146 45,965 Cardinal Financial Corp. 534,113 11,445 City National Corp. 744,955 3,209 Signature Bank* 103,907 36,508 Southwest Bancorp, Inc.* 930,954 31,768 Sterling Bancshares, Inc. 595,650 21,509 Texas Capital Bancshares, Inc.* 501,160 ----------- $ 4,146,801 ----------- Thrifts & Mortgage Finance - 1.0% 35,388 BankAtlantic Bancorp, Inc. $ 525,158 19,304 Provident Financial Services, Inc. 346,507 ----------- $ 871,665 ----------- Total Banks $ 5,018,466 ----------- Diversified Financials - 6.3% Asset Management & Custody Banks - 1.8% 87,183 Apollo Investment Corp. $ 1,611,142 ----------- Consumer Finance - 2.7% 37,268 Advanta Corp. $ 1,285,442 23,736 Cash America International, Inc. 759,552 7,322 The First Marblehead Corp. 416,915 ----------- $ 2,461,909 ----------- Investment Banking & Brokerage - 1.1% 18,905 A.G. Edwards, Inc. $ 1,045,825 ----------- Multi-Sector Holding - 0.6% 38,750 Compass Diversified Trust* $ 552,963 ----------- Specialized Finance - 0.1% 4,026 Nasdaq Stock Market, Inc.* $ 120,377 ----------- Total Diversified Financials $ 5,792,216 ----------- Insurance - 5.9% Life & Health Insurance - 0.4% 33,818 American Equity Investment Life Holding*(a) $ 360,500 ----------- Multi-Line Insurance - 0.4% 131,214 Quanta Capital Holdings* $ 339,844 ----------- Property & Casualty Insurance - 2.1% 61,034 Assured Guaranty, Ltd. $ 1,548,433 1,236 National Interstate Corp. 33,520 7,428 Selective Insurance Group, Inc. 415,002 ----------- $ 1,996,955 ----------- Shares Value Reinsurance - 3.0% 43,325 IPC Holdings, Ltd. $ 1,068,395 20,466 Max Re Capital, Ltd. 446,977 22,588 Platinum Underwriter Holdings, Ltd. 632,012 47,217 Ram Holdings, Ltd.* 593,518 ----------- $ 2,740,902 ----------- Total Insurance $ 5,438,201 ----------- Real Estate - 3.8% Mortgage Real Estate Investment Trusts - 2.2% 40,535 Annaly Mortgage Management, Inc. $ 519,253 107,041 Deerfield Triarc Capital Corp. 1,389,392 10,900 Hanover Capital Mortgage Holdings, Inc. 57,225 ----------- $ 1,965,870 ----------- Office Real Estate Investment Trusts - 1.4% 43,195 BioMed Property Trust, Inc. $ 1,293,258 ----------- Retail Real Estate Investment Trusts - 0.2% 19,736 Feldman Mall Properties, Inc. $ 216,307 ----------- Total Real Estate $ 3,475,435 ----------- Software & Services - 7.6% Application Software - 4.8% 106,102 Aspen Technology, Inc.* $ 1,392,058 46,449 Bottomline Technologies, Inc.* 378,095 27,241 Corel Corp.* 328,526 51,213 Sonic Solutions*(a) 845,015 23,429 SPSS, Inc.* 753,008 95,989 TIBCO Software, Inc.* 676,722 ----------- $ 4,373,424 ----------- IT Consulting & Other Services - 0.9% 45,493 Gartner Group, Inc.* $ 646,001 14,955 NCI, Inc.* 195,911 ----------- $ 841,912 ----------- Systems Software - 1.9% 127,328 Borland Software Corp.* $ 672,292 34,805 Internet Security Systems, Inc.* 656,074 20,672 Sybase, Inc.* 401,037 ----------- $ 1,729,403 ----------- Total Software & Services $ 6,944,739 ----------- Technology Hardware & Equipment - 10.1% Communications Equipment - 3.3% 28,658 Black Box Corp. $ 1,098,461 39,724 Dycom Industries, Inc.* 845,724 150,883 Symmetricom, Inc.* 1,066,743 ----------- $ 3,010,928 ----------- Computer Hardware - 1.9% 39,061 Avid Technology, Inc.*(a) $ 1,301,903 186,936 Concurrent Computer Corp.* 487,903 ----------- $ 1,789,806 -----------
The accompanying notes are an integral part of these financial statements. 49 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Computer Storage & Peripherals - 0.3% 14,214 Electronics for Imaging, Inc.* $ 296,788 ----------- Electronic Equipment & Instruments - 1.5% 4,344 Electro Scientific Industrials* $ 78,149 20,990 Planar Systems, Inc.* 252,720 47,162 Technitrol, Inc. 1,091,800 ----------- $ 1,422,669 ----------- Electronic Manufacturing Services - 1.3% 36,389 Mercury Computer Systems, Inc.* $ 560,027 69,225 Smart Modular Technologies (WWH), Inc.* 607,796 ----------- $ 1,167,823 ----------- Technology Distributors - 1.8% 85,306 Insight Enterprises, Inc.* $ 1,625,050 ----------- Total Technology Hardware & Equipment $ 9,313,064 ----------- Semiconductors - 1.0% Semiconductor Equipment - 0.3% 26,413 Brooks Automation, Inc.* $ 311,673 ----------- Semiconductors - 0.7% 98,244 Lattice Semiconductor Corp.* $ 607,148 ----------- Total Semiconductors $ 918,821 ----------- Telecommunication Services - 1.5% Integrated Telecommunication Services - 1.5% 110,933 Alaska Communications Systems Group, Inc. $ 1,403,302 ----------- Total Telecommunication Services $ 1,403,302 ----------- Utilities - 2.4% Gas Utilities - 2.4% 22,698 AGL Resources, Inc. $ 865,248 14,006 Energen Corp. 537,971 21,870 People's Energy Corp.(a) 785,352 ----------- $ 2,188,571 ----------- Total Utilities $ 2,188,571 ----------- TOTAL COMMON STOCKS (Cost $76,526,286) $82,979,668 ----------- EXCHANGE TRADED FUNDS - 0.8% 3,177 Russell 2000 Exchange Traded Fund(a) $ 227,791 3,645 Russell 2000 Growth Exchange Traded Fund(a) 268,272 3,620 Russell 2000 Value Exchange Traded Fund(a) 261,979 ----------- $ 758,042 ----------- TOTAL EXCHANGE TRADED FUNDS (Cost $641,672) $ 758,042 ----------- Principal Amount Value TEMPORARY CASH INVESTMENTS - 15.3% Repurchase Agreement - 8.3% $ 7,600,000 UBS Warburg, Inc., 4.40%, dated 6/30/06, repurchase price of $7,600,000 plus accrued interest on 7/3/06 collateralized by $7,762,000 U.S. Treasury Bill, 5.125%, 6/30/08 $ 7,600,000 ----------- Shares Security Lending Collateral - 7.0% 6,454,751 Securities Lending Investment Fund, 5.16% $ 6,454,751 ----------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $14,054,751) $14,054,751 ----------- TOTAL INVESTMENT IN SECURITIES - 106.8% (Cost $91,688,709) $98,140,283 ----------- OTHER ASSETS AND LIABILITIES - (6.8)% $(6,241,863) ----------- TOTAL NET ASSETS - 100.0% $91,898,420 ===========
* Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $1,401,776 or 1.5% of total net assets. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 11,203 AFC Enterprises, Inc.* $ 142,838 30,931 American Equity Investment Life Holding* 329,724 35,725 Avid Technology, Inc.* 1,190,714 25,795 Bally Technologies, Inc.* 424,844 7,130 Basin Water, Inc.* 71,443 75,701 Cambior, Inc.* 203,636 69,349 Cooper Tire & Rubber* 772,548 4,512 Dryships, Inc. 48,684 22,611 Excel Maritime Carriers ,Ltd.* 234,024 8,793 Fresh Del Monte Produce, Inc.* 151,855 58,921 Hancock Fabrics, Inc. 196,796 10,474 Massey Energy Co. 377,064 7,717 People's Energy Corp. 277,117 41,939 Quintana Maritime, Ltd. 343,900 1,980 Rosetta Resources, Inc.* 32,908 2,859 Russell 2000 Exchange Traded Fund 204,990 3,316 Russell 2000 Growth Exchange Traded Fund 244,058 3,584 Russell 2000 Value Exchange Traded Fund 259,374 42,712 Sonic Solutions* 704,748 ---------- Total $6,211,265 ==========
50 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value COMMON STOCKS - 96.0% Energy - 4.9% Coal & Consumable Fuels - 1.5% 150,010 Massey Energy Co. $ 5,400,360 ------------ Integrated Oil & Gas - 1.3% 90,310 Hess Corporation* $ 4,772,884 ------------ Oil & Gas Drilling - 0.6% 26,954 Transocean Offshore Inc.* $ 2,164,945 ------------ Oil & Gas Equipment & Services - 0.7% 53,552 Weatherford Intl, Inc.* $ 2,657,250 ------------ Oil & Gas Refining & Marketing - 0.8% 40,504 Tesoro Petroleum Corp. $ 3,011,877 ------------ Total Energy $ 18,007,316 ------------ Materials - 8.9% Aluminum - 0.8% 130,872 Novelis, Inc. $ 2,824,218 ------------ Diversified Chemical - 2.6% 90,869 Ashland, Inc. $ 6,060,962 56,792 PPG Industries, Inc. 3,748,272 ------------ $ 9,809,234 ------------ Diversified Metals & Mining - 0.6% 40,417 Freeport-McMoRan Copper & Gold, Inc. (Class B) $ 2,239,506 ------------ Industrial Gases - 1.8% 101,682 Air Products & Chemicals, Inc. $ 6,499,513 ------------ Metal & Glass Containers - 1.7% 171,636 Ball Corp. $ 6,357,397 ------------ Specialty Chemicals - 1.4% 144,610 International Flavor & Fragrances, Inc. $ 5,096,056 ------------ Total Materials $ 32,825,924 ------------ Capital Goods - 6.1% Construction & Farm Machinery & Heavy Trucks - 1.5% 67,336 Deere & Co. $ 5,621,883 ------------ Electrical Component & Equipment - 1.1% 74,300 Thomas & Betts Corp.* $ 3,811,590 ------------ Industrial Conglomerates - 1.3% 174,210 Tyco International Ltd. $ 4,790,775 ------------ Trading Companies & Distributors - 2.2% 107,746 W.W. Grainger, Inc. $ 8,105,732 ------------ Total Capital Goods $ 22,329,980 ------------ Commercial Services & Supplies - 2.4% Commercial Printing - 1.0% 120,793 R.R. Donnelly & Sons Co. $ 3,859,336 ------------ Shares Value Environmental & Facilities Services - 1.4% 123,873 Republic Services, Inc. $ 4,997,037 ------------ Total Commercial Services & Supplies $ 8,856,373 ------------ Transportation - 1.3% Railroads - 1.3% 67,400 CSX Corp.* $ 4,747,656 ------------ Total Transportation $ 4,747,656 ------------ Automobiles & Components - 2.4% Auto Parts & Equipment - 1.1% 60,400 Borg-Warner Automotive Inc. $ 3,932,040 ------------ Motorcycle Manufacturers - 1.3% 86,410 Harley -Davidson, Inc. $ 4,743,045 ------------ Total Automobiles & Components $ 8,675,085 ------------ Consumer Services - 2.6% Casinos & Gaming - 1.7% 91,210 Harrah's Entertainment, Inc.* $ 6,492,328 ------------ Hotels, Resorts & Cruise Lines - 0.9% 84,779 Royal Caribbean Cruises, Ltd. $ 3,242,797 ------------ Total Consumer Services $ 9,735,125 ------------ Media - 4.6% Advertising - 1.5% 658,080 The Interpublic Group of Companies, Inc.* $ 5,494,968 ------------ Broadcasting & Cable Television - 3.1% 248,222 Clear Channel Communications, Inc. $ 7,682,471 140,715 Entercom Communications Corp.* 3,681,104 ------------ $ 11,363,575 ------------ Total Media $ 16,858,543 ------------ Retailing - 2.0% Apparel Retail - 0.6% 40,600 Abercrombie & Fitch Co. $ 2,250,458 ------------ Department Stores - 1.4% 26,522 Federated Department Stores, Inc.* $ 970,705 60,500 J.C. Penney Co., Inc. 4,084,355 ------------ $ 5,055,060 ------------ Total Retailing $ 7,305,518 ------------ Food & Drug Retailing - 3.1% Drug Retail - 0.7% 80,850 CVS Corp. $ 2,482,095 ------------ Food Retail - 2.4% 345,308 Safeway, Inc. $ 8,978,008 ------------ Total Food & Drug Retailing $ 11,460,103 ------------
The accompanying notes are an integral part of these financial statements. 51 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Food, Beverage & Tobacco - 5.7% Brewers - 1.9% 100,531 Molson Coors Brewing Co. (Class B) $ 6,824,044 ------------ Packaged Foods & Meats - 1.7% 90,535 H.J. Heinz Co., Inc. $ 3,731,853 54,300 William Wrigley Jr. Co. 2,463,048 ------------ $ 6,194,901 ------------ Tobacco - 2.1% 174,410 UST, Inc.* $ 7,881,588 ------------ Total Food, Beverage & Tobacco $ 20,900,533 ------------ Health Care Equipment & Services - 6.0% Health Care Equipment - 1.0% 223,910 Boston Scientific Corp.* $ 3,770,644 ------------ Health Care Facilities - 1.1% 292,879 Tenet Healthcare Corp.* $ 2,044,295 45,224 Triad Hospitals, Inc.* 1,789,966 ------------ $ 3,834,261 ------------ Health Care Services - 1.7% 101,362 Laboratory Corporation of America Holdings* $ 6,307,757 ------------ Managed Health Care - 2.2% 83,614 CIGNA Corp. $ 8,236,815 ------------ Total Health Care Equipment & Services $ 22,149,477 ------------ Pharmaceuticals & Biotechnology - 1.1% Pharmaceuticals - 1.1% 26,856 Shire Pharmaceuticals Group Plc (A.D.R.) $ 1,187,841 93,910 Teva Pharmaceutical Industries, Ltd. 2,966,617 ------------ $ 4,154,458 ------------ Total Pharmaceuticals & Biotechnology $ 4,154,458 ------------ Banks - 9.9% Regional Banks - 7.3% 34,956 City National Corp. $ 2,275,286 124,225 KeyCorp 4,432,348 100,710 Marshall & Ilsley Corp. 4,606,475 83,610 PNC Bank Corp. 5,866,914 53,900 Regions Financial Corp. 1,785,168 121,310 TCF Financial Corp.* 3,208,650 57,200 Zions Bancorporation 4,458,168 ------------ $ 26,633,009 ------------ Thrifts & Mortgage Finance - 2.6% 242,021 Hudson City Bancorp, Inc. $ 3,226,140 144,599 The PMI Group, Inc. 6,446,223 ------------ $ 9,672,363 ------------ Total Banks $ 36,305,372 ------------ Shares Value Diversified Financials - 3.6% Asset Management & Custody Banks - 3.0% 155,014 Federated Investors, Inc.* $ 4,882,941 19,900 Legg Mason, Inc.* 1,980,448 120,459 Mellon Bank Corp. 4,147,403 ------------ $ 11,010,792 ------------ Investment Banking & Brokerage - 0.6% 94,500 E*TRADE Group, Inc.* $ 2,156,490 ------------ Total Diversified Financials $ 13,167,282 ------------ Insurance - 7.5% Insurance Brokers - 1.2% 128,510 Aon Corp.* $ 4,474,718 ------------ Life & Health Insurance - 2.1% 416,511 UNUM Corp. $ 7,551,344 ------------ Multi-Line Insurance - 2.0% 47,260 Assurant, Inc. $ 2,287,384 148,028 Genworth Financial, Inc. 5,157,296 ------------ $ 7,444,680 ------------ Property & Casualty Insurance - 1.2% 21,567 Ambac Financial Group, Inc.* $ 1,749,084 5,698 White Mountains Insurance Group, Ltd. 2,774,926 ------------ $ 4,524,010 ------------ Reinsurance - 1.0% 127,992 Platinum Underwriter Holdings, Ltd. $ 3,581,216 ------------ Total Insurance $ 27,575,968 ------------ Real Estate - 2.1% Industrial Real Estate Investment Trusts - 0.8% 53,900 ProLogis Trust $ 2,809,268 ------------ Mortgage Real Estate Investment Trusts - 0.8% 220,210 Annaly Mortgage Management, Inc. $ 2,820,890 ------------ Specialized Real Estate Investment Trusts - 0.5% 93,210 Host Hotels & Resorts, Inc.* $ 2,038,503 ------------ Total Real Estate $ 7,668,661 ------------ Software & Services - 1.0% Data Processing & Outsourced Services - 1.0% 269,882 The BISYS Group, Inc.* $ 3,697,383 ------------ Total Software & Services $ 3,697,383 ------------ Technology Hardware & Equipment - 9.3% Communications Equipment - 1.2% 270,020 Juniper Networks, Inc.* $ 4,317,620 ------------ Computer Hardware - 4.1% 182,110 Dell, Inc.* $ 4,445,305 215,810 NCR Corp.* 7,907,278 168,910 Palm, Inc.* 2,719,451 ------------ $ 15,072,034 ------------
52 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value Electronic Equipment & Instruments - 1.7% 590,910 Symbol Technologies, Inc.* $ 6,375,919 ------------ Office Electronics - 2.3% 606,719 Xerox Corp.* $ 8,439,461 ------------ Total Technology Hardware & Equipment $ 34,205,034 ------------ Semiconductors - 1.6% Semiconductors - 1.6% 195,710 Freescale Semiconductor, Inc. (Class B)* $ 5,753,874 ------------ Total Semiconductors $ 5,753,874 ------------ Telecommunication Services - 0.2% Integrated Telecommunication Services - 0.2% 138,313 Cincinnati Bell, Inc.* $ 567,083 ------------ Total Telecommunication Services $ 567,083 ------------ Utilities - 9.9% Electric Utilities - 4.6% 114,310 Allegheny Energy, Inc.* $ 4,237,472 135,581 Edison International 5,287,659 86,810 Firstenergy Corp. 4,705,970 85,700 PPL Corp.* 2,768,110 ------------ $ 16,999,211 ------------ Gas Utilities - 1.6% 73,800 Questar Corp. $ 5,940,162 ------------ Indep Power Producer & Energy Traders - 1.5% 113,166 NRG Energy, Inc.* $ 5,452,338 ------------ Multi-Utilities - 2.2% 110,084 NSTAR $ 3,148,402 120,971 PG&E Corp. 4,751,744 ------------ $ 7,900,146 ------------ Total Utilities $ 36,291,857 ------------ TOTAL COMMON STOCKS (Cost $332,079,994) $353,238,605 ------------ Principal Amount Value TEMPORARY CASH INVESTMENTS - 4.6% Repurchase Agreement - 4.6% $16,800,000 UBS Warburg, Inc., 4.4%, dated 6/30/06, repurchase price of $16,800,000 plus accrued interest on 7/3/06 collateralized by $17,158,000 U.S. Treasury Bill, 5.125%, 6/30/08 $ 16,800,000 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $16,800,000) $ 16,800,000 ------------ TOTAL INVESTMENT IN SECURITIES - 100.6% (Cost $348,879,994) $370,038,605 ------------ OTHER ASSETS AND LIABILITIES - (0.6)% $ (2,101,567) ------------ TOTAL NET ASSETS - 100.0% $367,937,038 ============
* Non-income producing security. The accompanying notes are an integral part of these financial statements. 53 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value COMMON STOCKS - 100.5% Energy - 2.0% Integrated Oil & Gas - 2.0% 5,500 ConocoPhillips $ 360,415 8,000 Repsol SA (A.D.R.) 224,480 ----------- $ 584,895 ----------- Total Energy $ 584,895 ----------- Materials - 1.8% Diversified Chemical - 1.8% 14,100 Dow Chemical Co. $ 550,323 ----------- Total Materials $ 550,323 ----------- Capital Goods - 12.0% Aerospace & Defense - 3.9% 3,800 L-3 Communications Holdings, Inc. $ 286,596 13,700 United Technologies Corp. 868,854 ----------- $ 1,155,450 ----------- Industrial Conglomerates - 8.1% 9,600 3M Co. $ 775,392 32,100 General Electric Co. 1,058,016 21,500 Tyco International, Ltd. 591,250 ----------- $ 2,424,658 ----------- Total Capital Goods $ 3,580,108 ----------- Consumer Durables & Apparel - 1.3% Footwear - 1.3% 5,000 Nike, Inc. $ 405,000 ----------- Total Consumer Durables & Apparel $ 405,000 ----------- Consumer Services - 1.3% Hotels, Resorts & Cruise Lines - 1.3% 9,400 Carnival Corp. $ 392,356 ----------- Total Consumer Services $ 392,356 ----------- Media - 2.1% Broadcasting & Cable TV - 1.1% 3,775 Liberty Media Holding Corp.* $ 316,232 ----------- Movies & Entertainment - 1.0% 8,350 Viacom, Inc. (Class B) $ 299,264 ----------- Total Media $ 615,496 ----------- Retailing - 7.1% Apparel Retail - 3.6% 10,600 Abercrombie & Fitch Co. $ 587,558 21,100 TJX Companies, Inc. 482,346 ----------- $ 1,069,904 ----------- Home Improvement Retail - 3.5% 29,400 Home Depot, Inc. $ 1,052,226 ----------- Total Retailing $ 2,122,130 ----------- Shares Value Food & Drug Retailing - 2.2% Drug Retail - 2.2% 21,700 CVS Corp. $ 666,190 ----------- Total Food & Drug Retailing $ 666,190 ----------- Food, Beverage & Tobacco - 4.9% Soft Drinks - 0.8% 2,700 Fomento Economico Mexicano SA de CV* $ 226,044 ----------- Tobacco - 4.1% 16,800 Altria Group, Inc. $ 1,233,624 ----------- Total Food, Beverage & Tobacco $ 1,459,668 ----------- Household & Personal Products - 3.5% Household Products - 3.5% 18,800 Procter & Gamble Co. $ 1,045,280 ----------- Total Household & Personal Products $ 1,045,280 ----------- Health Care Equipment & Services - 7.9% Health Care Equipment - 5.5% 14,600 Biomet, Inc. $ 456,834 71,353 Boston Scientific Corp.* 1,201,585 ----------- $ 1,658,419 ----------- Health Care Supplies - 1.2% 7,800 Cooper Companies, Inc.(a) $ 345,462 ----------- Managed Health Care - 1.2% 9,000 Aetna, Inc.* $ 359,370 ----------- Total Health Care Equipment & Services $ 2,363,251 ----------- Pharmaceuticals & Biotechnology - 15.6% Biotechnology - 5.8% 18,458 Amgen, Inc.* $ 1,204,015 8,900 Gilead Sciences, Inc.* 526,524 ----------- $ 1,730,539 ----------- Pharmaceuticals - 9.8% 12,400 Astrazeneca Plc (A.D.R.) $ 741,768 9,700 Eli Lilly & Co. 536,119 11,300 Johnson & Johnson 677,096 16,892 Par Pharmaceutical Co., Inc.*(a) 311,826 20,904 Teva Pharmaceutical Industries, Ltd.(a) 660,357 ----------- $ 2,927,166 ----------- Total Pharmaceuticals & Biotechnology $ 4,657,705 ----------- Diversified Financials - 5.5% Asset Management & Custody Banks - 2.2% 5,400 Franklin Resources, Inc.* $ 468,774 2,000 Legg Mason, Inc.* 199,040 ----------- $ 667,814 -----------
54 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value Consumer Finance - 2.3% 12,600 American Express Co. $ 670,572 ----------- Investment Banking & Brokerage - 1.0% 4,300 Merrill Lynch & Co., Inc. $ 299,108 ----------- Total Diversified Financials $ 1,637,494 ----------- Software & Services - 7.9% Systems Software - 7.9% 36,900 Macrovision Corp.* $ 794,088 67,300 Microsoft Corp. 1,568,090 ----------- $ 2,362,178 ----------- Total Software & Services $ 2,362,178 ----------- Technology Hardware & Equipment - 18.3% Communications Equipment - 12.3% 64,050 Cisco Systems, Inc.* $ 1,250,897 23,300 Corning, Inc.* 563,627 6,060 F5 Networks, Inc.* 324,089 18,000 Foundry Networks, Inc.* 191,880 40,380 Juniper Networks, Inc.* 645,676 35,500 Motorola, Inc. 715,325 ----------- $ 3,691,494 ----------- Computer Hardware - 6.0% 11,100 Apple Computer, Inc.* $ 634,032 35,800 Dell, Inc.* 873,878 18,070 Palm, Inc.*(a) 290,927 ----------- $ 1,798,837 ----------- Total Technology Hardware & Equipment $ 5,490,331 ----------- Semiconductors - 4.4% Semiconductors - 4.4% 10,790 Maxim Integrated Products* $ 346,467 31,800 Texas Instruments, Inc. 963,222 ----------- $ 1,309,689 ----------- Total Semiconductors $ 1,309,689 ----------- Utilities - 2.7% Independent Power Producer & Energy Traders - 2.7% 13,800 TXU Corp. $ 825,102 ----------- Total Utilities $ 825,102 ----------- TOTAL COMMON STOCKS (Cost $30,881,619) $30,067,196 ----------- Shares Value TEMPORARY CASH INVESTMENTS - 5.1% Security Lending Collateral - 5.1% 1,519,655 Securities Lending Investment Fund, 5.16% $ 1,519,655 ----------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,519,655) $ 1,519,655 ----------- TOTAL INVESTMENT IN SECURITIES - 105.6% (Cost $32,401,274) $31,586,851 ----------- OTHER ASSETS AND LIABILITIES - (5.6)% $(1,673,720) ----------- TOTAL NET ASSETS - 100.0% $29,913,131 ===========
* Non-income producing security. (A.D.R.) American Depositary Receipt. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 7,722 Cooper Companies, Inc. $ 342,007 14,820 Palm, Inc.* 238,602 11,514 Par Pharmaceutical Co., Inc.* 212,548 20,695 Teva Pharmaceutical Industries, Ltd. 653,755 ----------- Total $ 1,446,912 ===========
The accompanying notes are an integral part of these financial statements. 55 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value COMMON STOCKS - 98.3% Consumer Services - 3.8% Hotels, Resorts & Cruise Lines - 3.8% 74,000 Hilton Hotels Corp. $ 2,092,720 30,000 Starwood Hotels & Resorts* 1,810,200 ------------- $ 3,902,920 ------------- Total Consumer Services $ 3,902,920 ------------- Real Estate - 94.5% Diversified Real Estate Investment Trusts - 8.8% 82,500 Liberty Property Trust (a) $ 3,646,500 18,000 PS Business Parks, Inc. 1,062,000 52,700 Spirit Finance Corp. 593,402 39,000 Vornado Realty Trust 3,804,450 ------------- $ 9,106,352 ------------- Industrial Real Estate Investment Trusts - 7.4% 35,000 AMB Property Corp. $ 1,769,250 17,700 First Potomac Realty Trust 527,283 103,500 ProLogis Trust 5,394,420 ------------- $ 7,690,953 ------------- Mortgage Real Estate Investment Trusts - 0.8% 23,500 iStar Financial, Inc. $ 887,125 ------------- Office Real Estate Investment Trusts - 18.1% 28,000 BioMed Property Trust, Inc. $ 838,320 62,000 Boston Properties, Inc. 5,604,800 71,000 Brandywine Realty Trust 2,284,070 7,000 Carramerica Realty Corp. 311,850 26,500 Corporate Office Properties (a) 1,115,120 30,000 Duke Realty Investments, Inc. 1,054,500 44,500 Equity Office Properties Trust (a) 1,624,695 55,500 Highwoods Properties, Inc. 2,007,990 20,000 Kilroy Realty Corp. 1,445,000 13,500 Mack-Cali Realty Corp. 619,920 65,000 Trizec Properties, Inc. 1,861,600 ------------- $ 18,767,865 ------------- Real Estate Management & Development - 3.3% 108,000 Brookfield Properties Corp. (a) $ 3,474,360 ------------- Residential Real Estate Investment Trusts - 19.5% 23,100 Apartment Investment & Management Co. $ 1,003,695 74,500 Archstone Communities Trust 3,789,815 45,000 AvalonBay Communities, Inc. (a) 4,977,900 39,000 Camden Property Trust 2,868,450 8,000 Equity Lifestyle Properties, Inc. 350,640 109,000 Equity Residential Property Trust (a) 4,875,570 13,900 Home Properties, Inc.*(a) 771,589 57,000 United Dominion Realty Trust 1,596,570 ------------- $ 20,234,229 ------------- Shares Value Retail Real Estate Investment Trusts - 25.8% 67,000 Developers Diversifies Realty Corp. $ 3,496,060 35,200 Federal Realty Investment Trust 2,464,000 63,000 General Growth Properties, Inc. 2,838,780 52,500 Kimco Realty Corp. (a) 1,915,725 40,900 Kite Realty Group Trust 637,631 33,000 Pan Pacific Retail Properties, Inc. 2,289,210 37,000 Regency Centers Corp. 2,299,550 89,000 Simon DeBartolo Group, Inc. 7,381,660 48,000 Taubman Centers, Inc. 1,963,200 20,900 The Macerich Co. 1,467,180 ------------- $ 26,752,996 ------------- Specialized Real Estate Investment Trusts - 10.8% 41,000 Extra Space Storage, Inc.* $ 665,840 11,000 Healthcare Realty Trust, Inc. 350,350 12,000 Hospitality Properties Trust 527,040 190,000 Host Hotels & Resorts, Inc.*(a) 4,155,300 34,500 Nationwide Health Properties, Inc.* 776,595 42,100 Public Storage, Inc. 3,195,390 13,500 Shurgard Storage Centers, Inc. 843,750 20,000 Strategic Hotels & Resorts, Inc.* 414,800 14,500 U-Store-It Trust* 273,470 ------------- $ 11,202,535 ------------- Total Real Estate $ 98,116,415 ------------- TOTAL COMMON STOCKS (Cost $56,906,299) $ 102,019,335 ------------- TEMPORARY CASH INVESTMENT - 18.5% Security Lending Collateral - 18.5% 19,238,901 Securities Lending Investment Fund, 5.16% $ 19,238,901 ------------- TOTAL TEMPORARY CASH INVESTMENT (Cost $19,238,901) $ 19,238,901 ------------- TOTAL INVESTMENT IN SECURITIES - 116.8% (Cost $76,145,200) $ 121,258,236 ------------- OTHER ASSETS AND LIABILITIES - (16.8)% $ (17,416,823) ------------- TOTAL NET ASSETS - 100.0% $ 103,841,413 =============
* Non-income producing security. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 35,000 AvalonBay Communities, Inc. $ 3,871,700 52,400 Brookfield Properties Corp. 1,685,708 26,235 Corporate Office Properties 1,103,969 44,055 Equity Office Properties Trust 1,608,448 31,910 Equity Residential Property Trust 1,427,334 13,761 Home Properties, Inc.* 763,873 188,100 Host Hotels & Resorts, Inc.* 4,113,747 20,200 Kimco Realty Corp. 737,098 81,675 Liberty Property Trust 3,610,035 ------------ Total $ 18,921,912 ============
56 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value COMMON STOCKS - 96.2% Energy - 7.6% Integrated Oil & Gas - 5.8% 179,531 Chevron Corp. $ 11,141,694 88,025 ConocoPhillips 5,768,278 114,668 Exxon Mobil Corp. 7,034,882 53,725 Occidental Petroleum Corp. 5,509,499 ------------ $ 29,454,353 ------------ Oil & Gas Equipment & Services - 0.4% 42,162 Weatherford Intl, Inc.* $ 2,092,078 ------------ Oil & Gas Exploration & Production - 1.4% 61,094 Apache Corp. $ 4,169,666 67,515 Pioneer Natural Resources Co. 3,133,371 ------------ $ 7,303,037 ------------ Total Energy $ 38,849,468 ------------ Materials - 5.0% Aluminum - 0.5% 72,726 Alcoa, Inc. $ 2,353,413 ------------ Diversified Chemical - 0.8% 70,100 Dow Chemical Co. $ 2,736,003 37,427 E.I. du Pont de Nemours and Co. 1,556,963 ------------ $ 4,292,966 ------------ Diversified Metals & Mining - 2.5% 98,510 Inco, Ltd.* $ 6,491,809 122,524 Rio Tinto Plc 6,473,996 ------------ $ 12,965,805 ------------ Industrial Gases - 0.9% 25,334 Air Products & Chemicals, Inc. $ 1,619,349 53,762 Praxair, Inc. 2,903,148 ------------ $ 4,522,497 ------------ Specialty Chemicals - 0.3% 37,481 Ecolab, Inc. $ 1,520,979 ------------ Total Materials $ 25,655,660 ------------ Capital Goods - 9.7% Aerospace & Defense - 2.6% 86,022 General Dynamics Corp. $ 5,631,000 7,100 Lockheed Martin Corp.* 509,354 111,683 United Technologies Corp. 7,082,936 ------------ $ 13,223,290 ------------ Building Products - 0.0% 8,309 Masco Corp. $ 246,279 ------------ Shares Value Construction & Farm Machinery & Heavy Trucks - 4.5% 99,679 Caterpillar, Inc. $ 7,424,092 94,266 Deere & Co. 7,870,268 91,215 PACCAR, Inc. 7,514,292 ------------ $ 22,808,652 ------------ Electrical Component & Equipment - 1.2% 48,640 Emerson Electric Co. $ 4,076,518 29,606 Rockwell International Corp. 2,131,928 ------------ $ 6,208,446 ------------ Industrial Conglomerates - 1.1% 7,200 3M Co. $ 581,544 154,654 General Electric Co. 5,097,396 ------------ $ 5,678,940 ------------ Industrial Machinery - 0.3% 16,367 Parker Hannifin Corp. $ 1,270,079 ------------ Total Capital Goods $ 49,435,686 ------------ Transportation - 3.9% Airlines - 0.4% 135,293 Southwest Airlines Co. $ 2,214,746 ------------ Railroads - 3.5% 74,802 Burlington Northern, Inc. $ 5,928,059 222,911 Norfolk Southern Corp. 11,863,323 ------------ $ 17,791,382 ------------ Total Transportation $ 20,006,128 ------------ Automobiles & Components - 2.3% Auto Parts & Equipment - 1.5% 91,445 Johnson Controls, Inc. $ 7,518,608 ------------ Automobile Manufacturers - 0.8% 628,984 Ford Motor Corp. $ 4,358,859 ------------ Total Automobiles & Components $ 11,877,467 ------------ Consumer Durables & Apparel - 0.2% Apparel, Accessories & Luxury Goods - 0.2% 23,883 Liz Claiborne, Inc. $ 885,104 ------------ Total Consumer Durables & Apparel $ 885,104 ------------ Consumer Services - 0.1% Restaurants - 0.1% 14,325 Yum! Brands, Inc. $ 720,118 ------------ Total Consumer Services $ 720,118 ------------ Media - 5.2% Advertising - 0.7% 42,090 Omnicom Group $ 3,749,798 ------------ Movies & Entertainment - 1.0% 162,516 The Walt Disney Co. $ 4,875,480 ------------
The accompanying notes are an integral part of these financial statements. 57 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Publishing - 3.5% 41,058 Elsevier NV $ 617,338 64,140 Gannett Co. 3,587,350 125,263 John Wiley & Sons, Inc. 4,158,732 188,438 McGraw-Hill Co., Inc. 9,465,241 ------------ $ 17,828,661 ------------ Total Media $ 26,453,939 ------------ Retailing - 4.7% Computer & Electronics Retail - 0.1% 9,295 GameStop Corp. (Class B)* $ 318,354 ------------ Department Stores - 1.8% 100,356 Federated Department Stores, Inc.* $ 3,673,030 147,889 Nordstrom, Inc. 5,397,949 ------------ $ 9,070,979 ------------ General Merchandise Stores - 1.5% 150,713 Target Corp. $ 7,365,344 ------------ Home Improvement Retail - 0.8% 70,792 Lowe's Companies, Inc. $ 4,294,951 ------------ Specialty Stores - 0.5% 29,018 Barnes & Noble, Inc. $ 1,059,157 69,072 Staples, Inc.* 1,679,831 ------------ $ 2,738,988 ------------ Total Retailing $ 23,788,616 ------------ Food & Drug Retailing - 3.3% Drug Retail - 2.1% 75,467 CVS Corp. $ 2,316,837 190,303 Walgreen Co. 8,533,187 ------------ $ 10,850,024 ------------ Food Distributors - 1.0% 161,566 Sysco Corp. $ 4,937,457 ------------ Hypermarkets & Supercenters - 0.2% 19,649 Costco Wholesale Corp. $ 1,122,547 ------------ Total Food & Drug Retailing $ 16,910,028 ------------ Food, Beverage & Tobacco - 5.2% Packaged Foods & Meats - 3.9% 118,941 Campbell Soup Co. $ 4,413,901 76,411 General Mills, Inc. 3,947,392 108,055 H.J. Heinz Co., Inc. 4,454,027 82,795 Hershey Foods Corp. 4,559,521 23,685 Kellogg Co. 1,147,065 73,473 Sara Lee Corp. 1,177,037 ------------ $ 19,698,943 ------------ Soft Drinks - 1.3% 113,124 PepsiCo, Inc. $ 6,791,965 ------------ Total Food, Beverage & Tobacco $ 26,490,908 ------------ Shares Value Household & Personal Products - 1.8% Household Products - 1.3% 14,255 Clorox Co. $ 869,127 96,982 Colgate-Palmolive Co. 5,809,222 ------------ $ 6,678,349 ------------ Personal Products - 0.5% 67,208 Estee Lauder Co.* $ 2,598,933 ------------ Total Household & Personal Products $ 9,277,282 ------------ Health Care Equipment & Services - 4.0% Health Care Equipment - 4.0% 71,108 Becton, Dickinson & Co. $ 4,346,832 103,638 Biomet, Inc. 3,242,833 63,800 C. R. Bard, Inc. 4,673,988 50,339 Medtronic, Inc. 2,361,906 104,000 St. Jude Medical, Inc.* 3,371,680 39,300 Zimmer Holdings, Inc.* 2,229,096 ------------ $ 20,226,335 ------------ Total Health Care Equipment & Services $ 20,226,335 ------------ Pharmaceuticals & Biotechnology - 8.1% Biotechnology - 0.7% 53,778 Amgen, Inc.* $ 3,507,939 ------------ Pharmaceuticals - 7.4% 102,710 Abbott Laboratories $ 4,479,183 53,017 Barr Laboratorie, Inc.* 2,528,381 132,985 Bristol-Myers Squibb Co. 3,438,992 80,039 Eli Lilly & Co. 4,423,756 72,158 Johnson & Johnson 4,323,707 95,767 Merck & Co., Inc. 3,488,792 77,980 Novartis AG (A.D.R.)* 4,204,682 134,400 Pfizer, Inc. 3,154,368 36,377 Roche Holdings AG (A.D.R.)* 3,006,486 175,915 Schering-Plough Corp. 3,347,662 44,611 Teva Pharmaceutical Industries, Ltd. 1,409,261 ------------ $ 37,805,270 ------------ Total Pharmaceuticals & Biotechnology $ 41,313,209 ------------ Banks - 8.8% Diversified Banks - 3.7% 235,635 U.S. Bancorp $ 7,276,409 39,577 Wachovia Corp. 2,140,324 140,973 Wells Fargo & Co. 9,456,469 ------------ $ 18,873,202 ------------
58 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value Regional Banks - 3.3% 25,377 Compass Bancshares Inc.* $ 1,410,961 83,035 First Horizon National Corp. 3,338,007 170,284 National City Corp. 6,162,578 55,102 SunTrust Banks, Inc. 4,202,079 21,817 Zions Bancorporation 1,700,417 ------------ $ 16,814,042 ------------ Thrifts & Mortgage Finance - 1.8% 34,700 Golden West Financial Corp. $ 2,574,740 146,301 Washington Mutual, Inc. 6,668,400 ------------ $ 9,243,140 ------------ Total Banks $ 44,930,384 ------------ Diversified Financials - 6.5% Asset Management & Custody Banks - 3.3% 43,970 Federated Investors, Inc.* $ 1,385,055 104,482 State Street Corp. 6,069,359 249,606 T. Rowe Price Associates, Inc. 9,437,603 ------------ $ 16,892,017 ------------ Consumer Finance - 1.2% 112,725 American Express Co. $ 5,999,225 ------------ Investment Banking & Brokerage - 0.8% 58,452 Merrill Lynch & Co., Inc. $ 4,065,921 ------------ Diversified Financial Services - 1.2% 86,529 Bank of America Corp. $ 4,162,045 42,750 Citigroup, Inc. 2,062,260 ------------ $ 6,224,305 ------------ Total Diversified Financials $ 33,181,468 ------------ Insurance - 2.4% Life & Health Insurance - 0.5% 49,100 MetLife, Inc. $ 2,514,411 ------------ Multi-Line Insurance - 0.2% 13,522 Hartford Financial Services Group, Inc. $ 1,143,961 ------------ Property & Casualty Insurance - 1.7% 137,506 Chubb Corp. $ 6,861,549 34,082 Safeco Corp. 1,920,521 ------------ $ 8,782,070 ------------ Total Insurance $ 12,440,442 ------------ Software & Services - 3.5% Application Software - 0.5% 86,186 Adobe Systems, Inc.* $ 2,616,607 ------------ Data Processing & Outsourced Services - 2.2% 181,884 Automatic Data Processing, Inc. $ 8,248,439 25,841 DST Systems, Inc.* 1,537,540 28,113 Fiserv, Inc.* 1,275,206 ------------ $ 11,061,185 ------------ Shares Value Systems Software - 0.8% 181,275 Microsoft Corp. $ 4,223,708 ------------ Total Software & Services $ 17,901,500 ------------ Technology Hardware & Equipment - 6.1% Communications Equipment - 2.9% 139,000 Cisco Systems, Inc.* $ 2,714,670 313,651 Motorola, Inc. 6,320,068 274,102 Nokia Corp. (A.D.R.)* 5,553,307 ------------ $ 14,588,045 ------------ Computer Hardware - 2.1% 100,576 Dell, Inc.* $ 2,455,060 176,511 Hewlett-Packard Co. 5,591,868 703,372 Sun Microsystems, Inc.* 2,918,994 ------------ $ 10,965,922 ------------ Computer Storage & Peripherals - 0.3% 134,374 EMC Corp.* $ 1,474,083 ------------ Office Electronics - 0.8% 57,242 Canon, Inc. (A.D.R.) $ 4,194,121 ------------ Total Technology Hardware & Equipment $ 31,222,171 ------------ Semiconductors - 2.6% Semiconductor Equipment - 0.3% 96,070 Applied Materials, Inc. $ 1,564,020 ------------ Semiconductors - 2.3% 20,845 Freescale Semiconductor, Inc. (Class B)* $ 612,843 258,029 Intel Corp. 4,889,650 211,248 Texas Instruments, Inc. 6,398,702 ------------ $ 11,901,195 ------------ Total Semiconductors $ 13,465,215 Telecommunication Services - 4.2% Integrated Telecommunication Services - 3.9% 279,088 AT&T Corp. $ 7,783,764 141,901 BellSouth Corp. 5,136,816 74,411 Century Telephone Enterprises, Inc. 2,764,369 129,130 Verizon Communications, Inc. 4,324,564 ------------ $ 20,009,513 ------------ Wireless Telecommunication Services - 0.3% 23,216 Alltel Corp. $ 1,481,877 ------------ Total Telecommunication Services $ 21,491,390 ------------ Utilities - 0.9% Electric Utilities - 0.5% 15,000 Exelon Corp. $ 852,450 56,177 Southern Co. 1,800,473 ------------ $ 2,652,923 ------------
The accompanying notes are an integral part of these financial statements. 59 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Multi-Utilities - 0.4% 34,904 Consolidated Edison, Inc. $ 1,551,132 13,700 PG&E Corp. 538,134 ------------ $ 2,089,266 ------------ Total Utilities $ 4,742,189 ------------ TOTAL COMMON STOCKS (Cost $376,681,138) $491,264,707 ------------ Principal Amount TEMPORARY CASH INVESTMENT - 2.2% Repurchase Agreement - 2.2% $11,300,000 UBS Warburg, Inc., 4.40% dated 6/30/06, repurchase price of $11,300,000 plus accrued interest on 7/3/06 collateralized by $12,053,000 U.S. Treasury Bill, 3.375%, 9/15/09 $ 11,300,000 ------------ TOTAL TEMPORARY CASH INVESTMENT (Cost $11,300,000) $ 11,300,000 ------------ TOTAL INVESTMENT IN SECURITIES - 98.4% (Cost $387,981,138) $502,564,707 ------------ OTHER ASSETS AND LIABILITIES - 1.6% $ 8,367,499 ------------ TOTAL NET ASSETS - 100.0% $510,932,206 ============
(A.D.R.) American Depositary Receipt * Non-income producing security. 60 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value CONVERTIBLE PREFERRED STOCKS - 0.5% Automobiles & Components - 0.4% Automobile Manufacturers - 0.4% 60,747 Ford Cap Trust 6.50% 01/15/32 $ 1,680,869 ------------ Total Automobiles & Components $ 1,680,869 ------------ Pharmaceuticals & Biotechnology - 0.1% Pharmaceuticals - 0.1% 4,255 Schering-Plough Corp. Cnpfd 6.0%, 9/14/07 $ 214,346 ------------ Total Pharmaceuticals & Biotechnology $ 214,346 ------------ TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $3,070,923) $ 1,895,215 ------------ COMMON STOCKS - 97.0% Energy - 5.8% Integrated Oil & Gas - 5.8% 144,649 Chevron Corp. $ 8,976,917 115,922 ConocoPhillips 7,596,369 84,898 Exxon Mobil Corp. 5,208,492 ------------ $ 21,781,778 ------------ Total Energy $ 21,781,778 ------------ Materials - 4.4% Diversified Chemical - 1.1% 73,300 Dow Chemical Co. $ 2,860,899 82,800 Olin Corp. 1,484,604 ------------ $ 4,345,503 ------------ Diversified Metals & Mining - 0.3% 43,156 Compass Minerals International, Inc. $ 1,076,742 ------------ Forest Products - 0.8% 46,000 Weyerhaeuser Co. $ 2,863,500 ------------ Industrial Gases - 1.2% 71,152 Air Products & Chemicals, Inc. $ 4,548,036 ------------ Specialty Chemicals - 1.0% 146,365 Valspar Corp. $ 3,865,500 ------------ Total Materials $ 16,699,281 ------------ Capital Goods - 9.2% Aerospace & Defense - 1.7% 103,955 United Technologies Corp. $ 6,592,826 ------------ Construction & Farm Machinery & Heavy Trucks - 4.2% 38,489 Deere & Co. $ 3,213,447 153,643 PACCAR, Inc. 12,657,110 ------------ $ 15,870,557 ------------ Shares Value Electrical Component & Equipment - 2.0% 91,501 Emerson Electric Co. $ 7,668,699 ------------ Industrial Machinery - 1.3% 30,350 Gorman-Rupp Co. $ 807,310 117,902 The Timken Co. 3,950,896 ------------ $ 4,758,206 ------------ Total Capital Goods $ 34,890,288 ------------ Commercial Services & Supplies - 0.4% Office Services & Supplies - 0.4% 37,000 Mine Safety Appliances Co.*(a) $ 1,487,400 ------------ Total Commercial Services & Supplies $ 1,487,400 ------------ Automobiles & Components - 2.7% Auto Parts & Equipment - 2.0% 93,560 Johnson Controls, Inc. $ 7,692,503 ------------ Automobile Manufacturers - 0.7% 378,522 Ford Motor Corp.(a) $ 2,623,157 ------------ Total Automobiles & Components $ 10,315,660 ------------ Consumer Durables & Apparel - 0.6% Housewares & Specialties - 0.6% 123,380 Tupperware Brands Corp. $ 2,429,352 ------------ Total Consumer Durables & Apparel $ 2,429,352 ------------ Consumer Services - 1.8% Leisure Facilities - 1.4% 200,827 Cedar Fair, L.P. $ 5,329,949 ------------ Specialized Consumer Services - 0.4% 134,841 Servicemaster Co. $ 1,392,908 ------------ Total Consumer Services $ 6,722,857 ------------ Media - 1.5% Publishing - 1.5% 113,625 McGraw-Hill Co., Inc. $ 5,707,384 ------------ Total Media $ 5,707,384 ------------ Retailing - 1.5% Department Stores - 0.6% 55,242 Federated Department Stores, Inc.* $ 2,021,857 ------------ Distributors - 0.9% 84,730 Genuine Parts Co. $ 3,529,852 ------------ Total Retailing $ 5,551,709 ------------
The accompanying notes are an integral part of these financial statements. 61 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Food, Beverage & Tobacco - 7.1% Packaged Foods & Meats - 6.5% 188,614 Campbell Soup Co. $ 6,999,466 60,831 General Mills, Inc. 3,142,529 187,543 H.J. Heinz Co., Inc. 7,730,522 66,100 Kellogg Co. 3,201,223 81,300 The J.M. Smucker Co. 3,634,110 ------------ $ 24,707,850 ------------ Soft Drinks - 0.6% 38,972 PepsiCo, Inc. $ 2,339,879 ------------ Total Food, Beverage & Tobacco $ 27,047,729 ------------ Household & Personal Products - 2.3% Household Products - 2.3% 70,315 Clorox Co. $ 4,287,106 76,594 Colgate-Palmolive Co. 4,587,981 ------------ $ 8,875,087 ------------ Total Household & Personal Products $ 8,875,087 ------------ Pharmaceuticals & Biotechnology - 6.7% Pharmaceuticals - 6.7% 111,066 Abbott Laboratories $ 4,843,588 238,807 Bristol-Myers Squibb Co. 6,175,549 74,039 Eli Lilly & Co. 4,092,136 260,932 Merck & Co., Inc. 9,505,753 36,900 Pfizer, Inc. 866,043 ------------ $ 25,483,069 ------------ Total Pharmaceuticals & Biotechnology $ 25,483,069 ------------ Banks - 14.3% Diversified Banks - 4.1% 153,101 U.S. Bancorp $ 4,727,759 103,024 Wachovia Corp. 5,571,538 74,937 Wells Fargo & Co. 5,026,774 ------------ $ 15,326,071 ------------ Regional Banks - 7.2% 88,467 First Horizon National Corp. $ 3,556,373 123,911 National City Corp. 4,484,339 54,800 PNC Bank Corp. 3,845,316 73,800 Regions Financial Corp. 2,444,256 102,478 SunTrust Banks, Inc. 7,814,972 144,505 Whitney Holding Corp. 5,111,142 ------------ $ 27,256,398 ------------ Thrifts & Mortgage Finance - 3.0% 250,458 Washington Mutual, Inc. $ 11,415,876 ------------ Total Banks $ 53,998,345 ------------ Shares Value Diversified Financials - 5.6% Asset Management & Custody Banks - 4.3% 152,899 Eaton Vance Corp.(a) $ 3,816,359 34,424 State Street Corp. 1,999,690 279,886 T. Rowe Price Associates, Inc. 10,582,490 ------------ $ 16,398,539 ------------ Investment Banking & Brokerage - 0.8% 55,113 A.G. Edwards, Inc. $ 3,048,851 ------------ Diversified Financial Services - 0.5% 35,852 Bank of America Corp. $ 1,724,481 ------------ Total Diversified Financials $ 21,171,871 ------------ Insurance - 4.6% Life & Health Insurance - 1.4% 91,791 Lincoln National Corp.* $ 5,180,684 ------------ Property & Casualty Insurance - 3.2% 142,492 Chubb Corp. $ 7,110,351 92,994 Safeco Corp. 5,240,212 ------------ $ 12,350,563 ------------ Total Insurance $ 17,531,247 ------------ Real Estate - 2.7% Diversified Real Estate Investment Trusts - 0.9% 73,500 Liberty Property Trust(a) $ 3,248,700 ------------ Residential Real Estate Investment Trusts - 0.8% 56,454 Archstone Communities Trust(a) $ 2,871,815 ------------ Retail Real Estate Investment Trusts - 1.0% 109,500 Kimco Realty Corp. $ 3,995,655 ------------ Total Real Estate $ 10,116,170 ------------ Software & Services - 0.6% Data Processing & Outsourced Services - 0.6% 50,297 Automatic Data Processing, Inc. $ 2,280,969 ------------ Total Software & Services $ 2,280,969 ------------ Technology Hardware & Equipment - 0.3% Computer Hardware - 0.3% 36,500 Hewlett-Packard Co. $ 1,156,320 ------------ Total Technology Hardware & Equipment $ 1,156,320 ------------ Telecommunication Services - 9.3% Integrated Telecommunication Services - 8.2% 305,096 AT&T Corp. $ 8,509,127 251,696 BellSouth Corp. 9,111,395 364,179 Citizens Utilities Co. (Class B) 4,752,536 254,800 Verizon Communications, Inc. 8,533,252 ------------ $ 30,906,310 ------------
62 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value Wireless Telecommunication Services - 1.1% 66,304 Alltel Corp. $ 4,232,184 ------------ Total Telecommunication Services $ 35,138,494 ------------ Utilities - 15.6% Electric Utilities - 2.3% 127,711 Great Plains Energy, Inc.(a) $ 3,558,028 157,858 Southern Co. 5,059,349 ------------ $ 8,617,377 ------------ Gas Utilities - 6.4% 120,100 AGL Resources Inc. $ 4,578,212 129,470 Atmos Energy Corp. 3,613,508 170,238 Equitable Resources, Inc. 5,702,973 126,481 Questar Corp. 10,180,456 ------------ $ 24,075,149 ------------ Multi-Utilities - 6.9% 98,272 Ameren Corp. $ 4,962,736 94,780 Consolidated Edison, Inc. 4,212,023 180,200 Duke Energy Corp. 5,292,474 143,415 NSTAR 4,101,668 193,900 PG&E Corp. 7,616,392 ------------ $ 26,185,293 ------------ Total Utilities $ 58,877,819 ------------ TOTAL COMMON STOCKS (Cost $297,591,022) $367,262,829 ------------ Principal Amount TEMPORARY CASH INVESTMENTS - 6.5% Repurchase Agreement - 2.7% $10,100,000 UBS Warburg, Inc., 4.4% dated 6/30/06, repurchase price of $10,100,000 plus accrued interest on 7/3/06 collateralized by $10,302,000 U.S. Treasury Bill, 4.625%, 3/31/08 $ 10,100,000 ------------ Shares Security Lending Collateral - 3.8% 14,278,681 Securities Lending Investment Fund, 5.16% $ 14,278,681 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $24,378,681) $ 24,378,681 ------------ TOTAL INVESTMENT IN SECURITIES - 104.0% (Cost $325,040,626) $393,536,725 ------------ OTHER ASSETS AND LIABILITIES - (4.0)% $(14,959,301) ------------ TOTAL NET ASSETS - 100.0% $378,577,424 ============
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 54,026 Archstone Communities Trust $ 2,748,303 142,328 Eaton Vance Corp. 3,552,507 374,737 Ford Motor Corp. 2,596,927 69,296 Great Plains Energy, Inc. 1,930,587 38,112 Liberty Property Trust 1,684,550 36,630 Mine Safety Appliances Co.* 1,472,526 ----------- Total $13,985,400 ===========
The accompanying notes are an integral part of these financial statements. 63 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Shares Value COMMON STOCKS - 63.1% Energy - 4.9% Integrated Oil & Gas - 1.1% 6,700 Exxon Mobil Corp. $ 411,045 ----------- Oil & Gas Drilling - 1.4% 12,300 ENSCO International, Inc. $ 566,046 ----------- Oil & Gas Equipment & Services - 2.0% 12,598 National-Oilwell Varco, Inc.* $ 797,705 ----------- Oil & Gas Exploration & Production - 0.4% 2,700 Encana Corp.(a) $ 142,128 ----------- Total Energy $ 1,916,924 ----------- Materials - 3.8% Gold - 1.4% 10,000 Newmont Mining Corp. $ 529,300 ----------- Industrial Gases - 2.4% 17,400 Praxair, Inc. $ 939,600 ----------- Total Materials $ 1,468,900 ----------- Capital Goods - 4.4% Aerospace & Defense - 2.6% 16,000 Northrop Grumman Corp. $ 1,024,960 ----------- Industrial Conglomerates - 1.8% 8,500 3M Co. $ 686,545 ----------- Total Capital Goods $ 1,711,505 ----------- Commercial Services & Supplies - 0.4% Diversified Commercial Services - 0.4% 3,600 Cintas Corp.*(a) $ 143,136 ----------- Total Commercial Services & Supplies $ 143,136 ----------- Transportation - 2.4% Air Freight & Couriers - 2.4% 11,200 United Parcel Service $ 922,096 ----------- Total Transportation $ 922,096 ----------- Consumer Durables & Apparel - 1.4% Apparel, Accessories & Luxury Goods - 1.4% 14,600 Liz Claiborne, Inc. $ 541,076 ----------- Total Consumer Durables & Apparel $ 541,076 ----------- Media - 3.5% Broadcasting & Cable Television - 2.1% 25,100 Comcast Corp.* $ 822,778 ----------- Movies & Entertainment - 1.4% 14,659 Viacom, Inc. (Class B) $ 525,379 ----------- Total Media $ 1,348,157 ----------- Shares Value Retailing - 1.5% Apparel Retail - 1.5% 20,500 Ross Stores, Inc. $ 575,025 ----------- Total Retailing $ 575,025 ----------- Food & Drug Retailing - 3.5% Drug Retail - 3.3% 42,100 CVS Corp. $ 1,292,470 ----------- Hypermarkets & Supercenters - 0.2% 1,600 Wal-Mart Stores, Inc. $ 77,072 ----------- Total Food & Drug Retailing $ 1,369,542 ----------- Food, Beverage & Tobacco - 6.6% Brewers - 0.6% 5,100 Anheuser-Busch Companies, Inc.(a) $ 232,509 ----------- Packaged Foods & Meats - 1.5% 13,375 William Wrigley Jr. Co. $ 606,690 ----------- Soft Drinks - 4.5% 10,000 Coca-Cola Co. $ 430,200 21,700 PepsiCo, Inc. 1,302,868 ----------- $ 1,733,068 ----------- Total Food, Beverage & Tobacco $ 2,572,267 ----------- Household & Personal Products - 0.9% Personal Products - 0.9% 9,300 Estee Lauder Co.* $ 359,631 ----------- Total Household & Personal Products $ 359,631 ----------- Health Care Equipment & Services - 2.0% Health Care Distributors - 1.1% 6,400 Cardinal Health, Inc. $ 411,712 ----------- Health Care Equipment - 0.9% 11,100 Biomet, Inc. $ 347,319 ----------- Total Health Care Equipment & Services $ 759,031 ----------- Pharmaceuticals & Biotechnology - 6.5% Biotechnology - 1.9% 11,616 Amgen, Inc.* $ 757,712 ----------- Pharmaceuticals - 4.6% 4,000 Eli Lilly & Co. $ 221,080 20,788 Pfizer, Inc. 487,894 10,069 Teva Pharmaceutical Industries, Ltd.(a) 318,080 16,900 Wyeth 750,529 ----------- $ 1,777,583 ----------- Total Pharmaceuticals & Biotechnology $ 2,535,295 -----------
64 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value Diversified Financials - 5.1% Asset Management & Custody Banks - 1.3% 15,900 The Bank of New York Co., Inc. $ 511,980 ----------- Consumer Finance - 1.7% 13,100 American Express Co. $ 697,182 ----------- Investment Banking & Brokerage - 0.5% 2,900 Merrill Lynch & Co., Inc. $ 201,724 ----------- Other Diversified Finance Services - 1.4% 11,900 Bank of America Corp. $ 572,390 ----------- Total Diversified Financials $ 1,983,276 ----------- Insurance - 4.6% Property & Casualty Insurance - 4.6% 465 Berkshire Hathaway, Inc. (Class B)* $ 1,414,995 14,800 Progressive Corp. 380,508 ----------- $ 1,795,503 ----------- Total Insurance $ 1,795,503 ----------- Software & Services - 6.4% Data Processing & Outsourced Services - 3.3% 28,600 First Data Corp. $ 1,288,144 ----------- Systems Software - 3.1% 52,000 Microsoft Corp. $ 1,211,600 ----------- Total Software & Services $ 2,499,744 ----------- Shares Value Technology Hardware & Equipment - 4.2% Communications Equipment - 2.8% 21,900 Cisco Systems, Inc.* $ 427,707 9,500 Corning, Inc.* 229,805 10,900 Qualcomm, Inc. 436,763 ----------- $ 1,094,275 ----------- Computer Hardware - 1.4% 16,922 Hewlett-Packard Co. $ 536,089 ----------- Total Technology Hardware & Equipment $ 1,630,364 ----------- Semiconductors - 0.3% Semiconductors - 0.3% 7,800 Intel Corp. $ 147,810 ----------- Total Semiconductors $ 147,810 ----------- Telecommunication Services - 0.4% Wireless Telecommunication Services - 0.4% 7,800 Vodafone Group Plc (A.D.R.) $ 166,140 ----------- Total Telecommunication Services $ 166,140 ----------- TOTAL COMMON STOCKS (Cost $20,621,774) $24,445,422 -----------
The accompanying notes are an integral part of these financial statements. 65 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value ASSET BACKED SECURITIES - 0.8% Diversified Financials - 0.4% Other Diversified Finance Services - 0.4% 72,624 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 72,612 81,192 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 80,881 ----------- $ 153,493 ----------- Total Diversified Financials $ 153,493 ----------- Utilities - 0.4% Electric Utilities - 0.4% 82,600 BBB-/Baa3 FPL Energy America Wind LLC, 6.639%, 6/20/23 (144A) $ 84,431 59,400 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 59,326 ----------- $ 143,757 ----------- Total Utilities $ 143,757 ----------- TOTAL ASSET BACKED SECURITIES (Cost $300,274) $ 297,250 ----------- COLLATERALIZED MORTGAGE OBLIGATIONS - 1.1% Diversified Financials - 0.2% Diversified Financial Services - 0.2% 25,000 NR/Ba1 Global Signal, 7.036%, 2/15/36 (144A) $ 24,966 50,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 49,111 ----------- $ 74,077 ----------- Total Diversified Financials $ 74,077 ----------- Government - 0.9% Government - 0.9% 250,000 AAA/Aaa Fannie Mae Benchmark Remic, 6.0%, 6/25/16 $ 249,141 98,503 AAA/Aaa Federal Home Loan Mortgage Corp., 5.875%, 5/15/16 98,172 ----------- Total Government $ 347,313 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $422,379) $ 421,390 ----------- CORPORATE BONDS - 10.2% Energy - 0.8% Integrated Oil & Gas - 0.1% 40,000 A-/A3 Occidental Petroleum, 6.75%, 1/15/12 $ 42,087 ----------- Oil & Gas Equipment And Services - 0.2% 500,000 NR/NR Sevan Marine, 9.0%, 3/31/08 $ 82,888 ----------- Oil & Gas Exploration & Production - 0.3% 100,000 BBB/NR Gazprom International SA., 7.201%, 2/1/20 (144A) $ 101,375 ----------- Oil & Gas Refining & Marketing - 0.2% 25,000 BBB/Baa2 Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ 23,583 50,000 BB-/Ba2 Semco Energy, Inc., 7.125%, 5/15/08 49,643 ----------- $ 73,226 ----------- Total Energy $ 299,576 ----------- Materials - 1.2% Aluminum - 0.1% 50,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 48,000 -----------
66 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Commodity Chemicals - 0.3% 100,000 BB-/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ 92,000 ----------- Diversified Metals & Mining - 0.3% 125,000 BBB-/Baa3 Inco, Ltd., 7.2%, 9/15/32 $ 127,964 ----------- Metal & Glass Containers - 0.1% 40,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 44,151 ----------- Paper Products - 0.4% 50,000 B+/B1 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 48,438 100,000 B-/B3 MDP Acquisitions, 9.625%, 10/1/12 103,000 ----------- $ 151,438 ----------- Total Materials $ 463,553 ----------- Capital Goods - 0.5% Electrical Component & Equipment - 0.1% 25,000 NR/WD Orcal Geothermal, 6.21%, 12/30/20 (144A) $ 24,338 ----------- Industrial Conglomerates - 0.2% 55,000 AAA/Aaa General Electric Capital Corp., 6.125%, 2/22/11 $ 56,034 30,000 AAA/Aaa General Electric Capital Corp., 6.75%, 3/15/32 32,023 ----------- $ 88,057 ----------- Trading Companies & Distributors - 0.2% 100,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 91,329 ----------- Total Capital Goods $ 203,724 ----------- Automobiles & Components - 0.5% Automobile Manufacturers - 0.5% 200,000 B-/Caa1 General Motors, 7.2%, 1/15/11(a) $ 177,000 ----------- Total Automobiles & Components $ 177,000 ----------- Consumer Durables & Apparel - 0.1% Home Furnishings - 0.1% 30,000 BBB-/Baa3 Mohawk Industries, Inc., 6.125%, 1/15/16 $ 28,921 ----------- Total Consumer Durables & Apparel $ 28,921 ----------- Consumer Services - 0.1% Hotels, Resorts & Cruise Lines - 0.1% 50,000 BBB-/Ba1 Royal Caribbean Cruises, 7.25%, 6/15/16 $ 49,513 ----------- Total Consumer Services $ 49,513 ----------- Media - 1.4% Broadcasting & Cable Television - 0.9% 250,000 BBB+/Baa2 Comcast Cable Corp., 7.125%, 6/15/13 $ 261,883 100,000 BBB-/Baa3 Cox Communications, 7.125%, 10/1/12 103,432 ----------- $ 365,315 ----------- Publishing - 0.5% 170,000 BBB/Baa2 News America, Inc., 7.3%, 4/30/28 $ 172,389 ----------- Total Media $ 537,704 -----------
The accompanying notes are an integral part of these financial statements. 67 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Retailing - 0.1% Specialty Stores - 0.1% 50,000 BBB-/Baa3 Tanger Factory Outlet Centers, Inc., 6.15%, 11/15/15 $ 48,578 ----------- Total Retailing $ 48,578 ----------- Health Care Equipment & Services - 0.5% Health Care Facilities - 0.5% 200,000 BB+/Ba2 HCA, Inc., 6.3%, 10/1/12 $ 188,104 ----------- Total Health Care Equipment & Services $ 188,104 ----------- Banks - 0.3% Diversified Banks - 0.3% 50,000 AAA/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 $ 48,841 75,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 79,415 ----------- $ 128,256 ----------- Total Banks $ 128,256 ----------- Diversified Financials - 0.6% Consumer Finance - 0.2% 100,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 $ 91,376 ----------- Investment Banking & Brokerage - 0.2% 75,000 B+/Ba2 E*Trade Financial Corp., 8.0%, 6/15/11 $ 76,500 ----------- Diversified Financial Services - 0.2% 100,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 99,375 ----------- Total Diversified Financials $ 267,251 ----------- Insurance - 1.4% Life & Health Insurance - 0.3% 100,000 BB+/Ba1 Provident Co., Inc., 7.0%, 7/15/18 $ 96,548 ----------- Multi-Line Insurance - 0.1% 50,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 46,264 ----------- Property & Casualty Insurance - 0.6% 85,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 84,166 150,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 151,712 ----------- $ 235,878 ----------- Reinsurance - 0.4% 100,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 96,081 50,000 BBB/NA Platinum Underwriters HD, 7.50%, 6/1/17 49,050 ----------- $ 145,131 ----------- Total Insurance $ 523,821 ----------- Real Estate - 1.1% Real Estate Investment Trusts - 1.1% 100,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 $ 98,537 100,000 BBB-/Baa3 Health Care Real Estate Investment Trust, Inc., 6.2%, 6/1/16 97,145 107,000 BB/Ba2 Host Marriott LP, 6.375%, 3/15/15 100,580 75,000 B+/B1 Trustreet Properties Inc., 7.5%, 4/1/15 73,875 50,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 50,000 ----------- $ 420,137 ----------- Total Real Estate $ 420,137 -----------
68 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Technology Hardware & Equipment - 0.7% Computer Hardware - 0.7% 250,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 255,207 ----------- Total Technology Hardware & Equipment $ 255,207 ----------- Semiconductors - 0.2% Semiconductors - 0.2% 85,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 81,146 ----------- Total Semiconductors $ 81,146 ----------- Telecommunication Services - 0.7% Integrated Telecom Services - 0.6% 140,000 BBB+/Baa2 Telecom Italia Capital, 4.875%, 10/1/10 $ 133,870 100,000 BBB+/Baa2 Telecom Italia Capital, 5.25%, 11/15/13 92,447 ----------- $ 226,317 ----------- Wireless Telecommunication Services - 0.1% 30,000 BBB-/Baa3 Embarq Corp., 7.082%, 6/1/16 $ 29,835 ----------- Total Telecommunication Services $ 256,152 ----------- Utilities - 0.1% Electric Utilities - 0.1% 50,000 BBB+/Baa3 Entergy Gulf States, 5.7%, 6/1/15 $ 47,043 ----------- Total Utilities $ 47,043 ----------- TOTAL CORPORATE BONDS (Cost $3,982,853) $ 3,975,686 ----------- U.S GOVERNMENT AGENCY OBLIGATIONS - 24.1% 92,562 Federal Home Loan Bank, 5.27%, 12/28/12 $ 91,266 144,812 Federal Home Loan Mortgage Corp., 4.5%, 12/1/20 136,718 201,589 Federal Home Loan Mortgage Corp., 5.0%, 5/1/34 188,869 317,123 Federal Home Loan Mortgage Corp., 5.5%, 1/1/34 305,398 96,475 Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 94,803 159,426 Federal Home Loan Mortgage Corp., 5.5%, 12/1/35 153,227 129,125 Federal Home Loan Mortgage Corp., 5.5%, 9/01/17 126,915 71,766 Federal Home Loan Mortgage Corp., 6.0% , 1/1/32 70,968 849,489 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 839,534 216,070 Federal Home Loan Mortgage Corp., 6.0%, 11/1/33 213,388 31,360 Federal Home Loan Mortgage Corp., 6.0%, 6/1/34 30,939 6,962 Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 7,050 16,478 Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 16,571 117,407 Federal National Mortgage Association, 5.0%, 6/1/34 110,099 237,021 Federal National Mortgage Association, 5.5%, 10/1/34 228,263 172,091 Federal National Mortgage Association, 5.5%, 11/1/33 166,016 86,756 Federal National Mortgage Association, 5.5%, 12/1/34 83,550 146,258 Federal National Mortgage Association, 5.5%, 2/1/17 143,813 65,758 Federal National Mortgage Association, 5.5%, 3/1/34 63,329 171,466 Federal National Mortgage Association, 5.5%, 4/1/34 165,130 201,282 Federal National Mortgage Association, 5.5%, 9/1/34 193,845 90,212 Federal National Mortgage Association, 6.0%, 12/1/33 89,067 350,000 Federal National Mortgage Association, 6.0%, 7/1/36 344,422 110,000 Federal National Mortgage Association, 6.125%, 3/15/12 113,330
The accompanying notes are an integral part of these financial statements. 69 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal Amount USD ($) Value U.S. Government Agency Obligations (Cont.) 28,439 Federal National Mortgage Association, 6.5%, 10/1/32 $ 28,691 13,285 Federal National Mortgage Association, 6.5%, 10/1/32 13,402 42,462 Federal National Mortgage Association, 6.5%, 4/1/29 43,110 84,705 Federal National Mortgage Association, 6.5%, 7/1/32 85,453 55,336 Federal National Mortgage Association, 6.5%, 7/1/32 55,840 12,587 Federal National Mortgage Association, 6.5%, 8/1/13 12,760 10,913 Federal National Mortgage Association, 6.5%, 8/1/14 11,065 44,967 Federal National Mortgage Association, 6.5%, 9/1/32 45,572 42,967 Federal National Mortgage Association, 6.50%, 12/1/21 43,485 10,000 Federal National Mortgage Association, 7.125%, 6/15/10 10,581 17,635 Federal National Mortgage Association, 9.0%, 4/1/33 18,626 250,000 Freddie Mac, 4.9%, 11/3/08 246,095 150,000 Freddie Mac 5.75% 01/15/12 151,765 129,026 Government National Mortgage Association II, 5.5%, 2/20/34 124,648 44,611 Government National Mortgage Association II, 6.0%, 10/20/33 44,355 41,094 Government National Mortgage Association, 4.5%, 1/15/35 37,739 88,365 Government National Mortgage Association, 4.5%, 4/15/35 81,151 290,389 Government National Mortgage Association, 5.0%, 10/15/34 274,887 85,022 Government National Mortgage Association, 5.0%, 4/15/34 80,562 39,914 Government National Mortgage Association, 5.5%, 4/15/2033 38,737 120,563 Government National Mortgage Association, 5.5%, 7/15/33 117,006 189,470 Government National Mortgage Association, 5.5%, 8/15/19 187,270 135,536 Government National Mortgage Association, 5.5%, 8/15/33 131,538 35,108 Government National Mortgage Association, 5.5%, 9/15/33 34,093 152,395 Government National Mortgage Association, 5.50%, 06/15/33 147,899 223,293 Government National Mortgage Association, 6.0%, 8/15/32 221,918 112,619 Government National Mortgage Association, 6.0%, 8/15/34 111,839 54,618 Government National Mortgage Association, 6.0%, 9/15/32 54,261 249,666 Government National Mortgage Association, 6.0%, 9/15/33 247,998 33,889 Government National Mortgage Association, 6.5%, 10/15/28 34,413 48,876 Government National Mortgage Association, 6.5%, 5/15/33 49,513 13,434 Government National Mortgage Association, 7.5%, 9/20/29 13,958 50,000 U.S. Treasury Bonds, 4.0%, 2/15/14 46,449 325,000 U.S. Treasury Bonds, 5.25%, 11/15/28 323,476 100,000 U.S. Treasury Bonds, 6.25%, 8/15/23 110,289 28,936 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 30,266 470,000 U.S. Treasury Notes, 4.0%, 11/15/12 441,763 175,000 U.S. Treasury Notes, 4.125%, 5/15/15 162,497 500,000 U.S. Treasury Notes, 4.25%, 11/15/14 470,235 100,000 U.S. Treasury Notes, 4.25%, 8/15/15 93,566 300,000 U.S. Treasury Notes, 4.75%, 11/15/08 297,317 130,000 U.S. Treasury Notes, 5.375%, 2/15/31 132,245 5,000 U.S. Treasury Notes, 5.5%, 8/15/28 5,137 250,000 U.S. Treasury Notes, 5.625%, 5/15/08 251,973 200,000 U.S. Treasury Notes, 4.75%, 5/15/14 195,102 ---------- TOTAL U.S GOVERNMENT AGENCY OBLIGATIONS Cost $ 9,722,285) $9,337,055 ----------
70 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value TEMPORARY CASH INVESTMENT - 2.6% Security Lending Collateral - 2.6% 1,028,510 Securities Lending Investment Fund, 5.16% $ 1,028,510 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,028,510) $ 1,028,510 ----------- TOTAL INVESTMENT IN SECURITIES - 101.9% (Cost $36,078,075) $39,505,313 ----------- OTHER ASSETS AND LIABILITIES - (1.9%) $ (739,854) ----------- TOTAL NET ASSETS - 100.0% $38,765,459 ===========
* Non-income producing security. (A.D.R) American Depositary Receipt 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $589,258 or 1.5% of total net assets. NR Not Rated by either S&P or Moody's. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 5,049 Anheuser-Busch Companies, Inc. $ 230,184 3,554 Cintas Corp.* 141,307 2,673 Encana Corp. 140,707 9,968 Teva Pharmaceutical Industries, Ltd. 314,889 Principal Amount $198,000 General Motors, 7.2%, 1/15/11 175,230 ---------- Total $1,002,317 ==========
The accompanying notes are an integral part of these financial statements. 71 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
S&P/Moody's Ratings Shares (unaudited) Value CONVERTIBLE PREFERRED STOCKS - 2.0% Materials - 1.4% Diversified Metals & Mining - 1.4% 1,200 NR/NR Freeport-MC Copp., 5.5%, 12/31/49 $ 1,504,050 ------------ Total Materials $ 1,504,050 ------------ Banks - 0.6% Thrifts & Mortgage Finance - 0.6% 14,000 NR/NR Sovereign Cap Trust IV, 4.375%, 3/1/34 $ 633,500 ------------ Total Banks $ 633,500 ------------ TOTAL CONVERTIBLE PREFERRED STOCKS $ 2,137,550 ------------ (Cost $1,831,500) Principal Amount USD ($) CONVERTIBLE CORPORATE BONDS - 7.1% Materials - 1.0% Commodity Chemicals - 0.3% 200,000 B+/B1 Millennium Chemicals, Inc., 4.0%, 11/15/23 $ 358,250 ------------ Gold - 0.7% 800,000 B-/NR Coeur D'Alene Mines Corp 1.25%, 1/15/24 $ 728,000 ------------ Total Materials $ 1,086,250 ------------ Capital Goods - 1.5% Electrical Component & Equipment - 1.5% 2,595,000 BB-/B1 Roper Industries, Inc., 1.4813%, 1/15/34 $ 1,576,463 ------------ Total Capital Goods $ 1,576,463 ------------ Media - 1.7% Advertising - 1.7% 1,800,000 B/Ba3 Interpublic Group Cos., 4.5%, 3/15/23 $ 1,770,750 ------------ Total Media $ 1,770,750 ------------ Retailing - 0.9% Automotive Retail - 0.9% 1,000,000 B/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 $ 978,750 ------------ Total Retailing $ 978,750 ------------ Health Care Equipment & Services - 0.6% Health Care Equipment - 0.6% 375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) $ 251,250 450,000 NR/NR Wilson Greatbatch Tech., 2.25%, 6/15/13 391,500 ------------ $ 642,750 ------------ Total Health Care Equipment & Services $ 642,750 ------------
72 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Technology Hardware & Equipment - 1.4% Electronic Equipment & Instruments - 1.2% 300,000 NR/NR Flir Systems, Inc., 3.0%, 6/1/23 $ 360,000 1,000,000 NR/NR Veeco Instruments, 4.125%, 12/21/08 972,500 ------------ $ 1,332,500 ------------ Technology Distributors - 0.2% 300,000 NR/ NR Bell Microproducts, Inc., 3.75%, 3/5/24 $ 250,125 ------------ Total Technology Hardware & Equipment $ 1,582,625 ------------ TOTAL CONVERTIBLE CORPORATE BONDS $ 7,637,588 ------------ (Cost $8,078,583) Shares PREFERRED STOCK - 1.8% Real Estate - 1.8% Real Estate Management & Development - 1.8% 75,000 Forest City Enterprises, 7.375%, 2/1/34 $ 1,871,250 ------------ Total Real Estate $ 1,871,250 ------------ TOTAL PREFERRED STOCK $ 1,871,250 ------------ (Cost $1,917,000) COMMON STOCKS - 13.9% Energy - 1.6% Oil & Gas Exploration & Production - 0.3% 8,110 Pogo Producing Co.* $ 373,871 ------------ Oil & Gas Refining & Marketing - 0.5% 7,800 Tesoro Petroleum Corp. $ 580,008 ------------ Oil & Gas Storage & Transportation - 0.8% 7,900 Kinder Morgan, Inc. $ 789,131 ------------ Total Energy $ 1,743,010 ------------ Materials - 2.3% Commodity Chemicals - 0.1% 3,500 Georgia Gulf Corp.* $ 87,570 ------------ Construction Materials - 0.1% 1,752 Texas Industries, Inc. $ 93,031 ------------ Gold - 0.5% 17,600 Barrick Gold Corp.* $ 520,960 ------------ Industrial Gases - 0.5% 8,600 Air Products & Chemicals, Inc. $ 549,712 ------------ Specialty Chemicals - 1.1% 1,700 Arch Chemicals, Inc. $ 61,285 63,100 RPM, Inc. 1,135,800 ------------ $ 1,197,085 ------------ Total Materials $ 2,448,358 ------------
The accompanying notes are an integral part of these financial statements. 73 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Shares Value Capital Goods - 1.4% Electrical Component & Equipment - 0.9% 6,200 Franklin Electric Co., Inc.* $ 320,168 19,500 General Cable Corp.* 682,500 ------------ $ 1,002,668 ------------ Industrial Machinery - 0.5% 10,500 ITT Industries, Inc. $ 519,750 ------------ Total Capital Goods $ 1,522,418 ------------ Household & Personal Products - 1.1% Personal Products - 1.1% 24,600 Alberto-Culver Co. (Class B) $ 1,198,512 ------------ Total Household & Personal Products $ 1,198,512 ------------ Health Care Equipment & Services - 0.6% Health Care Equipment - 0.6% 10,900 Beckman Coulter, Inc.* $ 605,495 ------------ Total Health Care Equipment & Services $ 605,495 ------------ Pharmaceuticals & Biotechnology - 2.6% Biotechnology - 1.1% 11,900 PDL BioPharma, Inc.* $ 219,079 28,400 Vertex Pharmaceuticals, Inc.* 1,042,564 ------------ $ 1,261,643 ------------ Life Sciences Tools & Services - 1.1% 18,000 Bio-Rad Laboratories, Inc.* $ 1,168,920 ------------ Pharmaceuticals - 0.4% 15,000 Bristol-Myers Squibb Co. $ 387,900 ------------ Total Pharmaceuticals & Biotechnology $ 2,818,463 ------------ Real Estate - 0.1% Office Real Estate Investment Trusts - 0.1% 1,500 Equity Office Properties Trust (a) $ 54,765 ------------ Total Real Estate $ 54,765 ------------ Technology Hardware & Equipment - 0.5% Electronic Equipment & Instruments - 0.5% 10,000 Amphenol Corp.* $ 559,600 ------------ Total Technology Hardware & Equipment $ 559,600 ------------ Utilities - 3.7% Gas Utilities - 2.3% 10,900 Questar Corp. $ 877,341 47,700 Southern Union Co.* 1,290,762 9,600 Washington Gas Light Co.* 277,920 ------------ $ 2,446,023 ------------
74 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Shares Value Independent Power Producer & Energy Traders - 1.4% 31,100 NRG Energy, Inc.* $ 1,498,398 ------------ Total Utilities $ 3,944,421 ------------ TOTAL COMMON STOCKS $ 14,895,042 ------------ (Cost $13,636,095) Principal S&P/Moody's Amount Ratings USD ($) (unaudited) CORPORATE BONDS - 72.5% Energy - 5.6% Coal & Consumable Fuels - 2.1% 2,500,000 NA/NA Massey Energy Co., 6.875%, 12/15/13 $ 2,325,000 ------------ Oil & Gas Refining & Marketing - 3.5% 1,031,000 B+/B1 Frontier Oil Corp., 6.625%, 10/1/11 $ 987,183 2,850,000 BB+/Ba1 Tesoro Petroleum Corp., 6.25%, 11/1/12 (144A) 2,707,500 ------------ $ 3,694,683 ------------ Total Energy $ 6,019,683 ------------ Materials - 19.7% Aluminum - 2.1% 2,300,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 2,208,000 ------------ Commodity Chemicals - 6.0% 1,750,000 BB-/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 2,056,250 2,000,000 BB-/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,985,000 2,500,000 BB-/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,396,875 ------------ $ 6,438,125 ------------ Construction Materials - 1.4% 1,500,000 BB-/Ba3 Texas Industries, Inc, 7.25%, 7/15/13 $ 1,485,000 ------------ Fertilizers & Agricultural Chemicals - 2.2% 2,500,000 B+/Ba2 Scotts Co., 6.625%, 11/15/13 $ 2,400,000 ------------ Metal & Glass Containers - 0.6% 800,000 B/B2 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 $ 702,000 ------------ Paper Products - 4.7% 200,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 162,000 2,250,000 B+/B1 Abitibi-Consolidated, Inc., 8.55%, 8/1/10 (a) 2,131,875 3,100,000 B+/B1 Bowater, Inc., 6.5%, 6/15/13 2,697,000 ------------ $ 4,990,875 ------------ Specialty Chemicals - 2.7% 2,090,000 B+/B1 Millennium America, Inc., 7.625%, 11/15/26 $ 1,766,050 1,000,000 B+/B1 Millennium America, Inc., 9.25%, 6/15/08 1,025,000 ------------ $ 2,791,050 ------------ Total Materials $ 21,015,050 ------------ Capital Goods - 14.4% Aerospace & Defense - 6.7% 4,000,000 B/B3 DRS Technologies, Inc., 6.875%, 11/1/13 $ 3,850,000 3,150,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 3,189,375 ------------ $ 7,039,375 ------------
The accompanying notes are an integral part of these financial statements. 75 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Industrial Machinery - 7.7% 2,500,000 B/B2 Gardner Denver, Inc., 8.0%, 5/1/13 (144A) $ 2,625,000 517,000 B+/B2 JLG Industries, Inc., 8.375%, 6/15/12 535,095 800,000 BB-/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 784,000 4,750,000 NR/NR Mueller Industries, Inc. 6.0%, 11/1/14 4,370,000 ------------ $ 8,314,095 ------------ Total Capital Goods $ 15,353,470 ------------ Consumer Durables & Apparel - 0.1% Homebuilding - 0.1% 185,000 BB-/Ba2 Meritage Homes Corp., 6.25%, 3/15/15 $ 155,863 ------------ Total Consumer Durables & Apparel $ 155,863 ------------ Media - 2.0% Advertising - 2.0% 2,300,000 B/Ba3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,087,250 ------------ Total Media $ 2,087,250 ------------ Retailing - 5.1% Automotive Retail - 1.9% 2,290,000 CCC/B3 Pep Boys-Manny Moe Jack, 7.5%, 12/15/14 $ 1,992,300 ------------ Distributors - 3.2% 3,500,000 B/B2 Wesco Distribution, Inc., 7.5%, 10/15/17 (144A) $ 3,500,000 ------------ Total Retailing $ 5,492,300 ------------ Health Care Equipment & Services - 1.4% Health Care Supplies - 1.4% 1,500,000 CCC+/Caa3 Inverness Medical Innovation, 8.75%, 2/15/12 $ 1,455,000 ------------ Total Health Care Equipment & Services $ 1,455,000 ------------ Pharmaceuticals & Biotechnology - 1.8% Pharmaceuticals - 1.8% 2,000,000 BB-/B1 Valeant Pharmaceuticals, 7.0%, 12/15/11 $ 1,900,000 ------------ Total Pharmaceuticals & Biotechnology $ 1,900,000 ------------ Real Estate - 8.2% Real Estate Management & Development - 3.2% 3,435,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 $ 3,460,763 ------------ Real Estate Investment Trusts - 2.7% 1,500,000 BB-/B2 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 1,522,500 1,300,000 B/B1 Crescent Real Estate, 9.25%, 4/15/09 1,351,350 ------------ $ 2,873,850 ------------ Retail Real Estate Investment Trusts - 2.3% 2,500,000 BB+/Ba1 Rouse Co Lp/TRC Co- ISSR 6.75%, 5/1/13 (144A) $ 2,434,763 ------------ Total Real Estate $ 8,769,376 ------------ Technology Hardware & Equipment - 5.5% Electronic Equipment & Instruments - 3.3% 1,835,000 B/B2 General Cable Corp., 9.5%, 11/15/10 $ 1,945,100 1,500,000 B/B2 Itron, Inc., 7.75%, 5/15/12 1,530,000 ------------ $ 3,475,100 ------------
76 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Technology Distributors - 2.2% 1,600,000 BB+/Ba1 Anixter International Corp., 5.95%, 3/1/15 $ 1,472,000 1,000,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 982,812 ------------ $ 2,454,812 ------------ Total Technology Hardware & Equipment $ 5,929,912 ------------ Utilities - 8.7% Electric Utilities - 5.4% 3,300,000 BB-/Ba3 Allegheny Energy Supply, 7.8%, 3/15/11 $ 3,423,750 1,000,000 BB-/Ba3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,062,500 1,300,000 B+/B1 CMS Energy Corp., 7.5%, 1/15/09 1,316,250 ------------ $ 5,802,500 ------------ Multi-Utilities - 3.3% 3,000,000 B+/B1 CMS Energy Corp., 7.75%, 8/1/10 $ 3,045,000 450,000 B+/B1 CMS Energy Corp., 6.875%, 12/15/15 427,500 ------------ $ 3,472,500 ------------ Total Utilities $ 9,275,000 ------------ TOTAL CORPORATE BONDS (Cost $80,127,755) $ 77,452,904 ------------ Shares TEMPORARY CASH INVESTMENT - 1.6% Security Lending Collateral - 1.6% 1,695,184 Securities Lending Investment Fund, 5.16% $ 1,695,184 ------------ TOTAL TEMPORARY CASH INVESTMENT (Cost $1,695,184) $ 1,695,184 ------------ TOTAL INVESTMENT IN SECURITIES - 98.9% (Cost $107,286,117) $105,689,518 ------------ OTHER ASSETS AND LIABILITIES - 1.1% $ 1,161,880 ------------ TOTAL NET ASSETS - 100.0% $106,851,398 ============
NR Not rated by either S&P or Moody's * Non-income producing security. + Investment held by the fund representing 5% or more of the outstanding voting stock of such company. (a) At June 30, 2006, the following securities were out on loan:
Principal Amount Security Value $1,641,250 Abitibi-Consolidated, Inc., 8.55%, 8/1/10 $1,555,084 Shares 1,125 Equity Office Properties Trust 41,074 ---------- Total $1,596,158 ==========
The accompanying notes are an integral part of these financial statements. 77 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value CONVERTIBLE CORPORATE BONDS - 0.3% Semiconductors - 0.3% Semiconductor Equipment - 0.3% 170,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 $ 165,113 ----------- TOTAL CONVERTIBLE CORPORATE BONDS (Cost $158,934) $ 165,113 ----------- ASSET BACKED SECURITIES - 3.4% Diversified Financials - 1.1% Diversified Financial Services - 1.1% 270,805 BB-/Ba2 Caithness Coso Fund Corp., 6.263%, 6/15/14 (144A) $ 265,226 185,190 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) 185,159 247,636 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 246,687 ----------- $ 697,072 ----------- Total Diversified Financials $ 697,072 ----------- Utilities - 1.6% Electric Utilities - 1.6% 169,850 BBB-/Baa3 Empresa Electric, 8.625%, 4/30/13 (144A) $ 183,353 308,880 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 308,494 376,193 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 385,598 83,065 BB-/Ba2 Tenaska Alabama, 7.0%, 6/30/21 (144A) 80,956 ----------- $ 958,401 ----------- Total Utilities $ 958,401 ----------- Government - 0.7% Government - 0.7% COP 413,256 BB+/Ba2 Republic of Columbia, 9.75%, 4/9/11 $ 446,317 ----------- Total Government $ 446,317 ----------- TOTAL ASSET BACKED SECURITIES (Cost $2,115,884) $ 2,101,790 ----------- COLLATERALIZED MORTGAGE OBLIGATIONS - 0.5% Diversified Financials - 0.5% Diversified Financial Services - 0.5% 80,000 NR/Ba1 Global Signal, 7.036%, 2/15/36 (144A) $ 79,890 265,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 260,288 ----------- $ 340,178 ----------- Total Diversified Financials $ 340,178 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $345,000) $ 340,178 ----------- CORPORATE BONDS - 35.3% Energy - 4.6% Coal & Consumable Fuels - 0.4% 250,000 B+/Ba3 Adaro Finance BV, 8.5%, 12/8/10 (144A) $ 248,750 ----------- Oil & Gas Drilling - 0.5% 30,000 B/B2 Copano Energy LLC, 8.125%, 3/1/16 (144A) $ 29,850 300,000 NR/NR DDI Holding AS, 9.3%, 1/19/12 308,250 ----------- $ 338,100 -----------
78 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Oil & Gas Equipment & Services - 0.2% 150,000 NR/B1 Semgroup LP, 8.75%, 11/15/15 (144A) $ 149,250 ----------- Oil & Gas Exploration & Production - 2.9% 70,000 B+/B1 Atlas Pipeline Partners, 8.125%, 12/15/15 (144A) $ 69,738 210,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 216,825 260,000 B-/B3 Clayton Williams Energy, 7.75%, 8/1/13 239,200 245,000 B/B2 Compton Petroleum Corp., 7.625%, 12/1/13 233,975 355,000 BBB/NR Gazprom International SA, 7.201%, 2/1/20 (144A) 359,881 170,000 B-/B3 Harvest Operations Corp., 7.875%, 10/15/11 161,500 ITL 275,000,000 BBB-/Baa1 Petroleos Mexicanos, 7.375%, 8/13/07 187,792 115,000 CCC+/Caa1 Petroquest Energy, Inc., 10.375%, 5/15/12 119,025 200,000 B/B2 Quicksilver Resources, Inc., 7.125%, 4/1/16 187,500 45,000 BB+/Ba3 Southern Star Central Corp., 6.75%, 3/1/16 (144A) 43,200 ----------- $ 1,818,636 ----------- Oil & Gas Storage & Transportation - 0.6% 75,000 B/B1 Inergy LP, 8.25%, 3/1/16 $ 75,750 85,000 B-/B2 Targa Resources, Inc., 8.5%, 11/1/13 (144A) 82,025 176,000 B-/B3 Transmontaigne, Inc., 9.125%, 6/1/10 187,440 ----------- $ 345,215 ----------- Total Energy $ 2,899,951 ----------- Materials - 6.1% Aluminum - 0.8% 370,000 BB/Ba3 Asia Aluminum Holdings, 8.0%, 12/23/11 (144A) $ 346,875 140,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 134,400 ----------- $ 481,275 ----------- Commodity Chemicals - 1.0% 110,000 BB-/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 129,250 65,000 B-/B3 Aventine Renewable Energy, Floating Rate Note, 12/15/11(a) 68,494 130,000 B-/B2 Basell Finance Co., 8.1%, 3/15/27 (144A) 117,650 300,000 B+/Ba3 Invista, 9.25%, 5/1/12 (144A) 315,000 ----------- $ 630,394 ----------- Construction Materials - 0.4% 275,000 B-/B3 U.S. Concrete, Inc., 8.375%, 4/1/14 $ 277,750 ----------- Diversified Chemical - 0.5% 100,000 B-/B2 Ineos Group Holdings Plc, 7.875%, 2/15/16 (144A) $ 119,225 EURO 145,000 B-/B2 Nell AF Sarl, 8.375%, 8/15/15 (144A) 187,244 ----------- $ 306,469 ----------- Diversified Metals & Mining - 1.4% 70,000 B-/B3 American Rock Salt Co., LLC, 9.5%, 3/15/14 $ 70,875 100,000 BBB+/Baa3 Vale Overseas, Ltd., 6.25%, 1/11/16 95,250 400,000 BBB+/Baa3 Vale Overseas, Ltd., 8.25%, 1/17/34 431,500 280,000 BB/Ba1 Vedenta Resources Plc, 6.625%, 2/22/10 (144A) 267,400 ----------- $ 865,025 -----------
The accompanying notes are an integral part of these financial statements. 79 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Forest Products - 0.5% 305,000 B+/B2 Ainsworth Lumber, 6.75%, 3/15/14 $ 231,800 90,000 BB-/Ba2 Sino Forest Corp., 9.125%, 8/17/11 (144A) 92,700 ----------- $ 324,500 ----------- Metal & Glass Containers - 0.2% 130,000 BB-/B1 Greif Brothers Corp., 8.875%, 8/1/12 $ 136,825 ----------- Paper Packaging - 0.2% 110,000 CCC+/Caa2 Graham Packaging Co., 9.875%, 10/15/14 (b) $ 108,900 ----------- Paper Products - 0.4% 100,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 81,000 200,000 B+/B1 Bowater, Inc., 6.5%, 6/15/13 174,000 ----------- $ 255,000 ----------- Specialty Chemicals - 0.7% 350,000 B/Caa2 Crystal US Holdings, Inc., Floating Rate Note, 10/1/14 (a) $ 273,875 150,000 BB+/NA LPG International, Inc., 7.25%, 12/20/15 138,000 ----------- $ 411,875 ----------- Total Materials $ 3,798,013 ----------- Capital Goods - 4.1% Aerospace & Defense - 0.1% 75,000 BB+/Ba3 L-3 Communications Corp., 6.375%, 10/15/15 $ 71,625 ----------- Building Products - 0.9% 325,000 B/B3 Builders Firstsource, Inc., Floating Rate Note, 2/15/12 (a) $ 333,125 250,000 BB-/Ba3 Desarrolladora Homex SA, 7.5%, 9/28/15 235,000 ----------- $ 568,125 ----------- Construction & Engineering - 1.0% 3,450,000 NR/ NR Kvaerner ASA, 0.0%, 10/30/11 $ 611,315 ----------- Construction, Farm Machinery & Heavy Trucks - 0.7% 130,000 B+/Ba3 Commercial Vehicle Group, 8.0%, 7/1/13 $ 124,475 270,000 B+/B1 Greenbrier Co., Inc., 8.375%, 5/15/15 275,738 ----------- $ 400,213 ----------- Industrial Machinery - 0.3% 150,000 B/B2 Gardner Denver, Inc., 8.0%, 5/1/13 (144A) $ 157,500 53,000 B+/B2 JLG Industries, Inc., 8.375%, 6/15/12 54,855 ----------- $ 212,355 ----------- Trading Companies & Distributors - 1.1% 325,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 296,818 475,000 BB+/Ba1 Noble Group, Ltd., 6.625%, 3/17/15 (144A) 411,756 ----------- $ 708,574 ----------- Total Capital Goods $ 2,572,207 ----------- Commercial Services & Supplies - 1.2% Diversified Commercial Services - 0.6% 130,000 B+/Ba2 FTI Consulting, 7.625%, 6/15/13 $ 131,625 240,000 CCC+/Caa1 Park-Ohio Industries, Inc., 8.375%, 11/15/14 211,200 ----------- $ 342,825 -----------
80 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Environmental & Facilities Services - 0.5% 80,000 B+/B1 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 90,000 240,000 CCC+/Caa1 Hydrochem Industrial Service, 9.25%, 2/15/13 (144A) 231,600 ----------- $ 321,600 ----------- Office Services & Supplies - 0.1% 90,000 CCC/B3 Nutro Products, Inc., Floating Rate Note, 10/15/13 (144A)(a) $ 91,688 ----------- Total Commercial Services & Supplies $ 756,113 ----------- Transportation - 1.1% Airlines - 0.1% 85,000 CCC+/Caa2 AMR Corp., 9.8%, 10/1/21 $ 79,263 ----------- Airport Services - 0.1% 55,000 B-/Caa1 K&F Acquisition, Inc., 7.75%, 11/15/14 $ 54,175 ----------- Marine - 0.8% 185,000 BB+/NR CMA CGM SA, 7.25%, 2/1/13 (144A) $ 169,275 315,000 BB-/Ba3 Stena AB, 7.0%, 12/1/16 289,800 40,000 B-/B3 Trailer Bridge, Inc., 9.25%, 11/15/11 41,000 ----------- $ 500,075 ----------- Railroads - 0.1% 70,000 B-/B3 TFM SA De CV, 9.375%, 5/1/12 $ 74,550 ----------- Total Transportation $ 708,063 ----------- Automobiles & Components - 0.4% Tires & Rubber - 0.4% 280,000 B-/B3 Goodyear Tire & Rubber, 9.0%, 7/1/15 (b) $ 267,400 ----------- Total Automobiles & Components $ 267,400 ----------- Consumer Durables & Apparel - 1.2% Footwear - 0.2% 153,000 BB-/B1 Brown Shoe Co., Inc., 8.75%, 5/1/12 $ 157,208 ----------- Homebuilding - 1.0% 148,000 BB-/Ba2 Meritage Homes Corp., 6.25%, 3/15/15 $ 124,690 150,000 BB/Ba3 Urbi Desarrollos Urbanos, 8.5%, 4/19/16 (144A) 150,000 250,000 B+/Ba3 WCI Communities, Inc., 6.625%, 3/15/15 (b) 207,500 150,000 B+/Ba3 WCI Communities, Inc., 7.875%, 10/1/13 131,625 ----------- $ 613,815 ----------- Total Consumer Durables & Apparel $ 771,023 ----------- Consumer Services - 0.8% Casinos & Gaming - 0.8% 200,000 AAA/Aaa Lottomatica S.p.A., Floating Rate Note, 3/31/66 (144A) (a) $ 255,378 245,000 B-/Caa1 Trump Entertainment Resorts, 8.5%, 6/1/15(b) 235,506 ----------- $ 490,884 ----------- Total Consumer Services $ 490,884 ----------- Media - 1.7% Broadcasting & Cable TV - 0.9% 250,000 BB+/Ba2 C&M Finance Ltd., 8.1%, 2/1/16 (144A) $ 238,750 300,000 B-/B2 Kabel Deutschland GMBH, 10.625%, 7/1/14 316,500 ----------- $ 555,250 -----------
The accompanying notes are an integral part of these financial statements. 81 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Movies & Entertainment - 0.5% 335,000 B+/Ba2 Corp Interamer De Entret, 8.875%, 6/14/15 (144A) $ 318,250 ----------- Publishing - 0.3% 200,000 B/B1 Sheridan Acquisition Corp., 10.25%, 8/15/11 $ 203,250 ----------- Total Media $ 1,076,750 ----------- Retailing - 0.6% Automotive Retail - 0.2% 115,000 BB+/Ba2 Autonation, Inc., 7.0%, 4/15/14 (144A) $ 113,275 ----------- Computer & Electronics Retail - 0.2% 95,000 B+/ Ba3 GSC Holdings Corp., 8.0%, 10/1/12(b) $ 95,000 ----------- Distributors - 0.2% EURO 100,000 B-/B2 Central Eur Distribution Corp., 8.0%, 7/25/12 (144A) $ 137,291 ----------- Total Retailing $ 345,566 ----------- Food & Drug Retailing - 0.2% Drug Retail - 0.2% 110,000 CCC/Caa1 Duane Reade, Inc., Floating Rate Note, 12/15/10 (a) $ 106,700 ----------- Total Food & Drug Retailing $ 106,700 ----------- Food, Beverage & Tobacco - 0.8% Brewers - 0.8% 202,000 NR/NR Argentine Beverages, 7.375%, 3/22/12 (144A) $ 193,920 220,000 BBB/Baa3 Cia Brasileira de Bebida, 8.75%, 9/15/13 242,275 80,000 BBB/Baa3 Cia Brasileira de Bebida, 10.5%, 12/15/11 93,000 ----------- $ 529,195 ----------- Total Food, Beverage & Tobacco $ 529,195 ----------- Health Care Equipment & Services - 0.3% Health Care Services - 0.3% 165,000 CCC+/B3 Rural/Metro Corp., 9.875%, 3/15/15 $ 170,569 ----------- Total Health Care Equipment & Services $ 170,569 ----------- Pharmaceuticals & Biotechnology - 0.6% Biotechnology - 0.3% 200,000 B/B2 Angiotech Pharmaceutical, 7.75%, 4/1/14 (144A) $ 191,000 ----------- Pharmaceuticals - 0.3% 180,000 CCC+/Caa1 Warner Chilcott Corp., 8.75%, 2/1/15 $ 182,250 ----------- Total Pharmaceuticals & Biotechnology $ 373,250 ----------- Banks - 1.4% Diversified Banks - 1.4% 185,000 B/Ba1 ATF Bank JSC, 9.25%, 4/12/12 (144A) $ 184,112 170,000 BB+/Baa2 Kazkommerts International BV, 8.0%, 11/3/15 164,900 150,000 B+/Ba2 Russian Stand Bank, 7.5%, 10/7/10 (144A) 139,875 15,000 BBB+/A1 SEB, 8.125%, 9/6/49 (144A) 15,067 200,000 NA/NA Sibacademfinance Plc, 9.0%, 5/12/09 (144A) 196,720 175,000 BB/Baa1 Turanalem Finance BV, 8.5%, 2/10/15 (144A) 171,719 ----------- $ 872,393 ----------- Total Banks $ 872,393 -----------
82 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Diversified Financials - 1.7% Consumer Finance - 0.9% 300,000 B+/Ba2 Ford Motor Credit Co., 5.7%, 1/15/10 $ 262,781 35,000 B+/Ba2 Ford Motor Credit Co., 5.8%, 1/12/09 31,975 320,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 (a) 292,403 ----------- $ 587,159 ----------- Investment Banking & Brokerage - 0.5% 275,000 B+/Ba2 E*Trade Financial Corp., 8.0%, 6/15/11 $ 280,500 ----------- Diversified Financial Services - 0.3% 200,000 BB/NR CCSA Finance, Ltd., 7.875%, 5/17/16 (144A) $ 189,000 ----------- Total Diversified Financials $ 1,056,659 ----------- Insurance - 3.4% Life & Health Insurance - 0.9% 390,000 B-/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 388,050 140,000 BB+/Ba1 Provident Co., Inc., 7.0%, 7/15/18 135,167 ----------- $ 523,217 ----------- Multi-Line Insurance - 0.5% 325,000 BB+/Ba1 Hanover Insurance Group, 7.625%, 10/15/25 $ 325,791 ----------- Property & Casualty Insurance - 1.0% 285,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 282,203 350,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 353,995 ----------- $ 636,198 ----------- Reinsurance - 1.0% 300,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 288,243 365,000 BBB/NA Platinum Underwriters Holdings, 7.5%, 6/1/17 358,062 ----------- $ 646,305 ----------- Total Insurance $ 2,131,511 ----------- Real Estate - 1.4% Real Estate Management & Development - 0.2% 125,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 $ 125,938 ----------- Real Estate Investment Trusts - 1.2% 120,000 BB-/B2 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 121,800 95,000 B/B1 Crescent Real Estate, 9.25%, 4/15/09 98,753 340,000 B+/B1 Trustreet Properties, Inc., 7.5%, 4/1/15 334,900 180,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 180,000 ----------- $ 735,453 ----------- Total Real Estate $ 861,391 ----------- Technology Hardware & Equipment - 0.7% Communications Equipment - 0.1% 50,000 BBB/Baa3 Corning, Inc., 5.9%, 3/15/14 $ 49,436 ----------- Technology Distributors - 0.6% 406,000 BB+/Ba1 Anixter International Corp., 5.95%, 3/1/15 $ 373,520 ----------- Total Technology Hardware & Equipment $ 422,956 -----------
The accompanying notes are an integral part of these financial statements. 83 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Semiconductors - 0.3% Semiconductors - 0.3% 175,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 167,066 ----------- Total Semiconductors $ 167,066 ----------- Telecommunication Services - 1.5% Integrated Telecommunication Services - 0.6% 160,000 B+/Ba3 Dycom Industries, 8.125%, 10/15/15 $ 160,400 140,000 B-/B3 Eschelon Operating Co., 8.375%, 3/15/10 133,000 63,000 NR/Baa3 Tele Norte Leste Participacoes , 8.0%, 12/18/13 65,520 ----------- $ 358,920 ----------- Wireless Telecommunication Services - 0.9% 120,000 BBB-/Baa3 Embarq Corp., 7.082%, 6/1/16 $ 119,341 115,000 BB-/Ba3 Mobile Telesystems Finance, 8.375%, 10/14/10 (144A) 114,856 210,000 B-/B2 Stratos Global Corp., 9.875%, 2/15/13 (144A) 197,400 240,000 B/Caa1 Zeus Special Sub, Ltd., Floating Rate Note, 2/1/15 (144A)(a) 165,600 ----------- $ 597,197 ----------- Total Telecommunication Services $ 956,117 ----------- Utilities - 1.2% Electric Utilities - 1.1% 313,542 NR/Ba1 Juniper Generation, 6.79%, 12/31/14 (144A) $ 298,056 250,000 BBB-/Baa3 Kiowa Power Partners LLC, 5.737%, 3/30/21 (144A) 231,933 190,000 BB-/Ba3 MSW Energy Holdings, 7.375%, 9/1/10 190,000 ----------- $ 719,989 ----------- Multi-Utilities - 0.1% 60,000 B/B2 Reliant Energy, Inc., 6.75%, 12/15/14 $ 55,200 ----------- Total Utilities $ 775,189 ----------- TOTAL CORPORATE BONDS (Cost $22,157,475) $22,108,966 ----------- U.S. GOVERNMENT & AGENCY OBLIGATIONS - 48.2% 797,953 Federal Home Loan Mortgage Corp., 4.5%, 4/1/20 $ 753,357 462,676 Federal Home Loan Mortgage Corp., 4.5%, 7/1/20 436,817 273,791 Federal Home Loan Mortgage Corp., 4.5%, 4/1/35 249,004 40,690 Federal Home Loan Mortgage Corp., 5.0%, 5/1/34 38,123 138,807 Federal Home Loan Mortgage Corp., 5.0%, 6/1/35 129,733 350,000 Federal Home Loan Mortgage Corp., 5.0%, 6/1/36 326,893 48,238 Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 47,402 773,619 Federal Home Loan Mortgage Corp., 5.5%, 11/1/34 746,255 338,543 Federal Home Loan Mortgage Corp., 5.5%, 1/1/35 326,026 237,538 Federal Home Loan Mortgage Corp., 6.0%, 6/1/17 237,984 13,593 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 13,434 9,464 Federal Home Loan Mortgage Corp., 6.0%, 2/1/33 9,353 235,755 Federal Home Loan Mortgage Corp., 6.0% 11/1/33 232,828 179,827 Federal Home Loan Mortgage Corp., 6.0%, 1/1/34 177,414 218,166 Federal Home Loan Mortgage Corp., 6.0%, 4/1/35 214,937 233,366 Federal Home Loan Mortgage Corp., 6.0%, 6/1/35 229,912 290,416 Federal National Mortgage Association, 4.5%, 5/1/20 274,513 186,859 Federal National Mortgage Association, 4.5%, 9/1/20 176,627 151,432 Federal National Mortgage Association, 4.5%, 3/1/35 137,285
84 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal Amount USD ($) Value U.S. Government & Agency Obligations (Cont.) 598,025 Federal National Mortgage Association, 4.5%, 9/1/35 $ 542,159 172,184 Federal National Mortgage Association, 5.0%, 2/1/20 165,882 821,244 Federal National Mortgage Association, 5.0%, 10/1/20 791,186 346,087 Federal National Mortgage Association, 5.0%, 9/1/35 323,721 31,818 Federal National Mortgage Association, 5.0%, 2/1/36 29,761 567,477 Federal National Mortgage Association, 5.0%, 4/1/36 530,479 36,343 Federal National Mortgage Association, 5.5%, 3/1/18 35,727 79,966 Federal National Mortgage Association, 5.5%, 12/1/18 78,611 88,140 Federal National Mortgage Association, 5.5%, 4/1/19 86,681 186,044 Federal National Mortgage Association, 5.5%, 5/1/34 179,171 774,135 Federal National Mortgage Association, 5.5%, 10/1/35 744,077 150,000 Federal National Mortgage Association, 5.5%, 12/1/35 144,176 484,230 Federal National Mortgage Association, 5.5%, 3/1/36 465,429 149,704 Federal National Mortgage Association, 5.5%, 5/1/36 143,797 72,668 Federal National Mortgage Association, 6.0%, 7/1/17 72,946 4,537 Federal National Mortgage Association, 6.0%, 12/1/31 4,485 9,288 Federal National Mortgage Association, 6.0%, 2/1/32 9,182 5,483 Federal National Mortgage Association, 6.0% 11/1/32 5,417 306,157 Federal National Mortgage Association, 6.0%, 11/1/33 302,272 195,493 Federal National Mortgage Association, 6.0%, 12/1/33 193,013 111,861 Federal National Mortgage Association, 6.0%, 1/1/34 110,320 800,000 Federal National Mortgage Association, 6.375%, 8/15/07 595,939 998 Federal National Mortgage Association, 7.0%, 9/1/29 1,023 1,235 Federal National Mortgage Association, 6.5%, 7/1/31 1,247 4,832 Federal National Mortgage Association, 6.5%, 10/1/31 4,877 8,523 Federal National Mortgage Association, 6.5%, 2/1/32 8,601 207,864 Government National Mortgage Association, 4.5%, 9/15/33 191,218 173,629 Government National Mortgage Association, 4.5%, 5/15/34 159,600 629,492 Government National Mortgage Association, 4.5%, 4/15/35 578,101 300,000 Government National Mortgage Association, 4.5%, 3/15/36 275,366 209,039 Government National Mortgage Association, 5.0%, 12/15/34 198,074 453,463 Government National Mortgage Association, 5.0%, 4/15/35 429,303 349,213 Government National Mortgage Association, 5.5%, 10/15/19 345,159 201,856 Government National Mortgage Association, 5.5%, 1/15/34 195,826 381,254 Government National Mortgage Association, 5.5%, 4/15/34 369,864 133,266 Government National Mortgage Association, 5.5%, 4/20/34 128,744 50,556 Government National Mortgage Association, 5.5%, 7/15/34 49,046 397,913 Government National Mortgage Association, 5.5%, 10/15/34 386,026 395,083 Government National Mortgage Association, 5.5%, 6/15/35 383,125 946,538 Government National Mortgage Association, 5.5%, 11/15/35 917,890 447,202 Government National Mortgage Association, 6.0%, 8/15/16 450,547 22,238 Government National Mortgage Association, 6.0%, 5/15/17 22,410 212,294 Government National Mortgage Association, 6.0%, 6/15/17 213,937 252,056 Government National Mortgage Association, 6.0%, 2/15/18 254,051 148,335 Government National Mortgage Association, 6.0%, 8/15/19 149,468 26,119 Government National Mortgage Association, 6.0%, 2/15/33 25,945 95,208 Government National Mortgage Association, 6.0%, 3/15/33 94,579 46,786 Government National Mortgage Association, 6.0%, 6/15/33 46,474 102,992 Government National Mortgage Association, 6.0%, 7/15/33 102,304 157,456 Government National Mortgage Association, 6.0%, 9/15/33 156,404 61,248 Government National Mortgage Association, 6.0%, 10/15/33 60,839
The accompanying notes are an integral part of these financial statements. 85 PIONEER VARIABLE CONTRACTS TRUST Pioneer Strategic Income VCT Portfolio ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value U.S. Government & Agency Obligations (Cont.) 168,928 Government National Mortgage Association, 6.0%, 8/15/34 $ 167,758 24,700 Government National Mortgage Association, 6.5%, 3/15/29 25,077 7,067 Government National Mortgage Association, 6.5%, 1/15/30 7,168 2,064 Government National Mortgage Association, 6.5%, 6/15/31 2,092 18,749 Government National Mortgage Association, 6.5%, 2/15/32 18,999 21,107 Government National Mortgage Association, 6.5%, 3/15/32 21,388 25,641 Government National Mortgage Association, 6.5%, 11/15/32 25,995 19,181 Government National Mortgage Association, 6.5%, 1/15/33 19,431 30,012 Government National Mortgage Association, 6.5%, 5/15/33 30,403 64,380 Government National Mortgage Association, 6.5%, 1/15/34 65,204 815 Government National Mortgage Association, 7.0%, 3/15/31 841 8,998 Government National Mortgage Association, 7.5%, 5/15/23 9,280 2,463 Government National Mortgage Association, I, 7.0%, 3/15/31 2,541 125,198 Government National Mortgage Association II, 5.5%, 3/20/34 120,949 236,787 Government National Mortgage Association II, 6.0%, 11/20/33 234,613 625,000 U.S. Treasury Bonds, 4.375%, 12/15/10 607,080 2,240,000 U.S. Treasury Bonds, 5.25%, 11/15/28 2,229,499 425,000 U.S. Treasury Bonds, 6.25%, 8/15/23 468,729 80,000 U.S. Treasury Bonds, 7.25%, 5/15/16 92,631 1,237,602 U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 1,174,319 314,631 U.S. Treasury Inflation Protected Security, 2.0%, 1/15/16 300,461 840,278 U.S. Treasury Inflation Protected Security, 3.0%, 7/15/12 865,289 153,155 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 160,430 1,186,356 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 1,240,889 700,000 U.S. Treasury Notes, 4.0%, 2/15/15 645,039 620,000 U.S. Treasury Notes, 4.25%, 1/15/11 598,663 675,000 U.S. Treasury Notes, 4.25%, 11/15/14 634,817 400,000 U.S. Treasury Notes, 4.25%, 8/15/15 374,266 265,000 U.S. Treasury Notes, 4.875%, 2/15/12 262,101 1,200,000 U.S. Treasury Notes, 5.0%, 2/15/11 1,197,047 700,000 U.S. Treasury Notes, 5.5%, 8/15/28 719,195 1,920,000 U.S. Treasury Strip, 0.0%, 11/15/13 1,321,096 ----------- $30,155,666 ----------- TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost $31,033,922) $30,155,666 ----------- FOREIGN GOVERNMENT BONDS - 6.1% ITL 45,000,000 B+/B2 Banco Nac De Desen Econo, 8.0%, 4/28/10 $ 31,933 CAD 399,000 AAA/Aaa Government of Canada, 4.25%, 9/1/09 354,785 SEK 3,445,000 AAA/Aaa Government of Sweden, 5.25%, 3/15/11 507,675 SEK 2,955,000 NR/NR Government of Sweden, 5.5%, 10/8/12 446,015 SEK 2,150,000 NR/NR Government of Sweden, 8.0%, 8/15/07 314,925 NOK 1,500,000 AAA/Aaa Norwegian Government, 5.5%, 5/15/09 250,661 NOK 1,320,000 AAA/Aaa Norwegian Government, 6.0%, 5/16/11 228,832 NOK 3,410,000 AAA/Aaa Norwegian Government, 6.75%, 1/15/07 557,288 AUD 532,000 AAA/Aaa Ontario Province, 5.5%, 4/23/13 379,819 AUD 207,000 AAA/Aaa Queensland Treasury, 6.0%, 8/14/13 154,633 GBP 335,000 AAA/Aaa United Kingdom Treasury, 4.75%, 6/7/10 617,782 ----------- $ 3,844,348 ----------- TOTAL FOREIGN GOVERNMENT BONDS (Cost $3,568,480) $ 3,844,348 -----------
86 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value MUNICIPAL BONDS - 1.2% Muni Airport - 0.5% 50,000 B/CAA2 New Jersey Economic Development Authority, 6.25%, 9/15/29 $ 51,147 175,000 B/CAA2 New Jersey Economic Development Authority Special Facility Revenue, 7.0%, 11/15/30 183,393 100,000 NR/NR Wayne Charter County SPL, 6.75%, 12/1/15 55,663 ----------- $ 290,203 ----------- Muni Medical - 0.1% 80,000 AAA/NR Massachusetts Health & Educational Facilities, 5.0%, 1/15/10 $ 83,570 ----------- Muni Tobacco - 0.5% 90,000 BBB/Baa3 Golden State Tobacco Securitization, 6.75%, 6/1/39 $ 100,731 105,000 BBB/Baa3 Tobacco Settlement Authority Washington, 6.625%, 6/1/32 114,124 60,000 BBB/Baa3 Tobacco Settlement Financing Corp., 7.0%, 6/1/41 68,030 ----------- $ 282,885 ----------- Muni Utilities - 0.1% 60,000 AAA/Aaa San Antonio Texas Electric & Gas, Floating Rate Note, 2/1/19 (144A)(a) $ 77,242 ----------- TOTAL MUNICIPAL BONDS (Cost $647,737) $ 733,900 ----------- Shares RIGHTS/WARRANTS - 0.0% Transportation - 0.0% Railroads - 0.0% 210 Atlantic Express Transportation, Exp. 4/15/08* $ -- ----------- Total Transportation $ -- ----------- TOTAL RIGHTS/WARRANTS (Cost $0) $ -- ----------- TEMPORARY CASH INVESTMENT - 1.5% Security Lending Collateral - 1.5% 941,101 Securities Lending Investment Fund, 5.16% $ 941,101 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $941,101) $ 941,101 ----------- TOTAL INVESTMENT IN SECURITIES - 96.5% (Cost $60,968,533) $60,391,062 ----------- OTHER ASSETS AND LIABILITIES - 3.5% $ 2,225,966 ----------- TOTAL NET ASSETS - 100.0% $62,617,028 ===========
The accompanying notes are an integral part of these financial statements. 87 PIONEER VARIABLE CONTRACTS TRUST Pioneer Strategic Income VCT Portfolio ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================ * Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $8,986,634 or 14.4% of total net assets. NR Not Rated by either S&P or Moody's. (a) Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. (b) At June 30, 2006, the following securities were out on loan:
Principal Amount Security Value $ 94,050 GSC Holdings Corp., 8.0%, 10/1/12 $ 94,050 277,200 Goodyear Tire & Rubber, 9.0%, 7/1/15 264,726 108,900 Graham Packaging Co., 9.875%, 10/15/14 108,901 242,550 Trump Entertainment Resorts, 8.5%, 6/1/15 233,151 247,500 WCI Communities, Inc., 6.625%, 3/15/15 205,425 -------- Total $906,253 ========
NOTE: Principal amounts are denominated in U.S. dollars unless otherwise noted. ITL Italian Lira EURO Euro CAD Canadian Dollar SEK Swedish Krona NOK Norwegian Kroner AUD Australian Dollar GBP British Pound COP Colombian Peso 88 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Principal Amount Value COLLATERALIZED MORTGAGE OBLIGATIONS - 1.6% Government - 1.6% $ 213,395 Federal Home Loan Bank, 4.75%, 10/25/10 $ 207,107 116,164 Federal Home Loan Bank, 5.0%, 1/15/16 114,569 350,000 Freddie Mac, 5.5%, 7/15/28 345,437 ----------- $ 667,113 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $690,757) $ 667,113 ----------- CORPORATE BONDS - 0.6% Diversified Financials - 0.6% Specialized Finance - 0.6% 250,000 Private Export Funding, 3.375%, 2/15/09 $ 237,761 ----------- TOTAL CORPORATE BONDS (Cost $250,000) $ 237,761 ----------- U.S. GOVERNMENT AGENCY OBLIGATIONS - 95.8% 200,960 Fannie Mae, 5.5%, 6/1/23 $ 195,653 250,000 Federal Farm Credit Bank, 3.25%, 6/15/2007 244,778 400,000 Federal Farm Credit Bank, 4.9%, 3/17/14 380,366 100,000 Federal Farm Credit Bank, 5.3%, 9/28/15 95,931 100,000 Federal Farm Credit Bank, 5.88%, 9/8/08 100,855 250,000 Federal Farm Credit Bank, 4.45%, 6/1/15 231,219 200,000 Federal Farm Credit Bank, Medium Term Note, 6.38%, 11/27/06 200,717 250,000 Federal Home Loan Bank 4.25%, 10/10/08 243,879 300,000 Federal Home Loan Bank 4.43%, 4/7/08 294,739 250,000 Federal Home Loan Bank, 4.0%, 2/12/10 237,927 250,000 Federal Home Loan Bank, 4.25%, 2/16/10 240,360 200,000 Federal Home Loan Bank, 4.5%, 11/15/12 189,328 500,000 Federal Home Loan Bank, 4.75%, 12/10/10 485,227 100,000 Federal Home Loan Bank, 5.375%, 5/18/16 98,694 34,841 Federal Home Loan Corp., 6.5%, 2/1/32 35,180 28,642 Federal Home Loan Corp., 7.0%, 3/1/32 29,418 29,809 Federal Home Loan Corp., 7.0%, 4/1/32 30,548 300,000 Federal Home Loan Mortgage Corp., 5.0%, 1/1/36 280,388 210,000 Federal Home Loan Mortgage Corp., 5.0%, 3/1/36 196,135 209,461 Federal Home Loan Mortgage Corp., 5.5%, 12/1/34 201,717 223,200 Federal Home Loan Mortgage Corp., 5.5%, 9/1/34 214,947 64,095 Federal Home Loan Mortgage Corp., 6.0% 10/1/32 63,344 467,787 Federal Home Loan Mortgage Corp., 6.0%, 5/1/34 461,509 123,519 Federal Home Loan Mortgage Corp., 6.0%, 11/1/32 122,072 319,864 Federal Home Loan Mortgage Corp., 6.0%, 11/1/32 316,115 25,814 Federal Home Loan Mortgage Corp., 6.0%, 12/1/32 25,512 125,480 Federal Home Loan Mortgage Corp., 6.0%, 12/1/32 124,010 174,701 Federal Home Loan Mortgage Corp., 6.0%, 2/1/33 172,654 836,287 Federal Home Loan Mortgage Corp., 6.0%, 3/1/33 825,906 184,028 Federal Home Loan Mortgage Corp., 6.5% 4/1/32 185,758 48,346 Federal Home Loan Mortgage Corp., 6.5%, 1/1/29 48,869 84,665 Federal Home Loan Mortgage Corp., 6.5%, 10/1/31 85,490 60,129 Federal Home Loan Mortgage Corp., 6.5%, 3/1/11 60,769 30,461 Federal Home Loan Mortgage Corp., 6.5%, 3/1/29 30,794
The accompanying notes are an integral part of these financial statements. 89 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal Amount Value U.S. Government Agency Obligations (Cont.) $ 11,360 Federal Home Loan Mortgage Corp., 6.5%, 3/1/32 $ 11,467 27,373 Federal Home Loan Mortgage Corp., 6.5%, 4/1/31 27,640 62,428 Federal Home Loan Mortgage Corp., 6.5%, 7/1/32 63,014 16,412 Federal Home Loan Mortgage Corp., 7.0%, 2/1/31 16,819 2,653 Federal Home Loan Mortgage Corp., 7.0%, 4/1/30 2,718 1,361 Federal Home Loan Mortgage Corp., 7.0%, 7/1/31 1,395 5,090 Federal Home Loan Mortgage Corp., 7.0%, 9/1/31 5,217 29,942 Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 30,989 216,990 Federal National Mortgage Association, 4.5%, 4/1/19 205,362 104,783 Federal National Mortgage Association, 5.0%, 12/1/35 98,012 65,954 Federal National Mortgage Association, 5.0%, 3/1/09 64,565 197,643 Federal National Mortgage Association, 5.0%, 7/1/19 190,645 294,265 Federal National Mortgage Association, 5.5%, 11/1/23 286,494 329,863 Federal National Mortgage Association, 5.5%, 11/1/33 318,219 173,512 Federal National Mortgage Association, 5.5%, 12/1/34 167,101 65,839 Federal National Mortgage Association, 5.5%, 2/1/33 62,995 262,024 Federal National Mortgage Association, 5.5%, 3/1/18 257,687 195,772 Federal National Mortgage Association, 5.5%, 3/1/24 190,299 211,130 Federal National Mortgage Association, 5.5%, 3/1/34 203,329 313,429 Federal National Mortgage Association, 5.5%, 4/1/18 308,322 147,137 Federal National Mortgage Association, 5.5%, 6/1/33 145,270 289,416 Federal National Mortgage Association, 5.5%, 9/1/33 279,200 63,565 Federal National Mortgage Association, 6.0%, 6/1/33 62,759 38,601 Federal National Mortgage Association, 6.0%, 10/1/32 38,136 61,631 Federal National Mortgage Association, 6.0%, 11/1/32 60,888 79,506 Federal National Mortgage Association, 6.0%, 11/1/32 78,548 211,205 Federal National Mortgage Association, 6.0%, 11/1/32 208,660 152,421 Federal National Mortgage Association, 6.0%, 12/1/11 152,516 30,245 Federal National Mortgage Association, 6.0%, 12/1/31 29,898 407,887 Federal National Mortgage Association, 6.0%, 3/1/33 402,972 99,030 Federal National Mortgage Association, 6.0%, 4/1/33 97,837 135,064 Federal National Mortgage Association, 6.0%, 7/1/34 133,204 275,000 Federal National Mortgage Association, 6.0%, 7/1/36 270,617 124,525 Federal National Mortgage Association, 6.0%, 9/1/34 122,810 250,000 Federal National Mortgage Association, 6.07%, 5/12/16 249,423 39,140 Federal National Mortgage Association, 6.5%, 1/1/29 39,539 65,385 Federal National Mortgage Association, 6.5%, 1/1/32 65,981 9,074 Federal National Mortgage Association, 6.5%, 10/1/31 9,157 47,294 Federal National Mortgage Association, 6.5%, 10/1/31 47,725 46,875 Federal National Mortgage Association, 6.5%, 11/1/28 47,356 26,935 Federal National Mortgage Association, 6.5%, 2/1/32 27,181 33,047 Federal National Mortgage Association, 6.5%, 3/1/32 33,369 82,029 Federal National Mortgage Association, 6.5%, 3/1/32 82,753 26,710 Federal National Mortgage Association, 6.5%, 3/1/32 26,953 75,431 Federal National Mortgage Association, 6.5%, 4/1/32 76,097 34,591 Federal National Mortgage Association, 6.5%, 7/1/21 35,008 63,181 Federal National Mortgage Association, 6.5%, 7/1/32 63,739 287,626 Federal National Mortgage Association, 6.5%, 7/1/34 289,312 57,583 Federal National Mortgage Association, 6.5%, 8/1/32 58,108
90 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal Amount Value U.S. Government Agency Obligations (Cont.) $ 146,524 Federal National Mortgage Association, 6.5%, 8/1/32 $ 147,817 45,697 Federal National Mortgage Association, 6.5%, 8/1/32 46,101 30,953 Federal National Mortgage Association, 6.5%, 9/1/32 31,226 7,573 Federal National Mortgage Association, 7.0%, 1/1/29 7,764 20,784 Federal National Mortgage Association, 7.0%, 1/1/32 21,296 3,875 Federal National Mortgage Association, 7.0%, 5/1/31 3,973 16,847 Federal National Mortgage Association, 7.0%, 7/1/31 17,262 24,162 Federal National Mortgage Association, 7.0%, 8/1/19 24,843 37,753 Federal National Mortgage Association, 7.0%, 9/1/18 38,818 106,191 Federal National Mortgage Association, 7.0%, 9/1/30 108,869 14,336 Federal National Mortgage Association, 7.5%, 2/1/31 14,852 35,665 Federal National Mortgage Association, 9.0%, 4/1/33 37,669 300,000 Freddie Mac, 5.25%, 11/15/12 290,859 256,046 Government National Mortgage Association, 4.5%, 4/15/20 243,935 299,529 Government National Mortgage Association, 4.5%, 5/20/36 271,846 424,354 Government National Mortgage Association, 4.5%, 6/15/34 390,068 201,139 Government National Mortgage Association, 4.5%, 6/15/34 184,888 340,210 Government National Mortgage Association, 4.5%, 8/15/33 312,966 143,772 Government National Mortgage Association, 5.0%, 1/20/20 139,097 90,908 Government National Mortgage Association, 5.0%, 10/15/20 88,228 190,865 Government National Mortgage Association, 5.0%, 11/20/19 184,717 173,359 Government National Mortgage Association, 5.0%, 2/15/20 168,249 203,737 Government National Mortgage Association, 5.0%, 3/15/34 193,050 163,418 Government National Mortgage Association, 5.0%, 4/15/35 154,711 254,149 Government National Mortgage Association, 5.0%, 7/15/17 246,812 165,037 Government National Mortgage Association, 5.0%, 9/15/33 156,351 179,688 Government National Mortgage Association, 5.5%, 10/15/34 174,320 139,051 Government National Mortgage Association, 5.5%, 2/15/19 137,473 168,847 Government National Mortgage Association, 5.5%, 3/15/33 163,866 262,232 Government National Mortgage Association, 5.5%, 4/15/33 254,496 255,176 Government National Mortgage Association, 5.5%, 6/15/17 252,346 145,187 Government National Mortgage Association, 5.5%, 7/15/19 140,969 182,235 Government National Mortgage Association, 5.5%, 7/15/19 180,119 201,048 Government National Mortgage Association, 5.50%, 7/15/33 195,117 77,576 Government National Mortgage Association, 6.0%, 1/15/33 77,069 84,486 Government National Mortgage Association, 6.0%, 10/15/32 83,933 91,849 Government National Mortgage Association, 6.0%, 10/15/32 91,248 26,647 Government National Mortgage Association, 6.0%, 10/15/32 26,473 70,596 Government National Mortgage Association, 6.0%, 10/15/32 70,134 199,652 Government National Mortgage Association, 6.0%, 11/15/32 198,603 128,104 Government National Mortgage Association, 6.0%, 11/15/32 127,266 225,725 Government National Mortgage Association, 6.0%, 12/15/32 224,470 220,415 Government National Mortgage Association, 6.0%, 12/15/33 218,943 186,118 Government National Mortgage Association, 6.0%, 2/15/18 187,590 219,705 Government National Mortgage Association, 6.0%, 3/15/34 218,184 225,000 Government National Mortgage Association, 6.0%, 30 YR TBA 223,249 147,802 Government National Mortgage Association, 6.0%, 4/15/28 147,177 98,382 Government National Mortgage Association, 6.0%, 5/15/17 99,143 112,920 Government National Mortgage Association, 6.0%, 6/20/16 113,412 337,290 Government National Mortgage Association, 6.0%, 7/15/23 335,912
The accompanying notes are an integral part of these financial statements. 91 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
Principal Amount Value U.S. Government Agency Obligations (Cont.) $ 130,440 Government National Mortgage Association, 6.0%, 8/15/19 $ 131,437 127,058 Government National Mortgage Association, 6.0%, 8/15/34 126,299 157,972 Government National Mortgage Association, 6.0%, 8/15/34 156,878 105,080 Government National Mortgage Association, 6.0%, 9/15/32 104,392 104,677 Government National Mortgage Association, 6.0%, 9/15/34 103,952 238,068 Government National Mortgage Association, 6.0% 1/15/33 236,478 96,570 Government National Mortgage Association, 6.5%, 1/15/34 97,806 88,726 Government National Mortgage Association, 6.5%, 10/15/31 89,956 48,731 Government National Mortgage Association, 6.5%, 12/15/31 49,406 19,928 Government National Mortgage Association, 6.5%, 12/15/31 20,205 33,278 Government National Mortgage Association, 6.5%, 12/20/28 33,668 22,100 Government National Mortgage Association, 6.5%, 2/15/29 22,437 8,964 Government National Mortgage Association, 6.5%, 2/15/32 9,247 11,566 Government National Mortgage Association, 6.5%, 3/15/26 11,740 101,880 Government National Mortgage Association, 6.5%, 4/15/17 103,684 26,874 Government National Mortgage Association, 6.5%, 4/15/17 27,350 24,564 Government National Mortgage Association, 6.5%, 4/15/32 24,891 26,938 Government National Mortgage Association, 6.5%, 4/15/32 27,297 124,834 Government National Mortgage Association, 6.5%, 5/15/29 126,739 123,940 Government National Mortgage Association, 6.5%, 5/15/29 125,848 49,660 Government National Mortgage Association, 6.5%, 5/15/29 50,426 41,604 Government National Mortgage Association, 6.5%, 5/15/31 42,181 17,153 Government National Mortgage Association, 6.5%, 6/15/17 17,456 41,982 Government National Mortgage Association, 6.5%, 6/15/28 42,628 35,989 Government National Mortgage Association, 6.5%, 6/15/28 36,546 8,845 Government National Mortgage Association, 6.5%, 6/15/29 8,980 53,899 Government National Mortgage Association, 6.5%, 6/15/31 54,646 23,962 Government National Mortgage Association, 6.5%, 6/15/32 24,282 27,099 Government National Mortgage Association, 6.5%, 6/15/32 27,461 20,732 Government National Mortgage Association, 6.5%, 6/15/32 21,009 69,674 Government National Mortgage Association, 6.5%, 7/15/31 70,639 57,788 Government National Mortgage Association, 6.5%, 7/15/32 58,559 62,380 Government National Mortgage Association, 6.5%, 9/15/31 63,244 24,351 Government National Mortgage Association, 6.5%, 9/20/31 24,597 12,508 Government National Mortgage Association, 7.0%, 1/15/26 12,916 21,530 Government National Mortgage Association, 7.0%, 1/15/29 22,218 39,463 Government National Mortgage Association, 7.0%, 11/15/28 40,714 37,347 Government National Mortgage Association, 7.0%, 11/15/30 38,541 4,798 Government National Mortgage Association, 7.0%, 12/15/30 4,952 47,578 Government National Mortgage Association, 7.0%, 2/15/28 49,087 17,947 Government National Mortgage Association, 7.0%, 2/15/31 18,516 5,160 Government National Mortgage Association, 7.0%, 3/15/28 5,324 17,904 Government National Mortgage Association, 7.0%, 4/15/28 18,472 16,276 Government National Mortgage Association, 7.0%, 5/15/31 16,793 106,445 Government National Mortgage Association, 7.0%, 5/15/32 109,807 26,551 Government National Mortgage Association, 7.0%, 6/15/29 27,400 37,494 Government National Mortgage Association, 7.0%, 7/15/26 38,718 26,802 Government National Mortgage Association, 7.0%, 7/15/29 27,658 7,909 Government National Mortgage Association, 7.0%, 7/15/29 8,162 19,480 Government National Mortgage Association, 7.0%, 8/15/31 20,098
92 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal Amount Value U.S. Government Agency Obligations (Cont.) $ 13,546 Government National Mortgage Association, 7.0%, 9/15/27 $ 13,993 13,083 Government National Mortgage Association, 7.5%, 1/15/31 13,674 2,325 Government National Mortgage Association, 7.5%, 1/15/32 2,430 6,888 Government National Mortgage Association, 7.5%, 10/15/22 7,197 22,982 Government National Mortgage Association, 7.5%, 10/15/29 24,036 30,875 Government National Mortgage Association, 7.5%, 11/15/29 32,291 1,771 Government National Mortgage Association, 7.5%, 6/15/23 1,852 1,316 Government National Mortgage Association, 7.5%, 8/15/23 1,376 2 Government National Mortgage Association, 7.5%, 8/15/29 2 1,751 Government National Mortgage Association, 7.5%, 8/15/29 1,832 5,523 Government National Mortgage Association, 7.5%, 8/20/27 5,748 2,025 Government National Mortgage Association, 8.0%, 8/20/25 2,139 96,307 Government National Mortgage Association I, 6.0%, 2/15/29 95,771 293,283 Government National Mortgage Association II, 5.0%, 12/20/18 283,951 157,335 Government National Mortgage Association II, 5.5%, 11/20/34 151,996 322,566 Government National Mortgage Association II, 5.5%, 2/20/34 311,621 334,588 Government National Mortgage Association II, 5.5%, 7/20/19 329,660 170,917 Government National Mortgage Association II, 6.0%, 11/20/33 169,348 46,057 Government National Mortgage Association II, 6.0%, 12/20/18 46,278 118,218 Government National Mortgage Association II, 6.0%, 7/20/19 118,752 25,413 Government National Mortgage Association II, 6.5%, 8/20/28 25,708 12,071 Government National Mortgage Association II, 7.0%, 1/20/31 12,371 65,348 Government National Mortgage Association II, 7.0%, 2/20/29 66,987 34,120 Government National Mortgage Association II, 7.0%, 5/20/26 34,999 12,000 Tennessee Valley Authority, Floating Rate Note, 6/1/28 267,720 1,850,000 U.S. Treasury Bonds, 5.125%, 5/15/16 1,847,832 850,000 U.S. Treasury Bonds, 4.0%, 2/15/14 789,636 2,050,000 U.S. Treasury Bonds, 6.25%, 8/15/23 2,260,927 400,000 U.S. Treasury Bonds, 7.25%, 5/15/16 463,156 825,000 U.S. Treasury Notes, 4.0%, 11/15/12 775,436 870,000 U.S. Treasury Notes, 4.25%, 11/15/14 818,208 300,000 U.S. Treasury Notes, 4.25%, 8/15/15 280,699 100,000 U.S. Treasury Notes, 4.5%, 2/15/16 95,141 250,000 U.S. Treasury Notes, 4.5%, 11/15/15 238,125 475,000 U.S. Treasury Notes, 4.75%, 5/15/14 463,366 200,000 U.S. Treasury Notes, 5.0%, 2/15/11 199,506 1,150,000 U.S. Treasury Notes, 6.375%, 8/15/27 1,305,340 1,350,000 U.S. Treasury Notes, 6.5%, 2/15/10 1,410,487 207,130 U.S. Treasury Inflation Notes, 1.875%, 7/15/15 196,539 3,006,372 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 3,149,175 ----------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS $38,912,937 ----------- (Cost $ 40,065,748) TOTAL INVESTMENT IN SECURITIES - 98.0% $39,817,811 ----------- (Cost $41,006,505) OTHER ASSETS AND LIABILITIES - 2.0% $ 813,169 ----------- TOTAL NET ASSETS - 100.0% $40,630,980 ===========
The accompanying notes are an integral part of these financial statements. 93 Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) ================================================================================
Principal Amount Value COLLATERALIZED MORTGAGE OBLIGATIONS - 2.6% Banks - 2.6% Thrifts & Mortgage Finance - 2.5% $ 975,658 Federal Home Loan Mortgage, Corp., Multifamily VRD Certificate, Floating Rate Note, 1/15/42 $ 975,658 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $975,658) $ 975,658 ----------- CORPORATE BONDS - 40.5% Capital Goods - 5.5% Construction & Farm Machinery & Heavy Trucks - 4.2% 1,600,000 Caterpillar Financial Services, Floating Rate Note, 2/26/07 $ 1,600,849 ----------- Industrial Conglomerates - 1.3% 500,000 GE Capital Corp., Floating Rate Note, 6/15/07 $ 500,000 ----------- Total Capital Goods $ 2,100,849 ----------- Food & Drug Retailing - 2.4% Hypermarkets & Supercenters - 2.4% 900,000 Wal-Mart Stores, Floating Rate Note, 3/28/07 $ 899,732 ----------- Total Food & Drug Retailing $ 899,732 ----------- Pharmaceuticals & Biotechnology - 3.9% Pharmaceuticals - 3.9% 1,500,000 Abbott Laboratories, 5.625%, 7/1/06 $ 1,500,000 ----------- Total Pharmaceuticals & Biotechnology $ 1,500,000 ----------- Diversified Financials - 27.4% Consumer Finance - 5.9% 1,500,000 American Express Credit, Floating Rate Note, 9/19/06 $ 1,500,488 750,000 HSBC Finance Corp., Floating Rate Note, 5/10/07 750,250 ----------- $ 2,250,738 ----------- Principal Amount Value Investment Banking & Brokerage - 10.8% $ 500,000 Goldman Sachs Group Inc., Floating Rate Note, 3/30/07 $ 500,459 500,000 Goldman Sachs Group Inc., Floating Rate Note, 7/2/07 500,748 200,000 Goldman Sachs Group Inc., Floating Rate Note, 8/1/06 200,009 400,000 Lehman Brothers Holdings, Floating Rate Note, 4/20/07 400,386 1,000,000 Merrill Lynch & Co., Floating Rate Note, 7/11/07 1,000,000 1,500,000 Morgan Stanley Dean Witter, Floating Rate Note, 1/12/07 1,501,319 ----------- $ 4,102,921 ----------- Diversified Financial Services - 4.2% 800,000 Bank One Corp., Floating Rate Note, 8/11/06 $ 800,029 800,000 GE Capital Corp., Floating Rate Note, 7/9/07 800,000 ----------- $ 1,600,029 ----------- Specialized Finance - 6.4% 400,000 Citigroup Inc., Floating Rate Note, 2/15/07 $ 400,503 1,050,000 Citigroup Inc., Floating Rate Note, 1/12/07 1,050,428 1,000,000 Citigroup Inc., Floating Rate Note, 9/22/06 1,000,906 ----------- $ 2,451,837 ----------- Total Diversified Financials $10,405,525 ----------- Insurance - 1.3% Multi-Line Insurance - 1.3% 500,000 American General Finance, Floating Rate Note, 11/15/06 $ 500,298 ----------- Total Insurance $ 500,298 ----------- TOTAL CORPORATE BONDS (Cost $15,406,404) $15,406,404 ----------- U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.6% Banks - 2.6% Thrifts & Mortgage Finance - 2.6% 1,000,000 Freddie Mac, Floating Rate Note, 1/26/07 $ 1,000,000 ----------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $1,000,000) $ 1,000,000 -----------
94 The accompanying notes are an integral part of these financial statements. Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Principal Amount Value TEMPORARY CASH INVESTMENTS - 54.0% Commercial Paper - 54.0% $ 1,500,000 Abbey National Treasury, 4.92%, 7/19/06 $ 1,496,310 1,000,000 Bank of America Corp., 5.22%, 7/17/06 997,760 100,000 BNP Paribas Financial Inc., 5.04%, 7/13/06 99,832 1,000,000 BNP Paribas Financial Inc., 5.33%, 8/28/06 991,714 500,000 Citigroup Inc., 0%, 7/18/06 498,834 750,000 Depfa Bank Plc, 5.31%, 8/15/06 750,000 500,000 Dresner U.S. Finance, Inc., 5.05%, 7/7/06 499,579 1,000,000 Dresner U.S. Finance, Inc., 5.175%, 8/10/06 994,372 1,000,000 Fortis Banque Luxembourg, 5.02%, 7/5/06 999,442 300,000 HBOS Treasury Services PLC, 5.045%, 8/15/06 298,108 500,000 HBOS Treasury Services PLC, 5.08%, 8/8/06 497,319 700,000 HBOS Treasury Services PLC, 5.11%, 8/16/06 695,429 100,000 HBOS Treasury Services PLC, 5.4%, 9/12/06 98,905 1,000,000 ING Funding LLC, 5.015%, 7/12/06 998,468 500,000 ING Funding LLC, 5.05%, 8/10/06 497,195 400,000 JP Morgan Bank, 5.07%, 7/3/06 137,961 1,093,000 JP Morgan Bank, 5.07%, 7/6/06 342,758 500,000 Landesbank Baden-Wurttemberg, 5.38%, 9/19/2006 395,218 1,000,000 MetLife Funding Corp., 4.95%, 7/18/06 1,090,445 1,000,000 MetLife Funding Corp., 5.23%, 7/20/06 498,673 500,000 National Rural Utilities, 5.1%, 7/11/06 998,583 500,000 Nordea North America Inc., 5.04%, 8/11/06 994,260 500,000 Nordea North America, Inc. 5.29%, 9/11/06 494,795 500,000 Paccar Financial Corp., 5.05%, 8/17/06 496,704 500,000 Paccar Financial, 5.03%, 8/9/06 497,275 1,000,000 Paccar Financial, 5.04%, 8/15/06 496,850 1,200,000 Prudential Funding LLC, 5.02%, 7/10/06 499,372 138,000 Prudential Funding LLC, 5.04%, 7/7/06 999,160 343,000 Rabobank USA Financial Corp., 5.25%, 7/3/06 1,199,655 1,000,000 UBS Finance LLC, 4.99%, 8/22/06 992,662 ----------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $20,547,638) $20,547,638 ----------- Principal Amount Value TOTAL INVESTMENT IN SECURITIES - 99.7% (Cost $37,929,700) $37,929,700 ----------- OTHER ASSETS AND LIABILITIES - (0.3%) $ 112,486 ----------- TOTAL NET ASSETS - 100.0% $38,042,186 ===========
The accompanying notes are an integral part of these financial statements. 95 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 28.09 $ 20.48 $ 17.37 $ 11.03 $11.23 $ 12.10 ------- ------- ------- ------- ------ ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.18 $ 0.22 $ 0.22 $ 0.20 $ 0.06 $ 0.15 Net realized and unrealized gain (loss) on investments and foreign currency transactions 2.20 7.51 3.04 6.20 (0.19) (1.02) ------- ------- ------- ------- ------ ------- Net increase (decrease) from investment operations $ 2.38 $ 7.73 $ 3.26 $ 6.40 $(0.13) $ (0.87) Distributions to shareowners: Net investment income (0.16) (0.12) (0.15) (0.06) (0.07) -- Net realized gain (2.77) -- -- -- -- -- ------- ------- ------- ------- ------ ------- Net increase (decrease) in net asset value $ (0.55) $ 7.61 $ 3.11 $ 6.34 $(0.20) $ (0.87) ------- ------- ------- ------- ------ ------- Net asset value, end of period $ 27.54 $ 28.09 $ 20.48 $ 17.37 $11.03 $ 11.23 ======= ======= ======= ======= ====== ======= Total return* 9.14% 37.95% 18.93% 58.17% (1.20)% (7.19)% Ratio of net expenses to average net assets+ 1.57%** 1.75% 1.75% 1.75% 1.75% 1.66% Ratio of net investment income (loss) to average net assets+ 1.11%** 0.94% 1.12% 1.43% 0.63% 1.30% Portfolio turnover rate 49%** 74% 66% 79% 124% 175% Net assets, end of period (in thousands) $11,237 $11,205 $ 8,633 $ 8,399 $5,886 $ 6,896 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.57%** 1.77% 1.87% 2.51% 2.88% 3.83% Net investment income (loss) 1.11%** 0.92% 1.00% 0.67% (0.50)% (0.87)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.57%** 1.75% 1.75% 1.75% 1.75% 1.66% Net investment income (loss) 1.11%** 0.94% 1.12% 1.43% 0.63% 1.30%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 96 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 11.42 $ 10.64 $ 9.05 $ 6.82 $ 8.42 $ 11.07 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.24 $ 0.12 $ 0.11 $ 0.09 $ 0.05 $ 0.01 Net realized and unrealized gain (loss) on investments and foreign currency transactions 1.17 0.73 1.55 2.17 (1.65) (2.51) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 1.41 $ 0.85 $ 1.66 $ 2.26 $ (1.60) $ (2.50) Distributions to shareowners: Net income (0.08) (0.07) (0.07) (0.03) -- (0.15) Net realized gain -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 1.33 $ 0.78 $ 1.59 $ 2.23 $ (1.60) $ (2.65) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 12.75 $ 11.42 $ 10.64 $ 9.05 $ 6.82 $ 8.42 ======= ======= ======= ======= ======= ======= Total return* 12.41% 8.05% 18.48% 33.26% (19.00)% (22.66)% Ratio of net expenses to average net assets+ 1.53%** 1.50% 1.50% 1.50% 1.50% 1.50% Ratio of net investment income (loss) to average net assets+ 3.66%** 0.97% 0.92% 1.14% 0.68% 0.25% Portfolio turnover rate 20%** 95% 55% 52% 94% 73% Net assets, end of period (in thousands) $ 8,970 $ 8,714 $ 9,478 $ 9,330 $ 8,696 $12,417 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.58%** 1.76% 1.94% 2.52% 2.21% 1.99% Net investment income (loss) 3.61%** 0.71% 0.48% 0.12% 0.03% (0.24)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.53%** 1.50% 1.50% 1.50% 1.50% 1.50% Net investment income (loss) 3.66%** 0.97% 0.92% 1.14% 0.68% 0.25%
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 13.71 $ 11.88 $ 10.06 $ 7.79 $ 9.00 $ 11.83 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.12 $ 0.10 $ 0.05 $ 0.07 $ 0.03 $ 0.02 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.97 1.75 1.82 2.26 (1.23) (2.83) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 1.09 $ 1.85 $ 1.87 $ 2.33 $ (1.20) $ (2.81) Distributions to shareowners: Net investment income (0.07) (0.02) (0.05) (0.06) (0.01) (0.02) Net realized gain -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 1.02 $ 1.83 $ 1.82 $ 2.27 $ (1.21) $ (2.83) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 14.73 $ 13.71 $ 11.88 $ 10.06 $ 7.79 $ 9.00 ======= ======= ======= ======= ======= ======= Total return* 7.99% 15.58% 18.71% 30.06% (13.31)% (23.74)% Ratio of net expenses to average net assets+ 1.44%** 1.53% 1.75% 1.69% 1.46% 1.38% Ratio of net investment income (loss) to average net assets+ 1.48%** 0.70% 0.45% 0.68% 0.62% 0.21% Portfolio turnover rate 114%** 108% 129% 99% 31% 39% Net assets, end of period (in thousands) $20,848 $21,176 $22,859 $22,506 $21,271 $32,083 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.44%** 1.53% 1.75% 1.69% 1.46% 1.38% Net investment income 1.48%** 0.70% 0.45% 0.68% 0.62% 0.21% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.44%** 1.53% 1.75% 1.69% 1.46% 1.38% Net investment income 1.48%** 0.70% 0.45% 0.68% 0.62% 0.21%
** Annualized. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 97 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year 11/8/01(a) 6/30/06 Ended Ended Ended Ended to Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 16.19 $ 15.02 $ 12.50 $ 9.23 $ 10.87 $ 10.00 ------- ------- ------- ------- ------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.01 $ 0.05 $ (0.03) $ -- $ (0.01) $ 0.01 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.85 1.61 2.55 3.27 (1.63) 0.86 ------- ------- ------- ------- ------- -------- Net increase (decrease) from investment operations $ 0.86 $ 1.66 $ 2.52 $ 3.27 $ (1.64) $ 0.87 Distributions to Shareowners: Net investment income (0.02) -- -- -- (0.00)(b) -- Net realized gain (0.52) (0.49) -- -- (0.00)(b) -- ------- ------- ------- ------- ------- -------- Net increase (decrease) in net asset value $ 0.32 $ 1.17 $ 2.52 $ 3.27 $ (1.65) $ 0.87 ------- ------- ------- ------- ------- -------- Net asset value, end of period $ 16.51 $ 16.19 $ 15.02 $ 12.50 $ 9.23 $ 10.87 ======= ======= ======= ======= ======= ======== Total return* 5.43% 11.39% 20.16% 35.43% (15.08)% 8.70% Ratio of net expenses to average net assets+ 0.98%** 1.15% 1.25% 1.25% 1.25% 1.21%** Ratio of net investment income (loss) to average net assets+ 0.90%** 0.35% (0.21)% 0.03% (0.05)% 0.86%** Portfolio turnover rate 146%** 38% 36% 74% 50% 0% Net assets, end of period (in thousands) $59,141 $20,555 $17,993 $12,049 $ 6,603 $ 504 Ratios with no waiver of management fees and assumption of expenses by PIM: Net expenses 0.98%** 1.15% 1.30% 2.40% 2.76% 77.48%** Net investment income (loss) 0.90%** 0.35% (0.26)% (1.12)% (1.56)% (75.41)%** Ratios with waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.98%** 1.15% 1.25% 1.25% 1.25% 1.21%** Net investment income (loss) 0.90%** 0.35% (0.21)% 0.03% (0.05)% 0.86%**
(a) Shares of Pioneer Small Cap Value VCT Portfolio were first publicly offered on November 8, 2001. (b) Amount rounds to less than one cent per share * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 98 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 25.00 $ 24.67 $ 20.47 $ 14.94 $ 17.35 $ 17.79 -------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.11 $ 0.15 $ 0.08 $ 0.14 $ 0.07 $ 0.07 Net realized and unrealized gain (loss) on investments 0.01 1.75 4.41 5.45 (1.97) 1.06 -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ 0.12 $ 1.90 $ 4.49 $ 5.59 $ (1.90) $ 1.13 Distributions to shareowners: Net investment income (0.26) (0.08) (0.08) (0.06) (0.05) (0.10) Net realized gain (6.60) (1.49) (0.21) -- (0.46) (1.47) -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ (6.74) $ 0.33 $ 4.20 $ 5.53 $ (2.41) $ (0.44) -------- -------- -------- -------- -------- -------- Net asset value, end of year $ 18.26 $ 25.00 $ 24.67 $ 20.47 $ 14.94 $ 17.35 ======== ======== ======== ======== ======== ======== Total return* 1.18% 7.88% 22.12% 37.48% (11.21)% 6.49% Ratio of net expenses to average net assets+ 0.72%** 0.71% 0.72% 0.76% 0.80% 0.79% Ratio of net investment income (loss) to average net assets+ 0.89%** 0.58% 0.53% 0.86% 0.46% 0.45% Portfolio turnover rate 115%** 42% 55% 52% 68% 95% Net assets, end of period (in thousands) $273,839 $288,837 $303,138 $170,237 $120,687 $128,340 Ratio with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.72%** 0.71% 0.72% 0.76% 0.80% 0.79% Net investment income (loss) 0.89%** 0.58% 0.53% 0.86% 0.46% 0.45% Ratio with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.72%** 0.71% 0.72% 0.76% 0.80% 0.79% Net investment income (loss) 0.89%** 0.58% 0.53% 0.86% 0.46% 0.45%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 99 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 13.39 $ 13.04 $ 12.22 $ 9.75 $ 14.95 $ 18.39 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.02 $ 0.04 $ 0.09 $ (0.01) $ 0.00(a) $ 0.01 Net realized and unrealized gain (loss) on investments (0.38) 0.41 0.73 2.48 (5.19) (3.45) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ (0.36) $ 0.45 $ 0.82 $ 2.47 $ (5.19) $ (3.44) Distributions to shareowners: Net investment income (0.03) (0.10) -- (0.00)(a) (0.01) -- ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ (0.39) $ 0.35 $ 0.82 $ 2.47 $ (5.20) $ (3.44) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 13.00 $ 13.39 $ 13.04 $ 12.22 $ 9.75 $ 14.95 ======= ======= ======= ======= ======= ======= Total return* (2.71)% 3.48% 6.71% 25.35% (34.71)% (18.71)% Ratio of net expenses to average net assets+ 1.00%** 0.96% 0.96% 1.08% 0.97% 0.85% Ratio of net investment income (loss) to average net assets+ 0.31%** 0.19% 0.71% (0.05%) 0.01% 0.07% Portfolio turnover rate 102%** 79% 206% 58% 86% 111% Net assets, end of period (in thousands) $23,446 $26,986 $32,300 $35,750 $34,746 $72,456 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.00%** 0.96% 0.97% 1.08% 0.97% 0.85% Net investment income (loss) 0.31%** 0.19% 0.71% (0.05%) 0.01% 0.07% Ratios with waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.00%** 0.96% 0.96% 1.08% 0.97% 0.85% Net investment income (loss) 0.31%** 0.19% 0.71% (0.05%) 0.01% 0.07%
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 26.13 $ 24.30 $ 18.57 $ 14.47 $ 14.77 $ 14.42 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income $ 0.39 $ 0.43 $ 0.52 $ 0.74 $ 0.62 $ 0.68 Net realized and unrealized gain (loss) on investments 3.41 3.10 5.99 4.16 (0.23) 0.40 ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 3.80 $ 3.53 $ 6.51 $ 4.90 $ 0.39 $ 1.08 Distributions to shareowners: Net investment income (0.38) (0.39) (0.45) (0.64) (0.69) (0.56) Net realized gain (1.49) (1.31) (0.33) -- -- -- Tax return of capital -- -- -- (0.16) -- (0.17) ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 1.93 $ 1.83 $ 5.73 $ 4.10 $ (0.30) $ 0.35 ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 28.06 $ 26.13 $ 24.30 $ 18.57 $ 14.47 $ 14.77 ======= ======= ======= ======= ======= ======= Total return* 14.83% 15.13% 35.74% 34.75% (2.53)% 7.80% Ratio of net expenses to average net assets+ 0.89%** 0.94% 0.98% 1.03% 1.07% 1.16% Ratio of net investment income to average net assets+ 2.63%** 1.65% 2.41% 4.49% 4.76% 4.71% Portfolio turnover rate 18%** 12% 35% 20% 29% 34% Net assets, end of period (in thousands) $31,852 $32,086 $36,447 $31,891 $29,873 $33,026 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.89%** 0.94% 0.98% 1.03% 1.07% 1.16% Net investment income 2.63%** 1.65% 2.41% 4.49% 4.76% 4.71% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.89%** 0.94% 0.98% 1.03% 1.07% 1.16% Net investment income 2.63%** 1.65% 2.41% 4.49% 4.76% 4.71%
(a) Amount rounds to less than one cent per share. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 100 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 21.55 $ 20.57 $ 18.70 $ 15.28 $ 19.08 $ 22.67 -------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.15 $ 0.27 $ 0.24 $ 0.20 $ 0.19 $ 0.17 Net realized and unrealized gain (loss) on investments 0.95 0.99 1.85 3.41 (3.81) (2.57) -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ 1.10 $ 1.26 $ 2.09 $ 3.61 $ (3.62) (2.40) Distributions to shareowners: Net investment income (0.15) (0.28) (0.22) (0.19) (0.18) (0.17) Net realized gain -- -- -- -- -- (1.02) -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ 0.95 $ 0.98 $ 1.87 $ 3.42 $ (3.80) $ (3.59) -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 22.50 $ 21.55 $ 20.57 $ 18.70 $ 15.28 $ 19.08 ======== ======== ======== ======== ======== ======== Total return* 5.11% 6.17% 11.26% 23.76% 19.03% (10.85)% Ratio of net expenses to average net assets+ 0.70%** 0.70% 0.71% 0.76% 0.80% 0.74% Ratio of net investment income (loss) to average net assets+ 1.37%** 1.26% 1.26% 1.16% 1.09% 0.83% Portfolio turnover rate 9%** 23% 17% 11% 11% 7% Net assets, end of period (in thousands) $369,688 $382,973 $454,136 $154,839 $141,892 $199,160 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.70%** 0.70% 0.71% 0.76% 0.80% 0.74% Net investment income (loss) 1.37%** 1.26% 1.26% 1.16% 1.09% 0.83% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.70%** 0.70% 0.71% 0.76% 0.80% 0.74% Net investment income (loss) 1.37%** 1.26% 1.26% 1.16% 1.09% 0.83%
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 21.25 $ 20.58 $ 18.09 $ 15.11 $ 18.40 $ 21.28 -------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.28 $ 0.51 $ 0.44 $ 0.41 $ 0.42 $ 0.40 Net realized and unrealized gain (loss) on investments 1.53 0.66 2.49 2.96 (3.30) (1.86) -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ 1.81 $ 1.17 $ 2.93 $ 3.37 $ (2.88) $ (1.46) Distributions to shareowners: Net investment income (0.28) (0.50) (0.44) (0.39) (0.41) (0.36) Net realized gain (0.37) -- -- -- -- (1.06) -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ 1.16 $ 0.67 $ 2.49 $ 2.98 $ (3.29) $ (2.88) -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 22.41 $ 21.25 $ 20.58 $ 18.09 $ 15.11 $ 18.40 ======== ======= ======== ======== ======== ======== Total return* 8.62% 5.72% 16.39% 0.86% (15.82)% (6.97)% Ratio of net expenses to average net assets+ 0.69%** 0.71% 0.72% 0.78% 0.80% 0.75% Ratio of net investment income (loss) to average net assets+ 2.56%** 2.56% 2.40% 2.55% 2.48% 2.07% Portfolio turnover rate 28%** 22% 19% 12% 12% 13% Net assets, end of period (in thousands) $246,508 $232,249 $188,234 $155,634 $133,258 $164,019 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.69%** 0.71% 0.72% 0.78% 0.80% 0.75% Net investment income (loss) 2.56%** 2.56% 2.40% 2.55% 2.48% 2.07% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.69%** 0.71% 0.72% 0.78% 0.80% 0.75% Net investment income (loss) 2.56%** 2.56% 2.40% 2.55% 2.48% 2.07%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 101 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01(a) Net asset value, beginning of period $ 14.71 $ 14.40 $ 14.04 $ 12.27 $ 13.91 $ 14.60 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income $ 0.14 $ 0.25 $ 0.28 $ 0.23 $ 0.21 $ 0.34 Net realized and unrealized gain (loss) on investments (0.12) 0.33 0.39 1.80 (1.63) (0.67) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 0.02 $ 0.58 $ 0.67 $ 2.03 $ (1.42) $ (0.33) Distributions to shareowners: Net investment income (0.14) (0.27) (0.31) (0.26) (0.22) (0.36) Net realized gain -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ (0.12) $ 0.31 $ 0.36 $ 1.77 $ (1.64) $ (0.69) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 14.59 $ 14.71 $ 14.40 $ 14.04 $ 12.27 $ 13.91 ======= ======= ======= ======= ======= ======= Total return* 0.13% 4.08% 4.79% 16.71% (10.27)% (2.26)% Ratio of net expenses to average net assets+ 0.89%** 0.92% 0.90% 0.91% 0.95% 0.84% Ratio of net investment income to average net assets+ 1.81%** 1.66% 1.96% 1.75% 1.62% 2.42% Portfolio turnover rate 16%** 25% 30% 37% 179% 136% Net assets, end of period (in thousands) $25,522 $29,420 $35,312 $40,773 $42,849 $56,890 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.89%** 0.92% 0.90% 0.91% 0.95% 0.84% Net investment income 1.81%** 1.66% 1.96% 1.75% 1.62% 2.42% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.89%** 0.92% 0.90% 0.91% 0.95% 0.84% Net investment income 1.81%** 1.66% 1.96% 1.75% 1.62% 2.42%
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Year Year Year Year Year Ended 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 10.88 $ 11.67 $ 11.45 $ 9.27 $ 10.33 $ 9.82 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.31 $ 0.61 $ 0.62 $ 0.76 $ 0.92 $ 0.95 Net realized and unrealized gain (loss) on investments (0.15) (0.41) 0.27 2.18 (1.06) 0.62 ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 0.16 $ 0.20 $ 0.89 $ 2.94 $ (0.14) $ 1.57 Distributions to shareowners: Net investment income (0.31) (0.61) (0.62) (0.76) (0.92) (0.95) Net realized gain (0.15) (0.38) (0.05) -- -- (0.11) ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ (0.30) $ (0.79) $ 0.22 $ 2.18 $ (1.06) $ 0.51 ------- -------- ------- ------- ------- ------- Net asset value, end of period $ 10.58 $ 10.88 $ 11.67 $ 11.45 $ 9.27 $ 10.33 ======= ======= ======= ======= ======= ======= Total return* 1.52% 1.95% 8.03% 32.78% (1.42)% 16.60% Ratio of net expenses to average net assets+ 0.74%** 0.77% 0.78% 0.89% 1.02% 1.15% Ratio of net investment income (loss) to average net assets+ 5.71%** 5.52% 5.40% 7.22% 9.39% 9.15% Portfolio turnover rate 34%** 37% 42% 48% 42% 36% Net assets, end of period (in thousands) $61,948 $63,452 $70,890 $66,587 $41,111 $32,331 Ratios with no waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.74%** 0.77% 0.78% 0.89% 1.02% 1.28% Net investment income (loss) 5.71%** 5.52% 5.40% 7.22% 9.39% 9.02%
(a) The Portfolio began accreting discounts and amortizing premiums on debt securities. The effect of this change for the year ended December 31, 2001, was to decrease net investment income by $0.00, increase net realized and unrealized gain (loss) by $0.00 (both amounts round to less than one cent per share) and to decrease the ratio of net investment income to average net assets with waiver of management fees by PIM and reduction for fees paid indirectly. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 102 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 10.76 $ 11.26 $ 11.01 $ 9.67 $ 9.33 $ 9.43 ------- ------- ------- ------- ------- ------ Increase (decrease) from investment operations: Net investment income $ 0.28 $ 0.61 $ 0.60 $ 0.62 $ 0.65 $ 0.67 Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.16) (0.31) 0.47 1.38 0.32 (0.04) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 0.12 $ 0.30 $ 1.07 $ 2.00 $ 0.97 $ 0.63 Distributions to shareowners: Net investment income (0.31) (0.64) (0.66) (0.66) (0.63) (0.67) Net realized gain (0.05) (0.16) (0.16) -- -- (0.06) ------- ------ ------- ------- ------- ------- Net increase (decrease) in net asset value $ (0.24) $ (0.50) $ 0.25 $ 1.34 $ 0.34 $(0.10) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 10.52 $ 10.76 $ 11.26 $ 11.01 $ 9.67 $ 9.33 ======= ======= ======= ======= ======= ====== Total return* 1.16% 2.74% 10.25% 21.24% 10.72% 6.90% Ratio of net expenses to average net assets+ 0.87%** 0.89% 1.03% 1.25% 1.25% 1.25% Ratio of net investment income to average net assets+ 5.20%** 5.57% 5.52% 5.95% 6.75% 7.16% Portfolio turnover rate 52%** 46% 53% 68% 50% 55% Net assets, end of period (in thousands) $19,469 $20,662 $20,814 $19,312 $14,692 $7,479 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.87%** 0.89% 1.03% 1.25% 1.62% 2.44% Net investment income 5.20%** 5.57% 5.52% 5.95% 6.38% 5.97% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.87%** 0.89% 1.03% 1.25% 1.25% 1.25% Net investment income 5.20%** 5.57% 5.52% 5.95% 6.75% 7.16%
* Assumes initial investment at net asset value at the beginning of the period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of the period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 103 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01(a) Net asset value, beginning of period $ 9.84 $ 10.11 $ 10.35 $ 10.59 $ 10.06 $ 9.97 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.19 $ 0.38 $ 0.37 $ 0.35 $ 0.46 $ 0.52 Net realized and unrealized gain (loss) on investments (0.29) (0.18) (0.03) (0.16) 0.56 0.12 ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ (0.10) $ 0.20 $ 0.34 $ 0.19 $ 1.02 $ 0.64 Distributions to shareowners: Net investment income (0.23) (0.47) (0.58) (0.43) (0.49) (0.55) Net realized gain -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ (0.33) $ (0.27) $ (0.24) $ (0.24) $ 0.53 $ 0.09 ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 9.51 $ 9.84 $ 10.11 $ 10.35 $ 10.59 $ 10.06 ======= ======= ======= ======= ======= ======= Total return* (1.03)% 2.02% 3.42% 1.81% 10.32% 6.48% Ratio of net expenses to average net assets+ 0.75%** 0.82% 0.79% 0.78% 0.81% 0.83% Ratio of net investment income (loss) to average net assets+ 4.12%** 4.05% 3.74% 3.45% 4.39% 5.19% Portfolio turnover rate 49% 23% 37% 34% 54% 71% Net assets, end of period (in thousands) $22,590 $25,767 $32,342 $44,526 $69,551 $37,381 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.75%** 0.82% 0.79% 0.78% 0.81% 0.85% Net investment income (loss) 4.12%** 4.05% 3.74% 3.45% 4.39% 5.17% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.75%** 0.82% 0.79% 0.78% 0.81% 0.82% Net investment income (loss) 4.12%** 4.05% 3.74% 3.45% 4.39% 5.20%
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST ================================================================================ FINANCIAL HIGHLIGHTS ================================================================================
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.000 $ 1.000 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income $ 0.020 $ 0.025 $ 0.007 $ 0.006 $ 0.01 $ 0.03 Net realized and unrealized gain (loss) on investments -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 0.020 $ 0.025 $ 0.007 $ 0.006 $ 0.01 $ 0.03 Distributions to shareowners: Net investment income (0.020) (0.025) (0.007) (0.006) (0.01) (0.03) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= ======= Total return* 2.05% 2.47% 0.65% 0.56% 1.19% 3.39% Ratio of net expenses to average net assets+ 0.61%** 0.73% 0.74% 0.72% 0.78% 0.78% Ratio of net investment income to average net assets+ 4.08%** 2.40% 0.66% 0.58% 1.11% 3.16% Net assets, end of period (in thousands) $38,042 $33,216 $42,896 $34,736 $59,521 $49,545 Ratios with no waiver of fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.61%** 0.73% 0.74% 0.72% 0.78% 0.78% Net investment income 4.08%** 2.40% 0.66% 0.58% 1.11% 3.16% Ratios with waiver of fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.61%** 0.73% 0.74% 0.72% 0.78% 0.78% Net investment income 4.08%** 2.40% 0.66% 0.58% 1.11% 3.16%
(a) The Portfolio began accreting discounts and amortizing premiums on debt securities. The effect of this change for the year ended December 31, 2001, was to decrease net investment income by $0.00, increase net realized and unrealized gain (loss) by $0.00 (both amounts round to less than one cent per share) and to decrease the ratio of net investment income to average net assets with waiver of management fees by PIM and reduction for fees paid indirectly from 5.38% to 5.17%. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 104 The accompanying notes are an integral part of these financial statements. (This page has been left blank intentionally.) Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ STATEMENTS OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) ================================================================================
Pioneer Emerging Pioneer Markets Europe VCT Portfolio VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $1,841,466, $0, $729,516, $6,211,265, $0, $1,446,912 and $18,921,912, respectively) (Cost $41,380,403, $16,098,593, $24,076,514, $91,688,709, $348,879,994, $32,401,274 and $76,145,200, respectively) $ 58,053,110 $ 19,799,795 Cash 60,692 252,966 Futures collateral -- -- Foreign currencies, at value (Cost $86,276, $36, $40, $0, $0, $0 and $0, respectively) 86,806 36 Receivables -- Investment securities sold 845,683 268,416 Fund shares sold 61,490 102,579 Variation margin -- -- Dividends, interest and foreign taxes withheld 122,730 40,635 Forward foreign currency settlement contracts, net -- 1,884 Due from Pioneer Investment Management, Inc. -- -- Other 7,266 1,947 ------------ ------------ Total assets $ 59,237,777 $ 20,468,258 ------------ ------------ LIABILITIES: Payables -- Investment securities purchased $ 603,268 $ 335,790 Fund shares repurchased 137,647 2,991 Upon return of securities loaned 1,829,705 -- Forward foreign currency settlement contracts, net 3,372 -- Forward foreign currency portfolio hedge contracts, open -- net -- -- Reserve for repatriation taxes 36,643 -- Due to bank -- -- Due to affiliates 9,976 8,364 Accrued expenses 76,123 46,268 Other -- -- ------------ ------------ Total liabilities $ 2,696,734 $ 393,413 ------------ ------------ NET ASSETS: Paid-in capital $ 34,171,390 $ 19,926,514 Undistributed net investment income (loss) 83,178 353,175 Accumulated net realized gain (loss) 5,647,909 (3,907,755) Net unrealized gain (loss) on: Investments 16,636,064 3,701,202 Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 2,502 1,709 ------------ ------------ Total net assets $ 56,541,043 $ 20,074,845 ------------ ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 11,237,015 $ 8,970,304 Shares outstanding 408,029 703,576 ------------ ------------ Net asset value per share $ 27.54 $ 12.75 Class II: (No par value, unlimited number of shares authorized) Net assets $ 45,304,028 $ 11,104,541 Shares outstanding 1,659,941 887,007 ------------ ------------ Net asset value per share $ 27.29 $ 12.52
106 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Pioneer Pioneer Pioneer Pioneer Pioneer International Small Cap Mid Cap Growth Real Estate Value Value Value Shares Shares VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio $ 28,345,420 $ 98,140,283 $ 370,038,605 $ 31,586,851 $ 121,258,236 518,610 26,127 -- -- 1,226,876 -- -- -- -- -- 40 -- -- -- -- -- 4,833 5,261,104 1,235,287 295,747 19,362 250,498 134,741 -- 69,653 -- 25,250 -- -- -- 45,937 137,978 386,844 51,596 369,768 -- -- -- -- -- -- 3,102 -- -- -- 3,660 9,564 61,331 3,774 5,905 ------------ ------------ ------------- ------------- ------------- $ 28,933,029 $ 98,597,635 $ 375,882,625 $ 32,877,508 $ 123,226,185 ------------ ------------ ------------- ------------- ------------- $ -- $ 40,105 $ 7,210,113 $ 1,188,348 $ 42,070 944 64,060 425,989 52,196 52,917 743,621 6,454,751 -- 1,519,655 19,238,901 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 180,277 169,467 -- 9,661 2,167 22,470 8,400 10,706 55,257 138,132 106,738 26,311 40,178 -- -- -- -- -- ------------ ------------ ------------- ------------- ------------- $ 809,483 $ 6,699,215 $ 7,945,587 $ 2,964,377 $ 19,384,772 ------------ ------------ ------------- ------------- ------------- $ 30,364,401 $ 68,936,874 $ 322,562,891 $ 66,458,982 $ 53,200,452 201,886 206,359 1,554,166 39,631 229,457 (6,711,987) 16,211,745 22,661,370 (35,771,059) 5,298,468 4,268,906 6,451,574 21,158,611 (814,423) 45,113,036 -- 91,868 -- -- -- 340 -- -- -- -- ------------ ------------ ------------- ------------- ------------- $ 28,123,546 $ 91,898,420 $ 367,937,038 $ 29,913,131 $ 103,841,413 ------------ ------------ ------------- ------------- ------------- $ 20,848,150 $ 59,140,617 $ 273,838,888 $ 23,445,764 $ 31,851,653 1,414,874 3,582,110 14,995,239 1,804,084 1,135,310 ------------ ------------ ------------- ------------- ------------- $ 14.73 $ 16.51 $ 18.26 $ 13.00 $ 28.06 $ 7,275,396 $ 32,757,803 $ 94,098,150 $ 6,467,367 $ 71,989,760 496,375 1,998,916 5,165,326 504,366 2,570,361 ------------ ------------ ------------- ------------- ------------- $ 14.66 $ 16.39 $ 18.22 $ 12.82 $ 28.01
The accompanying notes are an integral part of these financial statements. 107 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ STATEMENTS OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) (continued) ================================================================================
Pioneer Pioneer Equity Fund Income VCT Portfolio VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $0, $13,985,400, $1,002,317, $1,596,158, $906,253, $0 and $0, respectively) (Cost $387,981,138, $325,040,626, $36,078,075, $107,286,117, $60,968,533, $41,006,505 and $37,929,700, respectively) $ 502,564,707 $ 393,536,725 Cash -- -- Futures collateral -- -- Foreign currencies, at value (cost $0, $0, $0, $0, $730,020, $0 and $0, respectively) -- -- Receivables -- Investment securities sold 271,151 37,746 Fund shares sold 9,378,559 217,641 Dividends, interest and foreign taxes withheld 598,463 736,988 Forward foreign currency settlement contracts, net -- -- Forward foreign currency portfolio hedge contracts, open -- net -- -- Due from Pioneer Investment Management, Inc. -- -- Other 18,273 12,514 ------------- ------------- Total assets $ 512,831,153 $ 394,541,614 ------------- ------------- LIABILITIES: Payables -- Investment securities purchased $ 835,823 $ -- Fund shares repurchased 652,335 1,448,052 Dividends -- -- Upon return for securities loaned -- 14,278,681 Forward foreign currency settlement contracts, net -- -- Forward foreign currency portfolio hedge contracts, open -- net -- -- Due to bank 299,613 152,838 Due to affiliates 16,409 16,432 Accrued expenses 94,767 68,187 Other -- -- ------------- ------------- Total liabilities $ 1,898,947 $ 15,964,190 ------------- ------------- NET ASSETS: Paid-in capital $ 425,701,652 $ 294,876,155 Undistributed net investment income (loss) 117,633 1,866,096 Accumulated net realized gain (loss) (29,470,697) 13,339,074 Net unrealized gain (loss) on: Investments 114,583,569 68,496,099 Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 49 -- ------------- ------------- Total net assets $ 510,932,206 $ 378,577,424 ------------- ------------- NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 369,688,116 $ 246,508,491 Shares outstanding 16,429,291 10,998,771 ------------- ------------- Net asset value per share $ 22.50 $ 22.41 Class II: (No par value, unlimited number of shares authorized) Net assets $ 141,244,090 $ 132,068,933 Shares outstanding 6,291,688 5,859,143 ------------- ------------- Net asset value per share $ 22.45 $ 22.54
108 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Pioneer Pioneer Pioneer Pioneer Pioneer High Strategic America Money Balanced Yield Income Income Market VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio $ 39,505,313 $105,689,518 $60,391,062 $ 39,817,811 $37,929,700 -- 711,034 1,675,991 643,506 74,120 -- -- -- -- -- -- -- 753,343 -- -- 500,963 944,726 4,086 454,790 -- 142,062 35,217 50,126 1,476 -- 138,464 1,334,645 787,740 349,458 130,596 -- -- -- -- -- 2,778 -- -- -- -- -- -- -- -- -- 3,553 6,303 4,177 1,511 3,612 ------------ ------------ ----------- ------------ ----------- $ 40,293,133 $108,721,443 $63,666,525 $ 41,268,552 $38,138,028 ------------ ------------ ----------- ------------ ----------- $ 343,755 $ -- $ -- $ 493,391 $ -- 80,310 120,084 4,322 76,733 70,154 -- -- 4,651 -- 1,479 1,028,510 1,695,184 941,101 -- -- -- -- 16,543 -- -- -- -- 23,367 -- -- 17,559 -- -- -- -- 8,591 10,019 9,602 8,605 4,767 48,949 44,758 49,911 58,843 19,442 -- -- -- -- -- ------------ ------------ ----------- ------------ ----------- $ 1,527,674 $ 1,870,045 $ 1,049,497 $ 637,572 $ 95,842 ------------ ------------ ----------- ------------ ----------- $ 38,744,584 $108,601,819 $62,510,593 $ 43,749,823 $38,045,036 (12,371) 31,588 193,339 (458,405) 124 (3,396,735) (185,410) 502,914 (1,471,744) (2,974) -- -- 3,427,238 (1,596,599) (577,471) (1,188,694) -- -- -- -- -- -- 2,743 -- (12,347) -- -- ------------ ------------ ----------- ------------ ----------- $ 38,765,459 $106,851,398 $62,617,028 $ 40,630,980 $38,042,186 ------------ ------------ ----------- ------------ ----------- $ 25,522,157 $ 61,947,521 $19,468,874 $ 22,589,980 $38,042,186 1,749,566 5,856,696 1,850,367 2,375,632 38,049,402 ------------ ------------ ----------- ------------ ----------- $ 14.59 $ 10.58 $ 10.52 $ 9.51 $ 1.00 $ 13,243,302 $ 44,903,878 $43,148,154 $ 18,041,000 $ -- 910,098 4,246,731 4,100,763 1,894,401 -- ------------ ------------ ----------- ------------ ----------- $ 14.55 $ 10.57 $ 10.52 $ 9.52 $ --
The accompanying notes are an integral part of these financial statements. 109 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ STATEMENTS OF OPERATIONS 6/30/06 (UNAUDITED) ================================================================================
Pioneer Pioneer Emerging Markets Europe VCT Portfolio VCT Portfolio Six Months Six Months Ended Ended 6/30/06 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $72,558, $68,353, $56,387, $0, $4,143, $1,892 and $6,237, respectively) $ 785,027 $ 516,174 Interest 13,259 3,352 Income on securities loaned, net 6,449 -- Other -- -- ------------ ---------- Total investment income $ 804,735 $ 519,526 ------------ ---------- EXPENSES: Management fees $ 346,428 $ 84,927 Transfer agent fees and expenses 4,996 4,920 Distribution fees (Class II) 59,681 13,598 Administrative reimbursements 9,470 9,698 Custodian fees 57,614 17,120 Professional fees 36,185 28,376 Printing expense 2,818 6,598 Fees and expenses of nonaffiliated trustees 2,542 923 Miscellaneous 5,641 5,381 ------------ ---------- Total expenses $ 525,375 $ 171,541 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- (5,304) Less fees paid indirectly -- -- ------------ ---------- Net expenses $ 525,375 $ 166,237 ------------ ---------- Net investment income (loss) $ 279,360 $ 353,289 ------------ ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments (net of foreign capital gain taxes of $30,901, $0, $0, $0, $0, $0 and $0, respectively) $ 5,740,092 $ 787,847 Redemption in kind -- -- Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (12,762) (1,296) ------------ ---------- $ 5,727,330 $ 786,551 ------------ ---------- Change in net unrealized gain or loss from: Investments (net of the change in reserve for repatriation taxes of $15,716, $0, $0, $0, $0, $0 and $0, respectively) $ (1,415,958) $1,142,972 Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (967) 1,865 ------------ ---------- $ (1,416,925) $1,144,837 ------------ ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ 4,310,405 $1,931,388 ============ ========== Net increase (decrease) in net assets resulting from operations $ 4,589,765 $2,284,677 ============ ==========
110 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Pioneer Pioneer Pioneer Pioneer Pioneer International Value Small Cap Value Mid Cap Value Growth Shares Real Estate Shares VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio Six Months Six Months Six Months Six Months Six Months Ended Ended Ended Ended Ended 6/30/06 6/30/06 6/30/06 6/30/06 6/30/06 $ 401,984 $ 328,598 $ 2,801,601 $ 208,529 $ 1,787,776 3,659 130,202 220,983 3,834 20,348 10,758 20,763 -- 480 10,145 -- -- -- -- -- ------------ ------------- ------------- ------------ ----------- $ 416,401 $ 479,563 $ 3,022,584 $ 212,843 $ 1,818,269 ------------ ------------- ------------- ------------ ----------- $ 120,195 $ 197,413 $ 1,223,963 $ 114,866 $ 412,565 5,011 1,483 4,577 5,007 4,996 8,308 31,324 115,590 8,674 88,416 9,536 8,805 55,072 9,558 9,698 40,746 17,163 11,251 12,820 7,208 19,579 23,576 19,514 14,032 17,406 3,748 11,330 37,440 5,837 -- 1,955 2,300 2,645 2,072 1,862 5,302 491 1,921 180 472 ------------ ------------- ------------- ------------ ----------- $ 214,380 $ 293,885 $ 1,471,973 $ 173,046 $ 542,623 -- -- -- -- -- -- -- (4,021) -- -- ------------ ------------- ------------- ------------ ----------- $ 214,380 $ 293,885 $ 1,467,952 $ 173,046 $ 542,623 ------------ ------------- ------------- ------------ ----------- $ 202,021 $ 185,678 $ 1,554,632 $ 39,797 $ 1,275,646 ------------ ------------- ------------- ------------ ----------- $ 3,182,264 $ 16,357,805 $ 27,674,699 $ 853,762 $ 5,583,655 -- 2,170,274 -- -- -- -- (6,512) -- -- -- (12,056) 165 -- -- -- ------------ ------------- ------------- ------------ ----------- $ 3,170,208 $ 18,521,732 $ 27,674,699 $ 853,762 $ 5,583,655 ------------ ------------- ------------- ------------ ----------- $ (1,263,381) $ (15,901,452) $ (24,698,742) $ (1,707,559) $ 7,249,324 -- 109,596 -- -- -- 834 -- -- -- -- ------------ ------------- ------------- ------------ ----------- $ (1,262,547) $ (15,791,856) $ (24,698,742) $ (1,707,559) $ 7,249,324 ------------ ------------- ------------- ------------ ----------- $ 1,907,661 $ 2,729,876 $ 2,975,957 $ (853,797) $12,832,979 ============ ============= ============= ============ =========== $ 2,109,682 $ 2,915,554 $ 4,530,589 $ (814,000) $14,108,625 ============ ============= ============= ============ ===========
The accompanying notes are an integral part of these financial statements. 111 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ STATEMENTS OF OPERATIONS 6/30/06 (UNAUDITED) (continued) ================================================================================
Pioneer Pioneer Fund Equity Income VCT Portfolio VCT Portfolio Six Months Six Months Ended Ended 6/30/06 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $64,753, $0, $39, $290, $0, $0 and $0, respectively) $ 5,097,295 $ 5,786,629 Interest 110,772 178,990 Income on securities loaned, net -- 2,659 Other -- -- ----------- ----------- Total investment income $ 5,208,067 $ 5,968,278 ----------- ----------- EXPENSES: Management fees $ 1,640,540 $ 1,191,418 Transfer agent fees and expenses 2,774 5,052 Distribution fees (Class II) 155,592 161,034 Administrative reimbursements 49,141 34,556 Custodian fees 21,099 21,619 Professional fees 17,706 13,706 Printing expense 29,920 51 Fees and expenses of nonaffiliated trustees 3,610 2,810 Miscellaneous 1,009 393 ----------- ----------- Total expenses $ 1,921,391 $ 1,430,639 Less fees paid indirectly -- (796) ----------- ----------- Net expenses $ 1,921,391 $ 1,429,843 ----------- ----------- Net investment income (loss) $ 3,286,676 $ 4,538,435 ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $10,710,235 $13,469,756 Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (19,335) -- ----------- ----------- $10,690,900 $13,469,756 ----------- ----------- Change in net unrealized gain or loss from: Investments $11,152,705 $12,301,600 Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 49 -- ----------- ----------- $11,152,754 $12,301,600 ----------- ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $21,843,654 $25,771,356 =========== =========== Net increase (decrease) in net assets resulting from operations $25,130,330 $30,309,791 =========== ===========
112 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Pioneer Pioneer Pioneer Pioneer Pioneer Balanced High Yield Strategic Income America Income Money Market VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio Six Months Six Months Six Months Six Months Six Months Ended Ended Ended Ended Ended 6/30/06 6/30/06 6/30/06 6/30/06 6/30/06 $ 160,982 $ 198,071 $ -- $ -- $ -- 388,016 3,429,052 1,832,489 1,009,616 831,342 1,683 2,251 805 -- -- -- -- -- -- -- ---------- ------------ ------------ ------------ -------- $ 550,681 $ 3,629,374 $ 1,833,294 $ 1,009,616 $831,342 ---------- ------------ ------------ ------------ -------- $ 132,865 $ 365,507 $ 195,783 $ 103,904 $ 70,806 4,863 4,858 5,001 4,996 961 16,241 60,958 51,007 22,339 -- 9,490 10,548 9,750 9,474 9,536 8,116 12,409 11,403 8,511 10,635 18,953 16,793 24,616 18,517 13,621 13 3,168 4,163 2,954 43 2,258 1,574 1,068 2,215 1,967 6,163 817 8,480 6,405 313 ---------- ------------ ------------ ------------ -------- $ 198,962 $ 476,632 $ 311,271 $ 179,315 $107,882 -- -- -- -- -- ---------- ------------ ------------ ------------ -------- $ 198,962 $ 476,632 $ 311,271 $ 179,315 $107,882 ---------- ------------ ------------ ------------ -------- $ 351,719 $ 3,152,742 $ 1,522,023 $ 830,301 $723,460 ---------- ------------ ------------ ------------ -------- $ 680,214 $ (177,537) $ 466,958 $ (127,147) $ -- -- -- -- -- -- (95) -- 77,651 -- -- ---------- ------------ ------------ ------------ -------- $ 680,119 $ (177,537) $ 544,609 $ (127,147) $ -- ---------- ------------ ------------ ------------ -------- $ (944,644) $ (1,391,350) $ (1,394,462) $ (1,136,024) $ (126) -- -- -- -- -- 2,743 -- (22,005) -- -- ---------- ------------ ------------ ------------ -------- $ (941,901) $ (1,391,350) $ (1,416,467) $ (1,136,024) $ (126) ---------- ------------ ------------ ------------ -------- $ (261,782) $ (1,568,887) $ (871,858) $ (1,263,171) $ (126) ========== ============ ============ ============ ======== $ 89,937 $ 1,583,855 $ 650,165 $ (432,870) $723,334 ========== ============ ============ ============ ========
The accompanying notes are an integral part of these financial statements. 113 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ STATEMENTS OF CHANGES IN NET ASSETS 6/30/06 ================================================================================
Pioneer Emerging Pioneer Markets VCT Portfolio Europe VCT Portfolio Six Months Six Months Ended Year Ended Year 6/30/06 Ended 6/30/06 Ended (unaudited) 12/31/05 (unaudited) 12/31/05 FROM OPERATIONS: Net investment income (loss) $ 279,360 $ 332,259 $ 353,289 $ 148,281 Net realized gain (loss) on investments, redemptions in kind, futures contracts and foreign currency transactions 5,727,330 7,305,703 786,551 3,108,967 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (1,416,925) 7,390,352 1,144,837 (1,857,317) ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations $ 4,589,765 $ 15,028,314 $ 2,284,677 $ 1,399,931 ------------- ------------- ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (59,203) $ (50,778) $ (58,839) $ (58,420) Class II (161,771) (161,235) (47,365) (44,828) Net realized gain Class I (1,033,768) -- -- -- Class II (4,159,777) -- -- -- ------------- ------------- ------------ ------------ Total distributions to shareowners $ (5,414,519) $ (212,013) $ (106,204) $ (103,248) ------------- ------------- ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 10,487,956 $ 13,210,315 $ 2,077,577 $ 3,090,347 Shares issued in reorganization -- -- -- -- Reinvestment of distributions 5,414,519 210,764 106,204 103,248 Cost of shares repurchased (13,768,240) (11,986,023) (2,959,113) (3,544,212) Redemptions in kind -- -- -- -- ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from Fund share transactions $ 2,134,235 $ 1,435,056 $ (775,332) $ (350,617) ------------- ------------- ------------ ------------ Net increase (decrease) in net assets $ 1,309,481 $ 16,251,357 $ 1,403,141 $ 946,066 ------------- ------------- ------------ ------------ NET ASSETS: Beginning of period $ 55,231,562 $ 38,980,205 $ 18,671,704 $ 17,725,638 ------------- ------------- ------------ ------------ End of period $ 56,541,043 $ 55,231,562 $ 20,074,845 $ 18,671,704 ============= ============= ============ ============ Undistributed net investment income, end of period $ 83,178 $ 24,792 $ 353,175 $ 106,090 ============= ============= ============ ============
114 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Pioneer International Pioneer Small Cap Pioneer Mid Cap Value VCT Portfolio Value VCT Portfolio Value VCT Portfolio Six Months Six Months Six Months Ended Year Ended Year Ended Year 6/30/06 Ended 6/30/06 Ended 6/30/06 Ended (unaudited) 12/31/05 (unaudited) 12/31/05 (unaudited) 12/31/05 $ 202,021 $ 163,925 $ 185,678 $ 92,250 $ 1,554,632 $ 2,876,590 3,170,208 4,186,631 18,521,732 3,025,018 27,674,699 146,233,723 (1,262,547) (617,934) (15,791,856) 1,010,721 (24,698,742) (98,298,212) ------------ ------------ ------------- ------------ ------------- -------------- $ 2,109,682 $ 3,732,622 $ 2,915,554 $ 4,127,989 $ 4,530,589 50,812,101 ------------ ------------ ------------- ------------ ------------- -------------- $ (100,557) $ (31,154) $ (73,422) $ -- $ (2,875,198) $ (980,182) (20,185) (3,084) (580) -- -- (1,186,576) -- -- (1,788,652) (593,880) (71,620,430) (18,901,870) -- -- (1,003,743) (497,417) (24,935,216) (33,992,323) ------------ ------------ ------------- ------------ ------------- -------------- $ (120,742) $ (34,238) $ (2,866,397) $ (1,091,297) $ (99,430,844) $ (55,060,951) ------------ ------------ ------------- ------------ ------------- -------------- $ 2,991,315 $ 3,244,454 $ 15,453,544 $ 20,346,152 $ 23,886,018 $ 138,080,446 -- -- 51,400,124 -- -- -- 120,741 34,238 2,866,397 -- 99,430,844 55,060,951 (3,879,174) (7,067,685) (8,332,855) (9,966,656) (37,533,546) (163,603,573) -- -- (11,792,154) -- -- (488,210,933) ------------ ------------ ------------- ------------ ------------- -------------- $ (767,118) $ (3,788,993) $ 49,595,056 $ 10,379,496 $ 85,783,316 $ (458,673,109) ------------ ------------ ------------- ------------ ------------- -------------- $ 1,221,822 $ (90,609) $ 49,644,213 $ 13,416,188 $ (9,116,939) $ (462,921,959) ------------ ------------ ------------- ------------ ------------- -------------- $ 26,901,724 $ 26,992,333 $ 42,254,207 $ 28,838,019 $ 377,053,977 $ 839,975,936 ------------ ------------ ------------- ------------ ------------- -------------- $ 28,123,546 $ 26,901,724 $ 91,898,420 $ 42,254,207 $ 367,937,038 $ 377,053,977 ============ ============ ============= ============ ============= ============== $ 201,886 $ 120,607 $ 206,359 $ 94,683 $ 1,554,166 $ 2,874,732 ============ ============ ============= ============ ============= ==============
The accompanying notes are an integral part of these financial statements. 115 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ STATEMENTS OF CHANGES IN NET ASSETS 6/30/06 (continued) ================================================================================
Pioneer Growth Pioneer Real Estate Shares VCT Portfolio Shares VCT Portfolio Six Months Six Months Ended Year Ended Year 6/30/06 Ended 6/30/06 Ended (unaudited) 12/31/05 (unaudited) 12/31/05 FROM OPERATIONS: Net investment income (loss) $ 39,797 $ 49,245 $ 1,275,646 $ 1,488,954 Net realized gain (loss) on investments and foreign currency transactions 853,762 3,211,502 5,583,655 6,859,537 Change in net unrealized gain or loss on investments and foreign currency transactions (1,707,559) (2,083,627) 7,249,324 5,415,473 ------------ ------------ ------------- ------------- Net increase (decrease) in net assets resulting from operations $ (814,000) $ 1,177,120 $ 14,108,625 $ 13,763,964 ------------ ------------ ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (49,224) $ (221,887) $ (420,758) $ (513,835) Class II -- (50,023) (836,959) (868,561) Net realized gain Class I -- -- (1,594,710) (1,720,481) Class II -- -- (3,624,498) (3,467,765) ------------ ------------ ------------- ------------- Total distributions to shareowners $ (49,224) $ (271,910) $ (6,476,925) $ (6,570,642) ------------ ------------ ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 605,124 $ 2,192,354 $ 4,325,603 $ 14,850,583 Class I shares issued in reorganization -- -- -- -- Reinvestment of distributions 49,224 271,910 6,476,926 6,570,642 Cost of shares repurchased (3,959,678) (9,337,142) (14,062,070) (27,391,461) Redemptions in kind -- -- -- -- ------------ ------------ ------------- ------------- Net increase (decrease) in net assets resulting from Fund share transactions $ (3,305,330) $ (6,872,878) $ (3,259,541) $ (5,970,236) ------------ ------------ ------------- ------------- Net increase (decrease) in net assets $ (4,168,554) $ (5,967,668) $ 4,372,159 $ 1,223,086 ------------ ------------ ------------- ------------- NET ASSETS: Beginning of period $ 34,081,685 $ 40,049,353 $ 99,469,254 $ 98,246,168 ------------ ------------ ------------- ------------- End of period $ 29,913,131 $ 34,081,685 $ 103,841,413 $ 99,469,254 ============ ============ ============= ============= Undistributed (distributions in excess of) net investment income, end of period $ 39,631 $ 49,058 $ 229,457 $ 211,528 ============ ============ ============= =============
116 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Pioneer Fund Pioneer Equity Pioneer VCT Portfolio Income VCT Portfolio Balanced VCT Portfolio Six Months Six Months Six Months Ended Year Ended Year Ended Year 6/30/06 Ended 6/30/06 Ended 6/30/06 Ended (unaudited) 12/31/05 (unaudited) 12/31/05 (unaudited) 12/31/05 $ 3,286,676 $ 6,406,915 $ 4,538,435 $ 8,063,117 $ 351,719 $ 704,175 10,690,900 46,679,070 13,469,756 19,415,048 680,119 1,339,268 11,152,754 (23,029,256) 12,301,600 (9,053,445) (941,901) (318,959) ------------- -------------- ------------- ------------- ------------ ------------ $ 25,130,330 $ 30,056,729 $ 30,309,791 $ 18,424,720 $ 89,937 $ 1,724,484 ------------- -------------- ------------- ------------- ------------ ------------ $ (2,525,809) $ (5,374,313) $ (3,001,872) $ (5,101,572) $ (253,793) $ (588,607) (670,506) (1,440,262) (1,421,557) (2,458,044) (105,572) (208,623) -- -- (4,037,203) -- -- -- -- -- (2,136,789) -- -- -- ------------- -------------- ------------- ------------- ------------ ------------ $ (3,196,315) $ (6,814,575) $ (10,597,421) $ (7,559,616) $ (359,365) $ (797,230) ------------- -------------- ------------- ------------- ------------ ------------ $ 43,018,367 $ 42,859,167 $ 23,815,875 $ 96,224,481 $ 1,651,171 $ 4,365,660 -- 53,856,933 -- -- -- -- 3,196,315 6,814,325 10,597,420 7,559,617 359,363 797,221 (56,846,033) (139,175,447) (35,255,571) (36,867,650) (5,055,963) (9,774,029) -- (75,731,419) -- -- -- -- ------------- -------------- ------------- ------------- ------------ ------------ $ (10,631,351) $ (111,376,441) $ (842,276) $ 66,916,448 $ (3,045,429) $ (4,611,148) ------------- -------------- ------------- ------------- ------------ ------------ $ 11,302,664 $ (88,134,287) $ 18,870,094 $ 77,781,552 $ (3,314,857) $ (3,683,894) ------------- -------------- ------------- ------------- ------------ ------------ $ 499,629,542 $ 587,763,829 $ 359,707,330 $ 281,925,778 $ 42,080,316 $ 45,764,210 ------------- -------------- ------------- ------------- ------------ ------------ $ 510,932,206 $ 499,629,542 $ 378,577,424 $ 359,707,330 $ 38,765,459 $ 42,080,316 ============= ============== ============= ============= ============ ============ $ 117,633 $ 27,272 $ 1,866,096 $ 1,751,090 $ (12,371) $ (4,725) ============= ============== ============= ============= ============ ============
The accompanying notes are an integral part of these financial statements. 117 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ STATEMENTS OF CHANGES IN NET ASSETS 6/30/06 (continued) ================================================================================
Pioneer High Yield Pioneer Strategic VCT Portfolio Income VCT Portfolio Six Months Six Months Ended Year Ended Year 6/30/06 Ended 6/30/06 Ended (unaudited) 12/31/05 (unaudited) 12/31/05 FROM OPERATIONS: Net investment income (loss) $ 3,152,742 $ 6,046,966 $ 1,522,023 $ 2,985,351 Net realized gain (loss) on investments and foreign currency transactions (177,537) 1,530,055 544,609 511,506 Change in net unrealized gain or loss on investments and foreign currency transactions (1,391,350) (5,535,598) (1,416,467) (2,035,611) ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations $ 1,583,855 $ 2,041,423 $ 650,165 $ 1,461,246 ------------- ------------- ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (1,828,845) $ (3,563,099) $ (568,788) $ (1,227,712) Class II (1,352,174) (2,466,908) (1,157,399) (1,916,310) Net realized gain Class I (896,053) (2,147,727) (95,758) (308,227) Class II (641,246) (1,587,624) (211,483) (487,951) ------------- ------------- ------------ ------------ Total distributions to shareowners $ (4,718,318) $ (9,765,358) $ (2,033,428) $ (3,940,200) ------------- ------------- ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 23,639,803 $ 43,512,782 $ 6,964,425 $ 19,663,891 Reinvestment of distributions 4,703,710 9,721,259 2,011,270 3,902,297 Cost of shares repurchased (28,978,600) (57,690,620) (5,682,815) (6,220,715) ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from Fund share transactions $ (635,087) $ (4,456,579) $ 3,292,880 $ 17,345,473 ------------- ------------- ------------ ------------ Net increase (decrease) in net assets $ (3,769,550) $ (12,180,514) $ 1,909,617 $ 14,866,519 ------------- ------------- ------------ ------------ NET ASSETS: Beginning of period $ 110,620,948 $ 122,801,462 $ 60,707,411 $ 45,840,892 ------------- ------------- ------------ ------------ End of period $ 106,851,398 $ 110,620,948 $ 62,617,028 $ 60,707,411 ============= ============= ============ ============ Undistributed (distributions in excess of) net investment income, end of period $ 31,588 $ 59,865 $ 193,339 $ 397,503 ============= ============= ============ ============
118 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
Pioneer America Pioneer Money Income VCT Portfolio Market VCT Portfolio Six Months Six Months Ended Year Ended Year 6/30/06 Ended 6/30/06 Ended (unaudited) 12/31/05 (unaudited) 12/31/05 $ 830,301 $ 1,818,811 $ 723,460 $ 942,592 (127,147) (8,670) -- 85 (1,136,024) (945,559) (126) 126 ------------ ------------- ------------ ------------- $ (432,870) $ 864,582 $ 723,334 $ 942,803 ------------ ------------- ------------ ------------- $ (563,165) $ (1,378,835) $ (723,669) $ (944,260) (403,021) (792,466) -- -- -- -- -- -- -- -- -- -- ------------ ------------- ------------ ------------- $ (966,186) $ (2,171,301) $ (723,669) $ (944,260) ------------ ------------- ------------ ------------- $ 2,842,982 $ 11,779,535 $ 12,972,512 $ 19,583,940 963,281 2,174,179 725,034 942,853 (8,894,397) (11,661,922) (8,871,120) (30,205,433) ------------ ------------- ------------ ------------- $ (5,088,134) $ 2,291,792 $ 4,826,426 $ (9,678,640) ------------ ------------- ------------ ------------- $ (6,487,190) $ 985,073 $ 4,826,091 $ (9,680,097) ------------ ------------- ------------ ------------- $ 47,118,170 $ 46,133,097 $ 33,216,095 $ 42,896,192 ------------ ------------- ------------ ------------- $ 40,630,980 $ 47,118,170 $ 38,042,186 $ 33,216,095 ============ ============= ============ ============= $ (458,405) $ (322,520) $ 124 $ 333 ============ ============= ============ =============
The accompanying notes are an integral part of these financial statements. 119 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) ================================================================================ 1. Organization and Significant Accounting Policies The Pioneer Variable Contracts Trust (the "Trust") is a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The financial statements of Value Portfolio, AmPac Growth Portfolio, Small and Mid Cap Growth Portfolio, Oak Ridge Large Cap Growth Portfolio, Growth Opportunities Portfolio, Bond Portfolio, Cullen Value Portfolio, Equity Opportunity Portfolio, Core Bond Portfolio, Global High Yield Portfolio, Ibbotson Aggressive Allocation Portfolio, Ibbotson Moderate Allocation Portfolio and Ibbotson Growth Allocation Portfolio and the Class II financial highlights of all the Portfolios are presented in separate books. Emerging Markets Portfolio, Europe Portfolio and International Value Portfolio seek long-term capital growth. Small Cap Value Portfolio, Mid Cap Value Portfolio and Growth Shares Portfolio seek capital appreciation. Real Estate Shares Portfolio pursues long-term capital growth and, secondarily, current income. Fund Portfolio seeks reasonable income and growth of capital. Equity Income Portfolio seeks current income and long-term capital growth. Balanced Portfolio seeks capital growth and current income. High Yield Portfolio seeks to maximize total return through a combination of income and capital appreciation. Strategic Income Portfolio seeks to produce a high level of current income. America Income Portfolio seeks a high level of current income as consistent with preservation of capital. Money Market Portfolio seeks current income consistent with preserving capital and providing liquidity. The Trust's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses and gains and losses on investments during the reporting periods. Actual results 120 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================ could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolios are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the NYSE. The value of such securities used in computing the net asset value of a Portfolio's shares is based on the last sale price on the principal exchange where they traded. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. The Portfolios also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the exchange. At June 30, 2006, there were no fair valued securities except as follows. All securities that trade in foreign markets whose closing prices are as of times prior to the close of the NYSE and that are held by Emerging Markets Portfolio, Europe Portfolio and International Value Portfolio are fair valued using vendor-supplied pricing updates for each security to the time of the close of the NYSE. The principal exchanges and markets for such securities have closing times prior to the close of the NYSE. However, the value of these securities may be influenced by changes in global markets occurring after the closing times of the local exchanges and markets up to the time the Portfolios determine their net asset values. Consequently, the Board of Trustees of the Trust has determined that the use of daily fair valuations as provided by a pricing service is appropriate for these Portfolios. The Portfolios may also take into consideration other significant events in determining the fair value of these securities. Thus, a Portfolio's securities valuations may differ from prices reported by the various local exchanges and markets. Temporary cash investments and securities held by any Portfolio are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Discounts and premiums on fixed income securities are accreted and amortized, respectively, on a yield-to-maturity basis and are included in interest income. Dividend and interest income from foreign securities are reported net of unrecoverable foreign taxes withheld at the applicable country rates. Gains and losses from sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Information regarding the Trust's principal investment risks is contained in the Trust's prospectus(es). Please refer to those documents when considering the Trust's risks. Because Real Estate Shares Portfolio invests a substantial portion of its assets in real estate investment trusts (REITs), the Portfolio may be subject to certain risks associated with direct investments in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and return of capital distributions may be made at any time. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code or its failure to maintain exemption from registration under the Investment Company Act of 1940. Emerging Markets, International Value and Europe Portfolios' investments in emerging markets or countries with limited or developing markets may subject these Portfolios to a greater degree of risk than in a developed market. Risks associated with 121 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================ these developing markets include political, social or economic factors and may affect the price of the Portfolios' investments and income generated by these investments, as well as the Portfolios' ability to repatriate such amounts. High Yield and Strategic Income Portfolios invest in below investment grade (high yield) debt securities and preferred stocks. Some of these high yield securities may be convertible into equity securities of the issuer. Debt securities rated below investment grade are commonly referred to as "junk bonds" and are considered speculative. These securities involve greater risk of loss, are subject to greater price volatility, and are less liquid, especially during periods of economic uncertainty or change, than higher rated debt securities. Small capitalization stocks, such as those in the Small Cap Value Portfolio while offering the potential for higher returns, may be subject to greater short-term price fluctuations than securities of larger companies. B. Futures Contracts The Portfolios may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolios are required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolios, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolios as unrealized gains or losses. When the contract is closed, the Portfolios realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk such as the changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolios' hedging and trading strategies and potentially result in a loss. As of June 30, 2006, open contracts are shown in the table below.
- ------------------------------------------------------------------------------------------------------------ Number of Contracts Settlement Unrealized Portfolio Type Long/(Short) Month Market Value Gain/(Loss) - ------------------------------------------------------------------------------------------------------------ Small Cap Value Portfolio Russell 2000 5 9/06 $1,828,750 $91,868 - ------------------------------------------------------------------------------------------------------------
C. Foreign Currency Translation The books and records of the Portfolios are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts Certain Portfolios are authorized to enter into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolios' financial statements. The Portfolios record realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar (see Note 8). 122 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================ E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolios may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the six months ended June 30, 2006, no such taxes were paid. In determining the daily net asset value, the Portfolios estimate the reserve for such taxes, if any, associated with investments in certain countries. Any estimated reserve for taxes on capital gains is based on the net unrealized appreciation on certain portfolio securities, the holding period of such securities and the related tax rates, tax loss carryforward (if applicable) and other such factors. As of June 30, 2006, the Portfolios had no reserves related to taxes on capital gains, except Emerging Markets Portfolio, which had $36,643 in reserve related to capital gains. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. A portion of the dividend income recorded by Real Estate Shares Portfolio is from distributions by publicly traded REITs, and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Trust as a reduction of the cost basis of the securities held, and those determined to be capital gains are reflected as such in the Statement of Operations. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, certain Portfolios had capital loss carryforwards and expirations as follows:
- --------------------------------------------------------------------------------------------------------- International Mid Cap Growth Expires in Europe Value Value Shares Fiscal Year Ending Portfolio Portfolio Portfolio Portfolio - --------------------------------------------------------------------------------------------------------- 2006 $ -- $ -- $ -- $ -- 2007 $ -- $ -- $ -- $ -- 2008 $ -- $ -- $ -- $ -- 2009 $ 1,921,644 $2,426,453 $1,330,134 $ 9,618,208 2010 $ 1,896,288 $5,309,516 $2,529,788 $19,245,183 2011 $ 783,043 $2,130,998 $ -- $ 7,319,241 2012 $ -- $ -- $ -- $ -- 2013 $ -- $ -- $ -- $ -- ------------------------------------------------------------------------------ Total $ 4,600,975 $9,866,967 $3,859,922 $36,182,632 ============================================================================== America Money Expires in Fund Balanced Income Market Fiscal Year Ending Portfolio Portfolio Portfolio Portfolio - --------------------- ----------- ---------- ---------- ----------- 2006 $ -- $ -- $ -- $ -- 2007 $ -- $ -- $ -- $ -- 2008 $ -- $ -- $ 382,424 $ -- 2009 $ -- $ -- $ -- $ -- 2010 $26,951,317 $1,409,746 $ -- $ 2,728 2011 $13,017,527 $2,590,145 $ 435,523 $ -- 2012 $ -- $ -- $ 171,643 $ 246 2013 $ -- $ -- $ 241,325 $ -- ------------------------------------------------------------------------------ Total $39,968,844 $3,999,891 $1,230,915 $ 2,974 ============================================================================== - ---------------------------------------------------------------------------------------------------------
123 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================ The following Portfolios elected to defer capital and/or currency losses recognized between November 1, 2005 and December 31, 2005 to their fiscal year ending December 31, 2006.
- -------------------------------------------------------------------------------- Portfolio Capital Losses Currency Losses - -------------------------------------------------------------------------------- Europe Portfolio $ 17,485 $-- America Income Portfolio $109,707 $-- Strategic Income Portfolio $ 40,713 $-- - --------------------------------------------------------------------------------
The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the distributions paid during the year ended December 31, 2005 and the components of distributable earnings (accumulated losses) as of December 31, 2005, on a tax basis. --------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Pioneer Pioneer Pioneer Pioneer International Small Cap Emerging Markets Europe Value Value VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio 2005 2005 2005 2005 - ------------------------------------------------------------------------------------------------------------------------------------ Distributions paid from: Ordinary Income $ 212,013 $ 103,248 $ 34,238 $ -- Long-Term capital gain -- -- -- 1,091,297 ------------------------------------------------------------------------ $ 212,013 $ 103,248 $ 34,238 $ 1,091,297 Return of Capital -- -- -- -- ------------------------------------------------------------------------ Total distributions $ 212,013 $ 103,248 $ 34,238 $ 1,091,297 ======================================================================== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 220,926 $ 106,090 $ 120,607 $ 646,863 Undistributed long-term gain/(Capital Loss carryforward) 5,193,430 (4,600,975) (9,866,967) 2,238,710 Post-October loss deferred -- (17,485) -- -- Unrealized appreciation (depreciation) 17,780,051 2,482,228 5,516,565 6,006,705 ------------------------------------------------------------------------ Total $23,194,407 $ (2,030,142) $(4,229,795) $ 8,892,278 ======================================================================== Pioneer Pioneer Pioneer Mid Cap Growth Real Estate Pioneer Value Shares Shares Fund VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio 2005 2005 2005 2005 - ------------------------------------------------------------------------------------------------------------------------------------ Distributions paid from: Ordinary Income $ 6,510,571 $ 271,910 $ 1,584,389 $ 6,814,575 Long-Term capital gain 48,550,380 -- 4,986,253 -- ------------------------------------------------------------------------ $ 55,060,951 $ 271,910 $ 6,570,462 $ 6,814,575 Return of Capital -- -- -- -- ------------------------------------------------------------------------ Total distributions $ 55,060,951 $ 271,910 $ 6,570,462 $ 6,814,575 ======================================================================== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 30,629,491 $ 49,058 $ -- $ 27,272 Capital loss carryforward from merger (3,859,922) -- -- (39,968,844) Undistributed long-term gain/(Capital loss carryforward) 68,794,908 (36,182,632) 5,283,368 -- REIT Dividend Payable -- -- 211,528 -- Unrealized appreciation (depreciation) 44,709,925 450,947 37,514,365 103,238,111 ------------------------------------------------------------------------ Total $140,274,402 $(35,682,627) $43,009,261 $63,296,539 ======================================================================== - ------------------------------------------------------------------------------------------------------------------------------------
124 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------ Pioneer Equity Pioneer Pioneer Pioneer Income Balanced High Yield Strategic Income VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio 2005 2005 2005 2005 - ------------------------------------------------------------------------------------------------------------------------------------ Distributions paid from: Ordinary Income $ 7,559,616 $ 797,097 $6,600,658 $3,166,871 Long-Term capital gain -- -- 3,164,700 773,329 ---------------------------------------------------------------------- $ 7,559,616 $ 797,097 $9,765,358 $3,940,200 Return of Capital -- -- -- -- ---------------------------------------------------------------------- Total distributions $ 7,559,616 $ 797,097 $9,765,358 $3,940,200 ====================================================================== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 203,918 $ -- $ 798,588 $ 573,117 Undistributed long-term gain/Capital loss carryforward 6,168,262 (3,999,891) 803,653 148,610 Post-October loss deferred -- -- -- (40,713) Unrealized appreciation (depreciation) 57,618,364 4,290,194 (212,035) 808,684 ---------------------------------------------------------------------- Total $63,990,544 $ 290,303 $1,390,206 $1,489,698 ====================================================================== Pioneer Pioneer America Income Money Market VCT Portfolio VCT Portfolio 2005 2005 - ------------------------------------------------------------------------------------------------------------------------------------ Distributions paid from: Ordinary Income $ 2,171,301 $ 944,260 Long-Term capital gain -- -- ---------------------------------------------------------------------- $ 2,171,301 $ 944,260 Return of Capital -- -- ---------------------------------------------------------------------- Total distributions $ 2,171,301 $ 944,260 ====================================================================== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 5,442 $ 333 Undistributed long-term gain/(Capital loss carryforward) (1,230,915) (2,974) Post-October loss deferred (109,707) -- Unrealized appreciation (depreciation) (384,607) 126 ---------------------------------------------------------------------- Total $(1,719,787) $ (2,515) ====================================================================== - ------------------------------------------------------------------------------------------------------------------------------------
For the fiscal year ending December 31, 2005, Emerging Markets Portfolio, Europe Portfolio and International Value Portfolio have elected to pass through foreign tax credits of $181,164, $46,274 and $58,710, respectively. The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, the recognition of unrealized gains or losses on certain futures contracts and the tax treatment of premium amortization. F. Portfolio Shares The Portfolios record sales and repurchases of their shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of share based on their respective percentage of the adjusted net assets at the beginning of the day. High Yield, Strategic Income, America Income and Money Market Portfolios declare 125 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================ as daily dividends substantially all of their respective net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by a Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. G. Securities Lending The Portfolios lend securities in their portfolios to certain broker-dealers or other institutional investors, with the Portfolios' custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolios also continue to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss on the fair value of the loaned securities that may occur during the term of the loan will be for the account of the Portfolios. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The amount of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolios have the right under the lending agreements to recover the securities on loan from the borrower on demand. The Portfolios invest cash collateral in the Securities Lending Investment Fund, which is sponsored by Brown Brothers Harriman & Co., the Portfolios' custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolios, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreements at the time of purchase. The collateral for all repurchase agreements are held in safekeeping in the customer-only account of the Trust's custodian, or subcustodians. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the Portfolios. Management fees are calculated daily at the following annual rates:
- -------------------------------------------------------------------------------- Management Fee as a Percentage of each Portfolio's Average Portfolio Daily Net Assets - -------------------------------------------------------------------------------- Emerging Markets Portfolio 1.15% Europe Portfolio 1.00% International Value Portfolio 1.00% Small Cap Value Portfolio 0.75% Mid Cap Value Portfolio 0.65% Growth Shares Portfolio 0.70% Real Estate Shares Portfolio 0.80% Fund Portfolio 0.65% Equity Income Portfolio 0.65% Balanced Portfolio 0.65% High Yield Portfolio 0.65% Strategic Income Portfolio 0.65% America Income Portfolio 0.55% Money Market Portfolio 0.50% - --------------------------------------------------------------------------------
126 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================ PIM has agreed not to impose a portion of its management fees and to assume other operating expenses for certain Portfolios through May 1, 2007 to the extent necessary to limit expenses of Class I shares to the following percentages of the Portfolios' average daily net assets attributable to Class I shares:
- -------------------------------------------------------------------------------- Expense Limitation as a Percentage of each Portfolio's Average Portfolio Daily Net Assets - -------------------------------------------------------------------------------- Mid Cap Value Portfolio 0.88% Fund Portfolio 0.80% Money Market Portfolio 0.90% - --------------------------------------------------------------------------------
The portion of the Portfolios' expenses attributable to Class II will be reduced only to the extent such expenses are reduced for Class I shares (or Class II shares). In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolios. At June 30, 2006, the following amounts were payable to PIM related to management fees, administrative fees and certain other services and are included in due to affiliates:
- -------------------------------------------------------------------------------- Portfolio Amount - -------------------------------------------------------------------------------- Emerging Markets Portfolio $ 1,980 Europe Portfolio 920 International Value Portfolio 943 Small Cap Value Portfolio 1,442 Mid Cap Value Portfolio 14,552 Growth Shares Portfolio 897 Real Estate Shares Portfolio 2,528 Fund Portfolio 11,776 Equity Income Portfolio 7,786 Balanced Portfolio 941 High Yield Portfolio 2,164 Strategic Income Portfolio 1,614 America Income Portfolio 790 Money Market Portfolio 416 - --------------------------------------------------------------------------------
3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. The following amounts of transfer agent fees payable to PIMSS are included in due to affiliates at June 30, 2006:
- -------------------------------------------------------------------------------- Portfolio Amount - -------------------------------------------------------------------------------- Emerging Markets Portfolio $7,692 Europe Portfolio 7,369 International Value Portfolio 8,669 Small Cap Value Portfolio 502 Mid Cap Value Portfolio 7,276 Growth Shares Portfolio 7,459 Real Estate Shares Portfolio 7,691 Fund Portfolio 3,729 Equity Income Portfolio 7,747 Balanced Portfolio 7,560 High Yield Portfolio 7,551 Strategic Income Portfolio 7,696 America Income Portfolio 7,692 Money Market Portfolio 4,351 - --------------------------------------------------------------------------------
127 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================ 4. Distribution Plans The Portfolios have adopted plans of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plans, each Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with each Portfolio's Class II shares. The following amounts of distribution fees payable to PFD are included in due to affiliates at June 30, 2006:
- -------------------------------------------------------------------------------- Portfolio Amount - -------------------------------------------------------------------------------- Emerging Markets Portfolio $304 Europe Portfolio 75 International Value Portfolio 49 Small Cap Value Portfolio 223 Mid Cap Value Portfolio 642 Growth Shares Portfolio 44 Real Estate Shares Portfolio 487 Fund Portfolio 904 Equity Income Portfolio 899 Balanced Portfolio 90 High Yield Portfolio 304 Strategic Income Portfolio 292 America Income Portfolio 123 - --------------------------------------------------------------------------------
5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:
- ------------------------------------------------------------------------------------------------------------ Gross Gross Net Appreciation/ Portfolio Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------------------------ Emerging Markets Portfolio $ 41,655,843 $ 17,606,129 $ (1,208,862) $ 16,397,267 Europe Portfolio $ 16,174,439 $ 4,031,428 $ (406,072) $ 3,625,356 International Value Portfolio $ 24,091,742 $ 4,835,999 $ (582,321) $ 4,253,678 Small Cap Value Portfolio $ 91,844,645 $ 10,071,511 $ (3,775,873) $ 6,295,638 Mid Cap Value Portfolio $350,027,408 $ 33,294,480 $ (13,283,283) $ 20,011,197 Growth Shares Portfolio $ 32,843,463 $ 1,327,536 $ (2,584,148) $ (1,256,612) Real Estate Shares Portfolio $ 76,427,953 $ 44,874,867 $ (44,584) $ 44,830,283 Fund Portfolio $388,173,891 $131,389,694 $ (16,998,878) $114,390,816 Equity Income Portfolio $323,616,761 $ 75,806,765 $ (5,886,801) $ 69,919,964 Balanced Portfolio $ 36,159,763 $ 4,686,107 $ (1,340,557) $ 3,345,550 High Yield Portfolio $107,292,903 $ 3,132,922 $ (4,736,307) $ (1,603,385) Strategic Income Portfolio $ 60,972,673 $ 1,120,768 $ (1,702,379) $ (581,611) America Income Portfolio $ 41,338,442 $ 78,166 $ (1,598,797) $ (1,520,631) Money Market Portfolio $ 37,929,700 $ -- $ -- $ -- - ------------------------------------------------------------------------------------------------------------
128 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================ 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were as follows:
- -------------------------------------------------------------------------------- Portfolio Purchases Sales - -------------------------------------------------------------------------------- Emerging Markets Portfolio $ 14,209,019 $ 17,047,023 Europe Portfolio $ 4,015,468 $ 4,480,689 International Value Portfolio $ 15,889,704 $ 17,170,894 Small Cap Value Portfolio $ 38,553,305 $ 50,592,666 Mid Cap Value Portfolio $210,947,409 $228,145,769 Growth Shares Portfolio $ 16,547,824 $ 19,750,398 Real Estate Shares Portfolio $ 9,304,012 $ 18,417,009 Fund Portfolio $ 21,306,387 $ 51,565,444 Equity Income Portfolio $ 49,579,685 $ 56,519,684 Balanced Portfolio $ 2,352,309 $ 4,858,625 High Yield Portfolio $ 18,419,965 $ 20,008,959 Strategic Income Portfolio $ 5,133,308 $ 9,346,181 America Income Portfolio $ -- $ -- Money Market Portfolio $292,629,694 $289,651,751 - --------------------------------------------------------------------------------
The cost of purchases and the proceeds from sales of U.S. Government obligations for the six months ended June 30, 2006, were as follows:
- -------------------------------------------------------------------------------- Portfolio Purchases Sales - -------------------------------------------------------------------------------- Balanced Portfolio $ 745,225 $ 1,000,186 Strategic Income Portfolio $12,786,100 $ 5,695,303 America Income Portfolio $ 5,484,201 $10,673,855 - --------------------------------------------------------------------------------
129 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================ 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ------------------------------------------------------------------------------------------------- '06 Shares '06 Amount '05 Shares '05 Amount (unaudited) (unaudited) - ------------------------------------------------------------------------------------------------- Emerging Markets Portfolio CLASS I: Shares sold 55,634 $ 1,782,641 57,112 $ 1,329,128 Reinvestment of distributions 42,233 1,092,971 2,300 49,529 Shares repurchased (88,778) (2,738,986) (82,002) (1,885,112) ------------------------------------------------------------ Net increase (decrease) 9,089 $ 136,626 (22,590) $ (506,455) ============================================================ CLASS II: Shares sold 275,162 $ 8,705,315 530,098 $ 11,881,187 Reinvestment of distributions 168,481 4,321,548 7,549 161,235 Shares repurchased (364,999) (11,029,254) (449,363) (10,100,911) ------------------------------------------------------------ Net increase 78,644 $ 1,997,609 88,284 $ 1,941,511 ============================================================ Europe Portfolio CLASS I: Shares sold 19,182 $ 242,185 21,878 $ 233,953 Reinvestment of distributions 4,791 58,839 5,591 58,420 Shares repurchased (83,616) (1,042,402) (155,613) (1,693,646) ------------------------------------------------------------ Net decrease (59,643) $ (741,378) (128,144) $ (1,401,273) ============================================================ CLASS II: Shares sold 148,729 $ 1,835,392 268,948 $ 2,856,394 Reinvestment of distributions 3,927 47,365 4,369 44,828 Shares repurchased (154,937) (1,916,711) (174,429) (1,850,566) ------------------------------------------------------------ Net increase (decrease) (2,281) $ (33,954) 98,888 $ 1,050,656 ============================================================ International Value Portfolio: CLASS I: Shares sold 56,236 $ 831,610 48,222 $ 576,930 Reinvestment of distributions 7,188 100,557 2,721 31,154 Shares repurchased (192,976) (2,841,013) (430,261) (5,229,863) ------------------------------------------------------------ Net decrease (129,552) $ (1,908,846) (379,318) $ (4,621,779) ============================================================ CLASS II: Shares sold 147,514 $ 2,159,705 218,007 $ 2,667,524 Reinvestment of distributions 1,451 20,184 270 3,084 Shares repurchased (72,693) (1,038,161) (147,285) (1,837,822) ------------------------------------------------------------ Net increase 76,272 $ 1,141,728 70,992 $ 832,786 ============================================================ Small Cap Value Portfolio CLASS I: Shares sold 245,412 $ 4,167,166 571,103 $ 8,553,972 Shares issued in reorganization 2,861,983 48,796,816 -- -- Redemptions in kind (654,874) (11,792,154) -- -- Reinvestment of distributions 116,744 1,862,074 40,427 589,019 Shares repurchased (256,798) (4,378,928) (539,585) (8,145,222) ------------------------------------------------------------ Net increase 2,312,467 $ 38,654,974 71,945 $ 997,769 ============================================================ CLASS II: Shares sold 665,015 $ 11,286,378 712,018 $ 10,705,770 Shares issued in reorganization 153,951 2,603,308 -- -- Reinvestment of distributions 63,445 1,004,323 34,350 497,391 Shares repurchased (233,745) (3,953,927) (121,596) (1,821,434) ------------------------------------------------------------ Net increase 648,666 $ 10,940,082 624,772 $ 9,381,727 ============================================================ - -------------------------------------------------------------------------------------------------
130 PIONEER VARIABLE CONTRACTS TRUST Pioneer Variable Contracts Trust ================================================================================ ================================================================================
- --------------------------------------------------------------------------------------------------------- '06 Shares '06 Amount '05 Shares '05 Amount (unaudited) (unaudited) - --------------------------------------------------------------------------------------------------------- Mid Cap Value Portfolio CLASS I: Shares sold 374,576 $ 9,587,662 2,037,703 $ 50,295,966 Reinvestment of distributions 4,182,798 74,495,628 821,233 19,882,052 Shares repurchased (1,115,637) (28,263,675) (2,727,151) (66,908,971) Redemptions in kind -- -- (868,079) (21,000,610) -------------------------------------------------------------------- Net increase (decrease) 3,441,737 $ 55,819,615 (736,294) $ (17,731,563) ==================================================================== CLASS II: Shares sold 570,095 $ 14,298,356 3,599,252 $ 87,784,480 Reinvestment of distributions 1,403,220 24,935,2165 1,468,235 35,178,899 Shares repurchased (377,034) (9,269,871) (3,965,242) (96,694,602) Redemptions in kind -- -- (19,499,464) (467,210,323) -------------------------------------------------------------------- Net increase (decrease) 1,596,281 $ 29,963,701 (18,397,219) $ (440,941,546) ==================================================================== Growth Shares Portfolio CLASS I: Shares sold 14,376 $ 195,725 34,054 $ 438,600 Reinvestment of distributions 3,819 49,224 17,362 221,887 Shares repurchased (229,888) (3,115,703) (512,773) (6,658,363) -------------------------------------------------------------------- Net decrease (211,693) $ (2,870,754) (461,357) $ (5,997,876) ==================================================================== CLASS II: Shares sold 30,827 $ 409,399 137,249 $ 1,753,754 Reinvestment of distributions -- -- 3,965 50,023 Shares repurchased (63,951) (843,975) (205,695) (2,678,779) -------------------------------------------------------------------- Net decrease (33,124) $ (434,576) (64,481) $ (875,002) ==================================================================== Real Estate Shares Portfolio CLASS I: Shares sold 33,257 $ 937,604 57,099 $ 1,401,143 Reinvestment of distributions 74,125 2,015,469 91,076 2,234,316 Shares repurchased (199,965) (5,670,285) (420,029) (10,198,782) -------------------------------------------------------------------- Net decrease (92,583) $ (2,717,212) (271,854) $ (6,563,323) ==================================================================== CLASS II: Shares sold 118,596 $ 3,387,999 558,332 $ 13,449,440 Reinvestment of distributions 164,596 4,461,457 176,725 4,336,326 Shares repurchased (296,023) (8,391,785) (699,655) (17,192,679) -------------------------------------------------------------------- Net increase (decrease) (12,831) $ (542,329) 35,402 $ 593,087 ==================================================================== Fund Portfolio CLASS I: Shares sold 540,777 $ 12,165,407 580,758 $ 11,975,172 Reinvestment of distributions 112,827 2,525,809 257,653 5,374,312 Shares repurchased (1,995,750) (44,772,169) (5,148,933) (106,238,103) -------------------------------------------------------------------- Net decrease (1,342,146) $ (30,080,953) (4,310,522) $ (88,888,619) ==================================================================== CLASS II: Shares sold 1,374,253 $ 30,852,960 1,500,748 $ 30,883,995 Shares issued in reorganization -- -- 2,567,061 53,856,933 Reinvestment of distributions 30,016 670,506 69,257 1,440,013 Shares repurchased (540,293) (12,073,864) (1,597,303) (32,937,344) Redemptions in kind -- -- (3,626,019) (75,731,419) -------------------------------------------------------------------- Net increase (decrease) 863,976 $ 19,449,602 (1,086,256) $ (22,487,822) ==================================================================== - ---------------------------------------------------------------------------------------------------------
131 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================
- --------------------------------------------------------------------------------------------------------- '06 Shares '06 Amount '05 Shares '05 Amount (unaudited) (unaudited) - --------------------------------------------------------------------------------------------------------- Equity Income Portfolio CLASS I: Shares sold 561,352 $ 12,533,920 2,853,636 $ 59,389,539 Reinvestment of distributions 320,294 7,039,074 242,794 5,101,573 Shares repurchased (810,119) (17,986,672) (1,317,139) (27,494,268) -------------------------------------------------------------------- Net increase 71,527 $ 1,586,322 1,779,291 $ 36,996,844 ==================================================================== CLASS II: Shares sold 503,869 $ 11,281,955 1,763,038 $ 36,834,942 Reinvestment of distributions 161,060 3,558,346 116,340 2,458,044 Shares repurchased (770,080) (17,268,899) (444,619) (9,373,382) -------------------------------------------------------------------- Net increase (decrease) (105,151) $ (2,428,598) 1,434,759 $ 29,919,604 ==================================================================== Balanced Portfolio CLASS I: Shares sold 13,004 $ 191,534 30,803 $ 441,468 Reinvestment of distributions 17,277 253,793 40,641 588,607 Shares repurchased (280,761) (4,188,699) (522,797) (7,567,111) -------------------------------------------------------------------- Net decrease (250,480) $ (3,743,372) (451,353) $ (6,537,036) ==================================================================== CLASS II: Shares sold 98,246 $ 1,459,637 272,986 $ 3,924,192 Reinvestment of distributions 7,213 105,570 14,431 208,614 Shares repurchased (58,191) (867,264) (151,515) (2,206,918) -------------------------------------------------------------------- Net increase 47,268 $ 697,943 135,902 $ 1,925,888 ==================================================================== High Yield Portfolio CLASS I: Shares sold 839,034 $ 9,137,961 1,902,148 $ 21,181,455 Reinvestment of distributions 252,418 2,710,344 514,993 5,666,754 Shares repurchased (1,066,068) (11,559,180) (2,659,638) (29,739,088) -------------------------------------------------------------------- Net increase (decrease) 25,384 $ 289,125 (242,497) $ (2,890,879) ==================================================================== CLASS II: Shares sold 1,328,901 $ 14,501,842 2,014,754 $ 22,331,327 Reinvestment of distributions 185,574 1,993,366 368,486 4,054,505 Shares repurchased (1,602,920) (17,419,420) (2,495,978) (27,951,532) -------------------------------------------------------------------- Net decrease (88,445) $ (924,212) (112,738) $ (1,565,700) ==================================================================== Strategic Income Portfolio CLASS I: Shares sold 139,804 $ 1,499,060 299,475 $ 3,285,765 Reinvestment of distributions 60,283 642,387 136,735 1,498,145 Shares repurchased (270,006) (2,903,452) (364,351) (3,995,330) -------------------------------------------------------------------- Net increase (decrease) (69,919) $ (762,005) 71,859 $ 788,580 ==================================================================== CLASS II: Shares sold 509,569 $ 5,465,365 1,483,721 $ 16,378,126 Reinvestment of distributions 128,525 1,368,883 219,709 2,404,152 Shares repurchased (258,667) (2,779,363) (204,670) (2,225,385) -------------------------------------------------------------------- Net increase 379,427 $ 4,054,885 1,498,760 $ 16,556,893 ==================================================================== - ---------------------------------------------------------------------------------------------------------
132 PIONEER VARIABLE CONTRACTS TRUST Pioneer Variable Contracts Trust ================================================================================ ================================================================================
- --------------------------------------------------------------------------------------------------------- '06 Shares '06 Amount '05 Shares '05 Amount (unaudited) (unaudited) - --------------------------------------------------------------------------------------------------------- America Income Portfolio CLASS I: Shares sold 78,094 $ 751,072 116,997 $ 1,169,565 Reinvestment of distributions 58,136 560,266 138,561 1,381,733 Shares repurchased (379,934) (3,682,011) (836,177) (8,331,104) -------------------------------------------------------------------- Net decrease (243,704) $ (2,370,673) (580,619) $ (5,779,806) ==================================================================== CLASS II: Shares sold 216,051 $ 2,091,910 1,061,522 $ 10,609,970 Reinvestment of distributions 41,773 403,015 79,492 792,446 Shares repurchased (530,616) (5,212,386) (336,194) (3,330,818) -------------------------------------------------------------------- Net increase (decrease) (272,792) $ (2,717,461) 804,820 $ 8,071,598 ==================================================================== Money Market Portfolio CLASS I: Shares sold 12,972,512 $ 12,972,512 19,584,349 $ 19,583,940 Reinvestment of distributions 725,034 725,034 942,853 942,853 Shares repurchased (8,871,120) (8,871,120) (30,205,433) (30,205,433) -------------------------------------------------------------------- Net increase (decrease) 4,826,426 $ 4,826,426 (9,678,231) $ (9,678,640) ==================================================================== - ---------------------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts During the six months ended June 30, 2006, certain Portfolios had entered into various contracts that obligate the Portfolios to deliver currencies at specified future dates. At the maturity of a contract, the Portfolios must make delivery of the foreign currency. Alternatively, prior to the settlement date of a portfolio hedge, the Portfolio may close out such contracts by entering into an offsetting hedge contract. As of June 30, 2006, the Portfolios' open portfolio hedges were as follows: - --------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------- Contracts to In Exchange Settlement Net Portfolio Deliver For Date Value Unrealized Gain (Loss) - ------------------------------------------------------------------------------------------------------------------------------- Strategic Income Portfolio AUD (925,000) $ (677,757) 7/31/06 $ (687,440) $ (9,683) Strategic Income Portfolio CAD (278,225) (250,427) 7/14/06 (249,112) 1,315 Strategic Income Portfolio EUR 487,705 617,509 7/5/06 623,583 6,074 Strategic Income Portfolio EUR (486,000) (623,465) 7/5/06 (621,597) 1,868 Strategic Income Portfolio GBP (335,000) (619,336) 8/7/06 (620,114) (778) Strategic Income Portfolio GBP (335,000) (617,509) 7/5/06 (619,025) (1,516) Strategic Income Portfolio JPY 195,000,000 1,733,617 7/5/06 1,709,257 (24,360) Strategic Income Portfolio JPY 195,000,000 1,714,536 8/7/06 1,718,249 3,713 Balanced Fund Portfolio NOK (530,000) (88,114) 8/14/06 (85,335) 2,778 - -------------------------------------------------------------------------------------------------------------------------------
Outstanding forward currency settlement contracts as of June 30, 2006 were as follows:
- ------------------------------------------------------------------------------------------------------------------------------- Settlement Net Portfolio Gross Receivable Date Gross Payable Receivable/(Payable) - ------------------------------------------------------------------------------------------------------------------------------- Emerging Markets Portfolio $ 514,150 7/1/06 $ (517,522) $ (3,372) Europe Portfolio 118,230 7/1/06 (116,346) 1,884 Strategic Income Portfolio 1,687,794 7/1/06 (1,704,337) (16,543) - -------------------------------------------------------------------------------------------------------------------------------
133 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) ================================================================================ 9. Merger Information On December 8, 2004, beneficial owners of Safeco RST Core Equity Portfolio, Safeco RST Money Market Portfolio and Safeco RST Multi-Cap Core Portfolio, three of the six portfolios that comprised Safeco Resource Series Trust, approved a proposed Agreement and Plan of Reorganization that provided for the mergers listed below. These tax-free reorganizations were accomplished on December 10, 2004 ("Closing Date"), by exchanging all of the Safeco's net assets for Class I shares as indicated below, based on Class I shares' ending net asset value on the Closing Date. The following charts show the details of the reorganizations as of that Closing Date:
Pioneer Fund VCT Portfolio - --------------------------------------------------------------------------------------------------- Pioneer Fund Safeco RST Core Pioneer Fund VCT Portfolio Equity Portfolio VCT Portfolio (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - --------------------------------------------------------------------------------------------------- Net Assets $281,591,969 $298,220,832 $879,147,352 Shares Outstanding 13,990,134 12,804,673 28,812,243 Class I Shares Issued 14,822,109 - --------------------------------------------------------------------------------------------------- Pioneer Money Market VCT Portfolio - --------------------------------------------------------------------------------------------------- Pioneer Money Pioneer Money Market VCT Safeco RST Money Market VCT Portfolio Market Portfolio Portfolio (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - --------------------------------------------------------------------------------------------------- Net Assets $23,493,640 $21,976,837 $67,613,266 Shares Outstanding 23,500,655 21,976,837 45,477,492 Class I Shares Issued 21,976,837 Pioneer Mid Cap Value VCT Portfolio - --------------------------------------------------------------------------------------------------- Pioneer Mid Cap Pioneer Mid Cap Value VCT Safeco RST Multi- Value VCT Portfolio Cap Core Portfolio Portfolio (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - --------------------------------------------------------------------------------------------------- Net Assets $757,206,652 $49,670,328 $858,922,877 Shares Outstanding 32,072,498 2,399,533 34,160,364 Class I Shares Issued 2,087,866 - --------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------- Unrealized Realized Appreciation on Gain/(Loss) Closing Date on Closing Date - --------------------------------------------------------------------------------------------------- Safeco RST Core Equity Portfolio $68,714,366 $20,662,968 Safeco RST Money Market Portfolio -- -- Safeco RST Multi-Cap Core Portfolio 5,550,191 7,992,587 - ---------------------------------------------------------------------------------------------------
134 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST ================================================================================ ================================================================================ In addition, on November 4, 2005, beneficial owners of AmSouth VIF Select Equity Portfolio approved a proposed Agreement and Plan of Reorganization that provided for the merger listed below. This tax-free reorganization was accomplished on November 4, 2005, by exchanging all of the AmSouth Fund's net assets for Class II shares as indicated below, based on Class II share's ending net asset value on the Closing Date. The following charts show the details of the reorganizations as of that closing date ("Closing Date"):
- ---------------------------------------------------------------------------------------------------- Pioneer Fund AmSouth VIF Pioneer Fund VCT Portfolio Select Equity VCT Portfolio (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - ---------------------------------------------------------------------------------------------------- Net Assets $444,635,312 $53,856,933 $498,492,245 Shares Outstanding 21,144,152 4,928,631 23,711,213 Class II Shares Issued 2,567,061 - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- Unrealized Realized Appreciation on (Loss) on Closing Date Closing Date - ---------------------------------------------------------------------------------------------------- AmSouth VIF Select Equity $4,928,126 $ (49,233) - ----------------------------------------------------------------------------------------------------
On May 23, 2006, beneficial owners of Pioneer Small Company VCT Portfolio and Pioneer Small Cap Value II VCT Portfolio approved a proposed Agreement and Plan of Reorganization that provided for the merger listed below. This tax-free reorganization was accomplished on May 24, 2006, by exchanging all of Pioneer Small Company VCT Portfolio's Class I and Class II net assets and Pioneer Small Cap Value II VCT Portfolio's Class I net assets for Pioneer Small Cap Value VCT Portfolio's shares, based on Pioneer Small Cap Value VCT Portfolio's Class I and Class II shares' ending net asset value, respectively. The following charts show the details of the reorganization as of that closing date ("Closing Date"):
- --------------------------------------------------------------------------------------------------------------------------------- Pioneer Small Pioneer Small Pioneer Small Pioneer Small Cap Value Company Cap Value II Cap Value VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio (Pre-Reorganization) (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - --------------------------------------------------------------------------------------------------------------------------------- Net Assets Class I $11,665,357 $3,024,464 $45,772,352 $60,462,173 Class II $30,138,805 $2,603,308 -- $32,742,113 ----------------------------------------------------------------------------------------- Total Net Assets $41,804,162 $5,627,772 $45,772,352 $93,204,286 ----------------------------------------------------------------------------------------- Shares Outstanding Class I 684,211 247,234 2,521,638 3,546,194 Class II 1,782,074 215,447 -- 1,936,024 Shares Issued in Reorganization Class I 2,861,983 Class II 153,951 - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------- Unrealized Accumulated Appreciation Gain/(Loss) on on Closing Date Closing Date - ----------------------------------------------------------------------------------------- Pioneer Small Company VCT Portfolio $ 1,554,529 $ 1,706 Pioneer Small Cap Value II VCT Portfolio $14,635,856 $ (85,337) --------------------------------------------- Total $16,190,385 $ (83,631) --------------------------------------------- - -----------------------------------------------------------------------------------------
135 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Mary K. Bush Vincent Nave, Treasurer Margaret B.W. Graham Dorothy E. Bourassa, Secretary Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's website at http://www.sec.gov. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. Pioneer Vision(SM) variable annuities were issued by Allmerica Financial Life Insurance and Annuity Company under contract form numbers A3025-96 (Pioneer Vision(SM) 2), A3027-98 (Pioneer C-Vision(SM), and A3028-99 (Pioneer XtraVision[RegTM]), located at 440 Lincoln Street, Worcester, MA 01653. Securities were distributed by VeraVest Investments, Inc., member NASD/SIPC. Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. [LOGO] PIONEER Investments(R) Pioneer Investment Management, Inc. 60 State Street Boston, MA 02109 www.pioneerinvestments.com [Logo] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Growth Opportunities VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 11 Notes to Financial Statements 15 Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) U.S. Common Stocks 82.5% Temporary Cash Investment 14.4% Exchange Traded Funds 2.2% Depositary Receipts for international Stocks 0.90%
Sector Distribution (As a percentage of equity holdings) Information Technology 24.6% Health Care 18.5% Industrials 16.3% Consumer Discretionary 14.7% Financials 10.4% Energy 8.9% Materials 2.9% Consumer Staples 2.4% Telecommunication Services 0.8% Utilities 0.5%
Five Largest Holdings (As a percentage of equity holdings) 1. Cubist Pharmaceuticals, Inc. 1.99% 2. Scientific Games Corp. 1.51 3. Stage Stores, Inc. 1.47 4. Rare Hospitality International, Inc. 1.41 5. Central Garden & Pet Co. 1.38
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 25.18 $ 25.37
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment - -------------------------------------------------------------------------------- The following chart shows the change in value of an investment made in Pioneer Growth Opportunities VCT Portfolio at net asset value, compared to that of the Russell 2000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. 6/96 10000 10000 10460 13311 6/98 11840 19396 12823 15959 6/00 16463 18001 12621 20497 6/02 9465 16344 9530 14390 6/04 12537 19262 13074 21471 6/06 14981 22889
The Russell 2000 Growth Index is an unmanaged measure of the performance of U.S. small-cap growth stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- 10 Year 8.63% 5 Year 2.23% 1 Year 6.60%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value - $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Growth Opportunities VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006
Share Class I - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 992.50 Expenses Paid During Period* $ 3.90
* Expenses are equal to the Portfolio's annualized expense ratio of 0.79% for Class I shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Growth Opportunities VCT Portfolio Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class I - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,020.88 Expenses Paid During Period* $ 3.96
* Expenses are equal to the Portfolio's annualized expense ratio of 0.79% for Class I shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- In the following interview, Diego Franzin and Peter Wiley, members of the Pioneer Growth Opportunities VCT Portfolio management team, discuss the factors that influenced performance for the six-month period ended June 30, 2006. Q. How did the Portfolio perform during the semiannual period? A. Class I shares of the Portfolio produced a total return of -0.75% at net asset value during the first half of the year, trailing the 6.07% return of its benchmark, the Russell 2000 Growth Index. The Portfolio's 126 Small-Cap Core peers returned an average of 6.47% over the period. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. Why did the Portfolio underperform? A. Our investment style was not well-suited to the environment of the past six months. To review, we use a disciplined and largely sector-neutral approach in order to pick stocks for the Portfolio. We begin with a quantitative screen that narrows down the broad investment universe based on a variety of fundamental factors. Then we use an intensive research process to select what we believe are the very best stocks from those that the screen shows to be potentially attractive investments. We strive to keep the Portfolio's sector weightings close to the sector weightings in the Russell 2000 Growth benchmark, meaning that our performance will largely be the result of individual stock selection. Unfortunately, the quantitative aspect of our process did not perform well during the most recent period. Our screens are designed to identify stocks with what we believe to be strong growth characteristics and reasonable valuations, but such stocks generally underperformed. We believe this is a short-term phenomenon, however. Having said this, we are always taking steps to tweak the investment process. Following a shift in the Portfolio's management team in May, we have been looking for ways to refine the quantitative screen better to identify the stocks with the best growth characteristics. Specifically, we are trying to identify companies that can continue to grow their sales per share, expand their profit margins, and deploy shareholders equity effectively. Quantitative management is an evolutionary process, and we will always be taking steps to try to improve the way, we pick stocks for the Portfolio. Q. What specific holdings helped and hurt performance? A. Looking first at what did well, the top contributor to the Portfolio's performance was Skechers USA, the maker of casual and outdoor footwear. The company's stock soared in late April when it reported sharply improved first quarter earnings on the strength of higher-than-expected sales both in the United States and abroad. Also contributing was a position in Packeteer, a network technology company that delivered earnings that were well above expectations for both the fourth quarter of 2005 and the first quarter of this year. Terex, which makes construction and mining equipment, produced a nice gain on the strength of a stock split, analyst upgrades and news that its first quarter earnings more than doubled from their level of one year ago. Rounding out the list of leading contributors, the Portfolio's position in Scientific Games, which provides services and systems to state lotteries and race tracks worldwide, gained ground on a steady flow of new contracts and two better-than-expected earnings reports. In terms of detractors, the Portfolio's performance was hurt by its positioning in three sectors: technology, health care and energy. While in most other sectors our performance was in line with the benchmark, our shortfall in these areas was large enough to result in underperformance for the Portfolio as a whole. In technology, Avid Technology, Bottom Line Technology and Westel Technology all declined as a result of earnings shortfalls; while in health care, Merge Technologies and CB Therapeutics also reported profits that came in below expectations. The situation was slightly different in energy. Here, the Portfolio's holdings performed well on an absolute basis, but failed to keep pace with the exceptional return produced by the energy stocks in the benchmark. A Word About Risk: Investments in small companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest a substantial amount of its assets in issuers located in a limited number of countries and therefore is more susceptible to adverse developments affecting those countries. Call 800-688-9915 or visit pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q. Do you have any closing thoughts for investors? A. Looking ahead to the remainder of 2006, it seems reasonable to expect that the market backdrop will remain challenging. High oil prices, geopolitical issues and questions surrounding economic growth and Federal Reserve policy are all factors that we believe may contribute to additional market volatility. Going forward, we will remain focused on our efforts to improve the Portfolio's long-term results. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 95.1% Energy - 8.7% Coal & Consumable Fuels - 0.6% 90,300 Alpha Natural Resources, Inc.* $ 1,771,686 ----------- Oil & Gas Drilling - 2.1% 298,600 Grey Wolf, Inc.*(a) $ 2,299,220 237,200 Parker Drilling Co.* 1,703,096 75,200 Pride International, Inc.*(a) 2,348,496 ----------- $ 6,350,812 ----------- Oil & Gas Equipment & Services - 1.1% 33,100 Dresser-Rand Group, Inc.* $ 777,188 66,500 Hornbeck Offshore Services* 2,362,080 ----------- $ 3,139,268 ----------- Oil & Gas Exploration & Production - 3.1% 15,400 Cheniere Energy, Inc.*(a) $ 569,184 66,000 Comstock Resources, Inc.* 1,970,760 87,500 Energy Partners, Ltd.*(a) 1,658,125 51,500 Newfield Exploration Co.* 2,520,410 51,000 Stone Energy Corp.* 2,374,050 ----------- $ 9,092,529 ----------- Oil & Gas Refining & Marketing - 1.8% 88,200 Frontier Oil Corp.* $ 2,857,680 35,000 Giant Industries, Inc.* 2,329,250 ----------- $ 5,186,930 ----------- Total Energy $25,541,225 ----------- Materials - 2.8% Aluminum - 0.4% 35,300 Century Aluminum Co.* $ 1,259,857 ----------- Construction Materials - 1.5% 44,450 Florida Rock Industries, Inc. $ 2,207,832 34,100 Headwaters, Inc.*(a) 871,596 25,200 Texas Industries, Inc. 1,338,120 ----------- $ 4,417,548 ----------- Fertilizers & Agricultural Chemicals - 0.4% 27,800 The Scotts Miracle-Gro Co. $ 1,176,496 ----------- Specialty Chemicals - 0.1% 63,400 Omnova Solutions, Inc.* $ 360,112 ----------- Steel - 0.4% 13,400 Cleveland-Cliffs, Inc.* $ 1,062,486 ----------- Total Materials $ 8,276,499 ----------- Capital Goods - 9.9% Aerospace & Defense - 1.7% 36,900 DRS Technologies, Inc. $ 1,798,875 58,700 Moog, Inc.* 2,008,714 37,900 Teledyne Technologies, Inc.* 1,241,604 ----------- $ 5,049,193 -----------
Shares Value Building Products - 1.6% 56,800 Elcor Corp.* $ 1,577,336 45,800 Lennox International, Inc. 1,212,784 36,000 NCI Building Systems, Inc.* 1,914,120 ----------- $ 4,704,240 ----------- Construction, Farm Machinery & Heavy Trucks - 1.4% 25,000 Terex Corp.* $ 2,467,500 102,700 Wabash National Corp. 1,577,472 ----------- $ 4,044,972 ----------- Electrical Component & Equipment - 2.1% 508,400 Power-One, Inc.* $ 3,355,440 14,100 Regal-Beloit Corp.* 622,515 39,800 Thomas & Betts Corp.* 2,041,740 ----------- $ 6,019,695 ----------- Industrial Conglomerates - 0.7% 137,300 Tredegar Corp. $ 2,172,086 ----------- Industrial Machinery - 2.4% 51,300 Crane Co. $ 2,134,080 35,000 Flowserve Corp.* 1,991,500 21,100 Gardner Denver, Inc.* 812,350 42,400 Idex Corp. 2,001,280 ----------- $ 6,939,210 ----------- Total Capital Goods $28,929,396 ----------- Commercial Services & Supplies - 3.1% Commercial Printing - 0.8% 23,400 Deluxe Corp.* $ 409,032 59,737 R.R. Donnelly & Sons Co. 1,908,597 ----------- $ 2,317,629 ----------- Diversified Commercial Services - 0.3% 122,600 Sirva, Inc.* $ 793,222 ----------- Human Resource & Employment Services - 0.9% 80,600 Labor Ready, Inc.* $ 1,825,590 102,000 Spherion Corp.* 930,240 ----------- $ 2,755,830 ----------- Office Services & Supplies - 1.1% 122,200 Ikon Office Solutions, Inc.* $ 1,539,720 33,800 United Stationers, Inc.* 1,667,016 ----------- $ 3,206,736 ----------- Total Commercial Services & Supplies $ 9,073,417 ----------- Transportation - 2.9% Air Freight & Couriers - 0.6% 37,300 EGL, Inc.* $ 1,872,460 -----------
6 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Airlines - 1.9% 66,100 Alaska Air Group, Inc.* $ 2,605,662 66,600 Continental Airlines (Class B)*(a) 1,984,680 143,800 ExpressJet Holdings, Inc.* 993,658 ----------- $ 5,584,000 ----------- Trucking - 0.4% 43,000 Laidlaw International, Inc. $ 1,083,600 ----------- Total Transportation $ 8,540,060 ----------- Consumer Durables & Apparel - 4.7% Apparel, Accessories & Luxury Goods - 1.0% 65,700 Phillips-Van Heusen $ 2,507,112 28,600 The Warnaco Group, Inc.* 534,248 ----------- $ 3,041,360 ----------- Footwear - 2.0% 65,400 K-Swiss, Inc.* $ 1,746,180 79,900 Skechers U.S.A.* 1,926,389 98,700 Wolverine World Wide, Inc. 2,302,671 ----------- $ 5,975,240 ----------- Homebuilding - 0.5% 144,500 Champion Enterprises, Inc.* $ 1,595,280 ----------- Leisure Products - 1.2% 73,200 Marvel Entertainment, Inc.*(a) $ 1,464,000 102,400 The Nautilus Group, Inc.*(a) 1,608,704 ----------- $ 3,072,704 ----------- Total Consumer Durables & Apparel $13,684,584 ----------- Consumer Services - 4.6% Casinos & Gaming - 2.2% 77,400 Monarch Casino & Resort, Inc.* $ 2,176,488 120,900 Scientific Games Corp.* 4,306,458 ----------- $ 6,482,946 ----------- Education Services - 0.2% 29,800 DeVry, Inc.* $ 654,706 ----------- Hotels, Resorts & Cruise Lines - 0.8% 76,600 Ambassadors Group, Inc.* $ 2,212,208 ----------- Restaurants - 1.4% 7,700 Morton's Restaurant Group* $ 117,964 140,400 Rare Hospitality International, Inc.* 4,037,904 ----------- $ 4,155,868 ----------- Total Consumer Services $13,505,728 ----------- Media - 1.0% Publishing - 1.0% 31,400 R.H. Donnelley Corp.* $ 1,697,798 95,700 Readers Digest Association, Inc.* 1,335,972 ----------- $ 3,033,770 ----------- Total Media $ 3,033,770 -----------
Shares Value Retailing - 4.0% Apparel Retail - 3.8% 134,500 Bebe Stores, Inc.*(a) $ 2,073,990 170,100 New York & Company, Inc.* 1,661,877 127,050 Stage Stores, Inc.* 4,192,650 103,600 Stein Mart, Inc. 1,533,280 71,900 The Dress Barn, Inc.* 1,822,665 ----------- $11,284,462 ----------- Internet Retail - 0.2% 18,900 Priceline.com, Inc.*(a) $ 564,354 ----------- Total Retailing $11,848,816 ----------- Household & Personal Products - 2.3% Household Products - 1.5% 91,400 Central Garden & Pet Co.* $ 3,934,770 12,000 Church & Dwight Co., Inc. 437,040 ----------- $ 4,371,810 ----------- Personal Products - 0.8% 235,300 Playtex Products, Inc.* $ 2,454,179 ----------- Total Household & Personal Products $ 6,825,989 ----------- Health Care Equipment & Services - 10.6% Health Care Distributors - 0.8% 62,300 Owens & Minor, Inc. $ 1,781,780 26,300 PSS World Medical, Inc.* 464,195 ----------- $ 2,245,975 ----------- Health Care Equipment - 4.7% 81,300 Adeza Biomedical Corp.* $ 1,139,826 42,000 ArthroCare Corp.*(a) 1,764,420 69,600 Hologic, Inc.*(a) 3,435,456 187,000 NMT Medical, Inc.*(a) 1,871,870 176,300 Symmetry Medical, Inc.* 2,715,020 86,300 Thoratec Corp.* 1,196,981 63,100 Wilson Greatbatch Technologies, Inc.* 1,489,160 ----------- $13,612,733 ----------- Health Care Facilities - 1.3% 73,700 Symbion, Inc.* $ 1,530,012 71,700 VCA Antech, Inc.* 2,289,381 ----------- $ 3,819,393 ----------- Health Care Services - 1.3% 107,000 AMN Healthcare Services* $ 2,172,100 60,400 Inventive Health, Inc.* 1,738,312 ----------- $ 3,910,412 ----------- Health Care Supplies - 1.2% 254,800 Merit Medical Systems, Inc.* $ 3,506,048 ----------- Health Care Technology - 0.8% 197,200 Merge Technologies, Inc.*(a) $ 2,427,532 -----------
The accompanying notes are an integral part of these financial statements. 7 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Managed Health Care - 0.5% 5,300 Healthspring, Inc.* $ 99,375 29,000 WellCare Health Plans, Inc.* 1,422,450 ----------- $ 1,521,825 ----------- Total Health Care Equipment & Services $31,043,918 ----------- Pharmaceuticals & Biotechnology - 7.5% Biotechnology - 4.4% 89,900 Alkermes, Inc.*(a) $ 1,700,908 225,500 Cubist Pharmaceuticals, Inc.*(a) 5,678,090 156,200 CV Therapeutics, Inc.*(a) 2,182,114 93,000 Vertex Pharmaceuticals, Inc.* 3,414,030 ----------- $12,975,142 ----------- Life Sciences Tools & Services - 1.4% 51,600 Molecular Devices Corp.* $ 1,576,896 82,200 Serologicals Corp.* 2,584,368 ----------- $ 4,161,264 ----------- Pharmaceuticals - 1.7% 235,400 Connetics Corp.* $ 2,768,304 71,800 Par Pharmaceutical Co., Inc.* 1,325,428 30,200 Sciele Pharma, Inc.* 700,338 ----------- $ 4,794,070 ----------- Total Pharmaceuticals & Biotechnology $21,930,476 ----------- Banks - 0.9% Regional Banks - 0.3% 16,000 Security Bank Corp.* $ 356,320 18,180 Southwest Bancorp, Inc.* 463,590 ----------- $ 819,910 ----------- Thrifts & Mortgage Finance - 0.6% 84,400 Franklin Bank Corp.* $ 1,704,036 ----------- Total Banks $ 2,523,946 ----------- Diversified Financials - 2.4% Asset Management & Custody Banks - 0.8% 47,100 Apollo Investment Corp. $ 870,408 76,000 Waddell & Reed Financial, Inc.* 1,562,560 ----------- $ 2,432,968 ----------- Consumer Finance - 1.1% 59,700 Asta Funding, Inc. (a) $ 2,235,765 17,200 The First Marblehead Corp. (a) 979,368 ----------- $ 3,215,133 ----------- Investment Banking & Brokerage - 0.5% 23,000 A.G. Edwards, Inc. $ 1,272,360 ----------- Total Diversified Financials $ 6,920,461 ----------- Insurance - 2.4% Life & Health Insurance - 0.3% 74,000 American Equity Investment Life Holding*(a) $ 788,840 -----------
Shares Value Property & Casualty Insurance - 1.1% 133,200 Assured Guaranty, Ltd. $ 3,379,284 ----------- Reinsurance - 1.0% 83,300 IPC Holdings, Ltd. $ 2,054,178 34,000 Platinum Underwriter Holdings, Ltd. 951,320 ----------- $ 3,005,498 ----------- Total Insurance $ 7,173,622 ----------- Real Estate - 2.0% Mortgage Real Estate Investment Trusts - 2.0% 191,500 Annaly Mortgage Management, Inc. (a) $ 2,453,115 258,500 Deerfield Triarc Capital Corp. 3,355,330 ----------- $ 5,808,445 ----------- Total Real Estate $ 5,808,445 ----------- Software & Services - 11.6% Application Software - 5.1% 34,600 Ansys, Inc.* $ 1,654,572 41,300 Bottomline Technologies, Inc.* 336,182 65,800 Corel Corp.* 793,548 59,900 FileNet Corp.* 1,613,107 23,600 Intergraph Corp.* 743,164 181,200 Intervoice, Inc.* 1,290,144 70,800 Jack Henry & Associates, Inc. 1,391,928 16,000 MicroStrategy, Inc.* 1,560,320 69,500 Net 1 UEPS Technologies, Inc.* 1,900,825 229,600 Sonic Solutions*(a) 3,788,400 ----------- $15,072,190 ----------- Data Processing & Outsourced Services - 0.4% 51,700 eFunds Corp.* $ 1,139,985 ----------- Internet Software & Services - 4.3% 56,700 Digital River, Inc.*(a) $ 2,290,113 146,400 Digitas, Inc.* 1,701,168 38,100 Infospace, Inc.* 863,727 97,400 J2 Global Communications, Inc.*(a) 3,040,828 179,900 RealNetworks, Inc.* 1,924,930 74,700 WebEx Communications, Inc.* 2,654,838 ----------- $12,475,604 ----------- IT Consulting & Other Services - 0.5% 62,600 Acxiom Corp.* $ 1,565,000 ----------- Systems Software - 1.3% 54,600 Macrovision Corp.* $ 1,174,992 28,100 Micros Systems, Inc.* 1,227,408 57,800 Progress Software Corp.* 1,353,098 ----------- $ 3,755,498 ----------- Total Software & Services $34,008,277 -----------
8 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Technology Hardware & Equipment - 6.7% Communications Equipment - 3.1% 46,600 CommScope, Inc.* $ 1,464,172 138,200 Foundry Networks, Inc.* 1,473,212 119,500 NETGEAR, Inc.* 2,587,175 167,400 Packeteer, Inc.* 1,898,316 85,300 Symmetricom, Inc.* 603,071 452,100 Westell Technologies, Inc.* 990,099 ------------ $ 9,016,045 ------------ Computer Hardware - 0.6% 55,100 Avid Technology, Inc.*(a) $ 1,836,483 ------------ Electronic Equipment & Instruments - 1.2% 170,900 Paxar Corp.* $ 3,515,413 ------------ Electronic Manufacturing Services - 1.1% 68,900 Plexus Corp.* $ 2,357,069 157,900 Sanmina-SCI Corp.* 726,340 ------------ $ 3,083,409 ------------ Technology Distributors - 0.7% 70,000 Scansource, Inc.* $ 2,052,400 ------------ Total Technology Hardware & Equipment $ 19,503,750 ------------ Semiconductors - 5.7% Semiconductor Equipment - 2.1% 106,300 Advanced Energy Industries, Inc.* $ 1,407,412 170,100 Amkor Technology, Inc.*(a) 1,609,146 85,300 MKS Instruments, Inc.* 1,716,236 94,300 Photronics, Inc.* 1,395,640 ------------ $ 6,128,434 ------------ Semiconductors - 3.6% 88,100 AMIS Holdings, Inc.* $ 881,000 346,900 Atmel Corp.* 1,925,295 21,400 Diodes, Inc.* 886,816 26,500 Hittite Microwave Corp.* 958,240 165,800 IXYS Corp.* 1,591,680 70,600 Microsemi Corp.* 1,721,228 345,400 SGC Holding Corp.* 2,030,952 15,500 Supertex, Inc.* 619,070 ------------ $ 10,614,281 ------------ Total Semiconductors $ 16,742,715 ------------ Telecommunication Services - 0.8% Integrated Telecommunication Services - 0.8% 98,900 Alaska Communications Systems Group, Inc. $ 1,251,085 29,500 Commonwealth Telephone Enterprises, Inc.* 978,220 ------------ $ 2,229,305 ------------ Total Telecommunication Services $ 2,229,305 ------------
Shares Value Utilities - 0.5% Independent Power Producer & Energy Traders - 0.5% 40,900 Black Hills Corp. $ 1,404,097 ------------ Total Utilities $ 1,404,097 ------------ TOTAL COMMON STOCKS (Cost $271,970,096) $278,548,496 ------------ WARRANTS - 0.0% Commercial Services & Supplies - 0.0% Diversified Commercial Services - 0.0% 37,165 NCO Group Warrants, Exp. 9/28/06* $ - ------------ Total Commercial Services & Supplies $ - ------------ Health Care Equipment & Services - 0.0% Health Care Facilities - 0.0% 140,000 Lifepoint Warrants, Exp. 4/1/07* $ - 84,000 Lifepoint Warrants, Exp. 7/21/07* - ------------ $ - ------------ Total Health Care Equipment & Services $ - ------------ Pharmaceuticals & Biotechnology - 0.0% Biotechnology - 0.0% 250,000 Photomedex Warrants, Exp. 6/13/07* $ 17,500 ------------ Total Pharmaceuticals & Biotechnology $ 17,500 ------------ TOTAL WARRANTS (Cost $21,608) $ 17,500 ------------ EXCHANGE TRADED FUNDS - 2.5% 34,100 Russell 2000 Growth Exchange Traded Fund (a) $ 2,509,760 24,900 Russell 2000 Value Exchange Traded Fund (a) 1,802,013 23,900 S&P Small Cap 600/BARRA Growth Exchange Traded Fund (a) 2,926,555 ------------ $ 7,238,328 ------------ TOTAL EXCHANGE TRADED FUNDS (Cost $5,027,288) $ 7,238,328 ------------ Principal Amount TEMPORARY CASH INVESTMENTS - 16.4% Repurchase Agreement - 2.8% $8,200,000 UBS Warburg, Inc., 4.40%, dated 6/30/06, repurchase price of $8,200,000 plus accrued interest on 7/3/06, collateralized by $5,399,000 U.S. Treasury Bill, 4.625%, 3/31/08 and $2,969,000 U.S. Treasury Bill, 5.125%, 6/30/08 $ 8,200,000 ------------
The accompanying notes are an integral part of these financial statements. 9 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Security Lending Collateral - 13.6% 39,933,867 Securities Lending Investment Fund, 5.16% $ 39,933,867 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $48,133,867) $ 48,133,867 ------------ TOTAL INVESTMENT IN SECURITIES - 114.0% (Cost $325,152,859) $333,938,191 ------------ OTHER ASSETS AND LIABILITIES - (14.0)% $(40,942,154) ------------ TOTAL NET ASSETS - 100.0% $292,996,037 ------------
* Non-income producing security. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 89,001 Alkermes, Inc. * $ 1,683,899 73,260 American Equity Investment Life Holding * 780,952 168,399 Amkor Technology, Inc. * 1,593,055 76,980 Annaly Mortgage Management, Inc. 986,114 41,580 ArthroCare Corp. * 1,746,776 54,403 Asta Funding, Inc. 2,037,392 9,449 Avid Technology, Inc. * 314,935 66,300 Bebe Stores, Inc. * 1,022,346 8,064 Cheniere Energy, Inc. * 298,045 65,934 Continental Airlines (Class B) * 1,964,833 41,600 Cubist Pharmaceuticals, Inc. * 1,047,488 154,638 CV Therapeutics, Inc. * 2,160,293 56,133 Digital River, Inc. * 2,267,212 2,300 Energy Partners, Ltd * 43,585 156,714 Grey Wolf, Inc. * 1,206,698 15,000 Headwaters, Inc. * 383,400 56,000 Hologic, Inc. * 2,764,160 38,200 J2 Global Communications, Inc. * 1,192,604 72,468 Marvel Entertainment, Inc. * 1,449,360 195,228 Merge Technologies, Inc. * 2,403,257 82,068 NMT Medical, Inc. * 821,501 18,711 Priceline.com, Inc. * 558,710 7,154 Pride International, Inc. * 223,419 33,717 Russell 2000 Growth Exchange Traded Fund 2,481,571 1,551 Russell 2000 Value Exchange Traded Fund 112,246 19,701 S&P Small Cap 600/BARRA Growth Exchange Traded Fund 2,412,387 172,199 Sonic Solutions * 2,841,284 17,028 The First Marblehead Corp. 969,574 91,376 The Nautilus Group, Inc. * 1,435,517 ----------- Total $39,202,613 ===========
10 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended Class I (unaudited) 12/31/05 Net asset value, beginning of period $ 25.37 $ 23.78 --------- ------- Increase (decrease) from investment operations: Net investment loss $ (0.01) $ (0.01) Net realized and unrealized gain (loss) on investments (0.18) 1.60 --------- -------- Net increase (decrease) from investment operations $ (0.19) $ 1.59 --------- -------- Distributions to shareowners: Net realized gain - - --------- -------- Net increase (decrease) in net asset value $ (0.19) $ 1.59 --------- -------- Net asset value, end of period $ 25.18 $ 25.37 ========= ======== Total return* (0.75)% 6.69% Ratio of net expenses to average net assets 0.79%** 0.79% Ratio of net investment loss to average net assets (0.05)%** (0.02)% Portfolio turnover rate 137%** 75% Net assets, end of period (in thousands) $ 292,996 $323,945 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.80%** 0.80% Net investment loss (0.06)%** (0.03)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.79%** 0.79% Net investment loss (0.05)%** (0.02)% Year Year Year Year Ended Ended Ended Ended Class I 12/31/04 (b) 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 19.44 $ 13.60 $ 21.89 $ 18.81 -------- -------- --------- -------- Increase (decrease) from investment operations: Net investment loss $ (0.01) $ (0.02) $ (0.10) $ (0.10) Net realized and unrealized gain (loss) on investments 4.35 5.86 (8.12)(a) 3.67 -------- -------- --------- -------- Net increase (decrease) from investment operations $ 4.34 $ 5.84 $ (8.22) $ 3.57 -------- -------- --------- -------- Distributions to shareowners: Net realized gain - - (0.07) (0.49) -------- -------- --------- -------- Net increase (decrease) in net asset value $ 4.34 $ 5.84 $ (8.29) $ 3.08 -------- ------- --------- ------- Net asset value, end of period $ 23.78 $ 19.44 $ 13.60 $ 21.89 ======== ======== ========= ======== Total return* 22.33% 42.94% (37.67)% 19.14% Ratio of net expenses to average net assets 0.81% 0.80% 0.79% 0.78% Ratio of net investment loss to average net assets (0.06)% (0.16)% (0.58)% (0.53)% Portfolio turnover rate 19% 54% 38% 47% Net assets, end of period (in thousands) $383,468 $337,573 $ 245,954 $428,013 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.81% 0.80% 0.79% 0.78% Net investment loss (0.06)% (0.16)% (0.58)% (0.53)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.81% 0.80% 0.79% 0.78% Net investment loss (0.06)% (0.16)% (0.58)% (0.53)%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period. ** Annualized. (a) Includes $0.01 related to investment reimbursement by advisor. (Safeco Asset Management) (b) Effective August 2, 2004, PIM became the sub-advisor of the Fund and subsequently became the advisor on December 10, 2004. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 11 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) ASSETS: Investment in securities, at value (including securities loaned of $39,202,613) (cost $325,152,859) $333,938,191 Receivables - Fund shares sold 41,116 Dividends, interest and foreign taxes withheld 93,891 Other 12,861 ------------ Total assets $334,086,059 ------------ LIABILITIES: Payables - Investment securities purchased $ 476,578 Fund shares repurchased 508,258 Upon return of securities loaned 39,933,867 Due to bank 154,341 Due to affiliates 5,736 Accrued expenses 11,242 ------------ Total liabilities $ 41,090,022 ------------ NET ASSETS: Paid-in capital $246,554,636 Accumulated net investment loss (72,435) Accumulated net realized gain on investments 37,728,504 Net unrealized gain on: Investments 8,785,332 ------------ Total net assets $292,996,037 ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $292,996,037 Shares outstanding 11,636,786 ------------ Net asset value per share $ 25.18
12 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $938) $ 878,381 Interest 172,934 Income on securities loaned, net 141,288 ------------- Total investment income $ 1,192,603 ------------- EXPENSES: Management fees $ 1,184,972 Transfer agent fees and expenses 1,253 Administrative reimbursements 29,114 Custodian fees 24,684 Professional fees 23,322 Printing expense 18,038 Fees and expenses of nonaffiliated trustees 3,275 Miscellaneous 1,481 ------------- Total expenses $ 1,286,139 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (21,101) ------------- Net expenses $ 1,265,038 ------------- Net investment loss $ (72,435) ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from: Investments $ 52,474,018 ------------- Change in net unrealized gain from: Investments $ (53,613,957) ------------- Net loss on investments $ (1,139,939) ============= Net decrease in net assets resulting from operations $ (1,212,374) =============
The accompanying notes are an integral part of these financial statements. 13 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment loss $ (72,435) $ (68,614) Net realized gain on investments 52,474,018 74,701,451 Change in net unrealized gain or (loss) on investments (53,613,957) (54,760,663) ------------- ------------- Net increase (decrease) in net assets resulting from operations $ (1,212,374) $ 19,872,174 ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 8,314,860 $ 9,685,009 Cost of shares repurchased (38,051,644) (89,080,383) ------------- ------------- Net decrease in net assets resulting from Fund share transactions $ (29,736,784) $ (79,395,374) ------------- ------------- Net decrease in net assets $ (30,949,158) $ (59,523,200) NET ASSETS: Beginning of period 323,945,195 383,468,395 ------------- ------------- End of period $ 292,996,037 $ 323,945,195 ============= ============= Accumulated net investment loss, end of period $ (72,435) $ - ============= =============
14 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Growth Opportunities VCT Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts, or by qualified pension and retirement plans. The Portfolio is the successor to the Safeco RST Growth Opportunities Portfolio. Safeco RST Growth Opportunities Portfolio, one of six portfolios that comprised Safeco Resource Series Trust, transferred all of the net assets to the portfolio in exchange for the Portfolio's Class I shares in a one-to-one exchange ratio, on December 10, 2004, pursuant to an agreement and plan of reorganization (the "reorganization" which was approved by the shareholders of Safeco RST Growth Opportunities Portfolio on December 8, 2004). The Portfolio had no assets or liabilities prior to the reorganization. Accordingly, the reorganization, which was a tax-free exchange, had no effect on the Portfolio's operations. The Growth Opportunities VCT Portfolio seeks capital appreciation. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: 15 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Investments in small companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest a substantial amount of its assets in issuers located in a limited number of countries and therefore is more susceptible to adverse developments affecting those countries. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Growth Opportunities Portfolio had a net capital loss carryforward of $14,745,514, of which the following amounts will expire between 2011 and 2012, if not utilized: $14,496,308 in 2011 and $249,206 in 2012. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- Pioneer Growth Opportunities VCT Portfolio 2005 - -------------------------------------------------------------------------------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/(capital loss carryforward) (14,745,514) Unrealized appreciation (depreciation) 62,399,289 ------------- Total $ 47,653,775 ============= - --------------------------------------------------------------------------------
16 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- C. Portfolio Shares The Portfolio records sales and repurchases of its Portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano) $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the portfolio. Management fees are calculated at the annual rate of 0.74% of the Portfolio's average daily net assets. Prior to the reorganization, the Portfolio was advised by Safeco Asset Management, which received an annual fee equal to 0.74% of its average daily net assets. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and to assume other operating expenses of the Portfolio to the extent necessary to limit Class I expenses to 0.79% of the average daily net assets attributable to Class I shares. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $5,607 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent Since the reorganization, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $129 in transfer agent fees payable to PIMSS at June 30, 2006. Prior to the reorganization Safeco Services Corporation was the Transfer and Shareholder Servicing agent. 4. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------------------------- Growth Opportunities Portfolio $325,152,859 $32,075,133 $ (23,289,801) $8,785,332 ============ =========== ============= ========== - ----------------------------------------------------------------------------------------------------------
17 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 25. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $214,061,531 and $247,745,412, respectively. 6. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ---------------------------------------------------------------------------------------------------------- '06 Shares '06 Amount '05 Shares '05 Amount Growth Opportunities Portfolio (unaudited) (unaudited) - ---------------------------------------------------------------------------------------------------------- Class I: Shares Sold 310,966 $ 8,314,860 406,285 $ 9,685,009 Shares repurchased (1,441,332) (38,051,644) (3,765,592) (89,080,383) -------------------------------------------------------------------- Net decrease (1,130,366) $ (29,736,784) (3,359,307) $ (79,395,374) ==================================================================== - ----------------------------------------------------------------------------------------------------------
18 PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Opportunities VCT Portfolio - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - -------------------------------------------------------------------------------- Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Mary K. Bush Vincent Nave, Treasurer Margaret B.W. Graham Dorothy E. Bourassa, Secretary Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 19 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 21 [Logo] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19616-00-0806 [LOGO]PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Bond VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Bond VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 11 Notes to Financial Statements 15 Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment in securities) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] U.S. Government Securities 67.1% U.S. Corporate Bonds 29.1% Asset Backed Securities 1.9% Collateralized Mortgage Obligations 1.9%
Quality Distribution (As a percentage of total investment in securities) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Treasury/Agency 67.3% AAA 0.4% AA 0.7% A 3.9% BBB 16.0% BB 9.0% B & Lower 2.5% Commercial Paper 0.5%
Five Largest Holdings (As a percentage of long-term holdings) 1. Government National Mortgage Association, 5.5%, 10/15/33 4.31% 2. Federal National Mortgage Association, 4.78%, 12/1/12 4.02% 3. Federal National Mortgage Association, 5.0%, 12/1/17 4.00% 4. Federal National Mortgage Association, 5.0%, 3/1/33 3.83% 5. U.S. Treasury Notes, 5.5%, 8/15/28 3.38%
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 10.46 $ 10.79
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.2668 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Bond VCT Portfolio at net asset value, compared to that of the Lehman Brothers Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Bond Lehman Brothers VCT Portfolio Aggregate Bond Index 6/06 10000 10000 10492 10815 6/98 11641 11955 11691 12331 6/00 12128 12894 13458 14342 6/02 14316 15579 15621 17200 6/04 15573 17255 16564 18428 6/06 16446 18280
The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market. A market value-weighted measure of treasure and agency issues, corporate bond issues and mortgage-backed securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (as of June 30, 2006)
Net Asset Value 10 Years 5.10% 5 Years 4.09% 1 Year -0.71%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable products report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Please refer to variable product's semiannual report for performance that reflects the deduction of the variable products fees and charges. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Bond VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006
Share Class I - ------------------------------------------------------------ Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 994.10 Expenses Paid During Period* $ 3.07
* Expenses are equal to the Portfolio's annualized expense ratio of 0.62% for Class I shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Bond VCT Portfolio Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006
Share Class I - ------------------------------------------------------------ Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,021.72 Expenses Paid During Period* $ 3.11
* Expenses are equal to the Portfolio's annualized expense ratio of 0.62% for Class I shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Against a backdrop of strong economic growth throughout the globe, inflation concerns grew steadily during the first six months of 2006. With dramatic increases in commodity prices - most notably in energy prices - fears built that inflationary pressures would start to spread throughout the general economy. Given these concerns, the U.S. Federal Reserve Board continued to raise short-term interest rates to relieve inflationary pressures and control economic growth. The Fed raised its Fed funds rate four successive times over the six months, from 4.25% to 5.25%. As the Fed acted, rates across securities of all maturities also rose, and bond prices generally declined. In the following interview, Kenneth J. Taubes discusses the factors that influenced Pioneer Bond VCT Portfolio's performance during the six months ended June 30, 2006. Mr. Taubes, Director of Pioneer's Fixed Income Group, oversees the team responsible for the daily management of the Portfolio. Q: How did the Portfolio perform during the six months ended June 30, 2006? A: Pioneer Bond VCT Portfolio, Class I shares, had a total return of -0.59% for the six months at net asset value. During the same six months, the Lehman Aggregate Bond Index produced a total return of -0.72%. The average return of the 52 portfolios in the Lipper underlying General Bond category was 0.09%. The Portfolio's SEC 30-day yield on June 30, 2006 was 4.98%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q: What were the primary factors influencing performance? A: It was challenging period in the bond market, given the persistent economic growth and the Federal Reserve Board's increasing concern about rising inflationary pressures. The Fed raised short-term rates at each of the board's four meetings during the six months. Over the half year, the yield on the six-month Treasury bill rose by about 90 basis points (nine-tenths of one percentage point). Yields of two- to three-year Treasury securities rose by about 79 basis points, the yields of 10-year Treasuries climbed by 78 basis points, and the yields of 30-year Treasuries rose by 67 basis points. As these rate changes occurred, bond prices - especially among higher-quality securities - tended to depreciate, with most high-grade securities recording negative total returns. The most notable exceptions were issues with short maturities of two years and less, which were the best-performing over the six months. Corporate bonds, including high-yield securities, performed somewhat better than Treasuries, as the yield advantages of corporate bonds compensated for the erosion in the market value of high-yield bonds. Q: What were your principal strategies during the period? A: In general, as the period progressed we became increasingly defensive to guard against the risks of a slowing economy as the impacts of the Federal Reserve's rate hikes worked their way through the economy. When interest rates rose, we gradually increased duration - a measure of a bond's price sensitivity to changes in interest rates - as longer-maturity bonds began to decline and started to offer greater value. The Portfolio's effective duration on June 30, 2006, was 5.05 years, compared with 4.84 years six months earlier. We maintained an exposure to Treasury Inflation Protected Securities (TIPS) for most of the six months, although we did reduce our positions late in the period. Over the six months, we reduced the Portfolio's investments in corporate bonds, including high-yield bonds, as they began to appear increasingly expensive while raising the overall credit quality of the Portfolio. These measures also were in anticipation that corporates would not perform as well as economic growth eventually begins to slow. At the end of the fiscal period on June 30, 2006, average credit quality was AA-, and 67.3% of assets were invested in Treasury and U.S. government agency securities, including agency-backed mortgage securities. On the same date, 11.5% of Portfolio assets were invested in high-yield, below investment-grade bonds. Q: What types of investments had the greatest impact on Portfolio performance? A: The positions in TIPS helped performance, as did individual investments in corporate bonds of Ford Motor and of Corning, a major producer of flat-panel screens for personal computers and television sets. While our exposure to the corporate sector - both investment-grade and high-yield bonds - helped performance generally, individual corporate bond holdings that were disappointing included securities of Hospital Corporation of America (HCA) and of Abitibi-Consolidated, a global paper products company. A Word About Risk: When interest rates rise, the prices of fixed- income securities in the Portfolio will generally fall. Conversely, when interest rates fall, the prices of fixed income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. Investments in high yield or lower-rated securities are subject to greater-than-average risk. The securities issued by U.S. Government sponsored entities (i.e., FNMA, Freddie Mac) are neither guaranteed nor issued by the U.S. Government. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-Backed securities are also subject to pre-payments. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Q: What is your investment outlook? A: We anticipate that we will see increased evidence that the Federal Reserve has been successful in slowing the rate of economic growth. We also see a drying up of liquidity in the global markets because of widespread hikes in short-term interest rates by central banks across the globe. Given these factors, we believe it makes sense to lengthen the Portfolio's duration and to increase investments in Treasury and high-quality mortgage securities. We believe these maneuvers could help protect the Portfolio in a slowing economy while positioning it for the time when the Federal Reserve ends its cycle of rate hikes. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
S&P/Moody's Principal Ratings Amount (unaudited) Value ASSET BACKED SECURITIES - 1.8% Diversified Financials - 0.6% Diversified Financial Services - 0.6% $ 93,381 BB-/Ba2 Caithness Coso Fund Corp., 6.263%, 6/15/14 (144A) $ 91,457 81,192 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 80,881 ----------- $ 172,338 ----------- Total Diversified Financials $ 172,338 ----------- Utilities - 1.2% Electric Utilities - 1.2% 127,157 BB-/Ba2 FPL Energy National Wind, 6.125%, 3/25/19 (144A) $ 123,129 186,120 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 185,887 58,634 BB-/Ba2 Tenaska Alabama, 7.0%, 6/30/21 (144A) 57,146 ----------- $ 366,162 ----------- Total Utilities $ 366,162 ----------- TOTAL ASSET BACKED SECURITIES (Cost $552,405) $ 538,500 ----------- COLLATERALIZED MORTGAGE OBLIGATIONS - 1.9% Diversified Financials - 1.5% Diversified Financial Services - 1.5% 450,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 $ 441,999 ----------- Total Diversified Financials $ 441,999 ----------- Government - 0.4% Government - 0.4% 104,982 AAA/Aaa Freddie Mac, 6.1%, 9/15/18 $ 104,600 ----------- Total Government $ 104,600 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $555,833) $ 546,599 ----------- CORPORATE BONDS - 28.8% Energy - 4.1% Integrated Oil & Gas - 1.1% 215,000 BBB/Baa2 Petro-Canada, 4.0%, 7/15/13 $ 190,198 140,000 BBB+/Baa1 USX Corp., 6.85%, 3/1/08 142,570 ----------- $ 332,768 ----------- Oil & Gas Equipment & Services - 0.4% 125,000 B+/Ba3 Holly Energy Partners LP, 6.25%, 3/1/15 $ 114,375 ----------- Oil & Gas Exploration & Production - 1.4% 370,000 BBB/Baa1 Pemex Project Funding Master, 9.125%, 10/13/10 $ 405,150 ----------- Oil & Gas Refining & Marketing - 0.2% 50,000 BBB/Baa2 Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ 47,165 ----------- Oil & Gas Storage & Transportation - 1.0% 295,000 BBB+/Baa1 Kinder Morgan Energy Partners, 6.75%, 3/15/11 $ 301,362 ----------- Total Energy $ 1,200,820 ----------- Materials - 3.0% Aluminum - 1.0% 285,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 273,600 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
S&P/Moody's Principal Ratings Amount (unaudited) Value Commodity Chemicals - 0.7% $ 80,000 B+/Ba3 Invista, 9.25%, 5/1/12 (144A) $ 84,000 135,000 BB-/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 124,200 ----------- $ 208,200 ----------- Fertilizers & Agricultural Chemicals - 0.7% 220,000 BBB+/Baa1 Potash Corp. Saskatchewan, 4.875%, 3/1/13 $ 206,926 ----------- Paper Products - 0.6% 225,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 182,250 ----------- Total Materials $ 870,976 ----------- Capital Goods - 2.0% Aerospace & Defense - 0.6% 190,000 A/A2 Boeing Co., 5.125%, 2/15/13 $ 183,307 ----------- Electrical Component & Equipment - 0.2% 60,000 NR/WD Orcal Geothermal, 6.21%, 12/30/20 (144A) $ 58,412 ----------- Trading Companies & Distributors - 1.2% 245,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 223,755 145,000 BB+/Ba1 Noble Group, Ltd., 6.625%, 3/17/15 (144A) 125,694 ----------- $ 349,449 ----------- Total Capital Goods $ 591,168 ----------- Consumer Durables & Apparel - 0.2% Home Furnishings - 0.2% 70,000 BBB-/Baa3 Mohawk Industries, Inc., 6.125%, 1/15/16 $ 67,483 ----------- Total Consumer Durables & Apparel $ 67,483 ----------- Consumer Services - 0.4% Education Services - 0.4% 100,000 AAA/Aaa President & Fellows of Harvard, 6.3%, 10/1/37 $ 100,578 ----------- Total Consumer Services $ 100,578 ----------- Media - 0.5% Broadcasting & Cable TV - 0.5% 135,000 BBB+/Baa2 Comcast Corp., 5.3%, 1/15/14 $ 127,013 ----------- Total Media $ 127,013 ----------- Food, Beverage & Tobacco - 2.8% Brewers - 0.9% 280,000 BBB+/Baa1 Miller Brewing Co., 5.5%, 8/15/13 (144A) $ 268,655 ----------- Packaged Foods & Meats - 1.0% 280,000 A+/A1 Unilever Capital Corp., 7.125%, 11/1/10 $ 293,987 ----------- Soft Drinks - 0.9% 280,000 A/A3 Bottling Group LLC, 5.0%, 11/15/13 $ 266,273 ----------- Total Food, Beverage & Tobacco $ 828,915 ----------- Health Care Equipment & Services - 1.0% Health Care Facilities - 1.0% 300,000 BB+/Ba2 HCA, Inc., 6.3%, 10/1/12 $ 282,156 ----------- Total Health Care Equipment & Services $ 282,156 ----------- Banks - 0.7% Diversified Banks - 0.7% 225,000 AA-/Aa2 US Bancorp, 3.125%, 3/15/08 $ 216,113 ----------- Total Banks $ 216,113 -----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
S&P/Moody's Principal Ratings Amount (unaudited) Value Diversified Financials - 3.0% Consumer Finance - 1.3% $ 415,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 (a) $ 379,210 ----------- Diversified Financial Services - 1.7% 500,000 BBB-/Baa3 Bombardier Capital, Inc., 7.09%, 3/30/07 $ 500,000 ----------- Total Diversified Financials $ 879,210 ----------- Insurance - 3.4% Life & Health Insurance - 0.5% 160,000 B-/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 159,200 ----------- Multi-Line Insurance - 0.5% 130,000 BB+/Ba1 Hanover Insurance Group, 7.625%, 10/15/25 $ 130,316 ----------- Property & Casualty Insurance - 1.7% 250,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 247,546 250,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 252,853 ----------- $ 500,399 ----------- Reinsurance - 0.7% 200,000 BBB/NA Platinum Underwriters Holding, 7.5%, 6/1/17 $ 196,199 ----------- Total Insurance $ 986,114 ----------- Real Estate - 3.6% Real Estate Investment Trusts - 3.6% 350,000 BBB-/Baa3 Health Care, Inc., 6.0%, 11/15/13 $ 338,322 350,000 BBB/Baa2 Hospitality Properties Trust, 5.125%, 2/15/15 321,054 225,000 BB/Ba2 Host Marriott LP, 6.375%, 3/15/15 211,500 50,000 B+/B1 Trustreet Properties, Inc., 7.5%, 4/1/15 49,250 130,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 130,000 ----------- $ 1,050,126 ----------- Total Real Estate $ 1,050,126 ----------- Technology Hardware & Equipment - 1.2% Communications Equipment - 1.2% 350,000 BBB/Baa3 Corning, Inc., 5.9%, 3/15/14 $ 346,051 ----------- Total Technology Hardware & Equipment $ 346,051 ----------- Semiconductors - 0.5% Semiconductors - 0.5% 155,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 147,972 ----------- Total Semiconductors $ 147,972 ----------- Telecommunication Services - 0.0% Integrated Telecommunication Services - 0.0% 10,000 BBB+/Baa2 Telecom Italia Capital, 4.875%, 10/1/10 $ 9,562 ----------- Total Telecommunication Services $ 9,562 ----------- Utilities - 2.4% Electric Utilities - 1.5% 109,092 BBB-/Baa3 Crocket Cogeneration, 5.869%, 3/30/25 (144A) $ 102,006 85,000 BBB+/Baa3 Entergy Gulf States, 5.7%, 6/1/15 79,973 260,000 BBB-/Baa3 Kiowa Power Partners LLC, 5.737%, 3/30/21 (144A) 241,210 ----------- $ 423,189 -----------
8 The accompanying notes are an integral part of these financial statements. Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
S&P/Moody's Principal Ratings Amount (unaudited) Value Multi-Utilities - 0.9% $ 270,000 BBB-/Baa3 Avista Corp., 7.75%, 1/1/07 $ 272,310 ----------- Total Utilities $ 695,499 ----------- TOTAL CORPORATE BONDS (Cost $8,750,223) $ 8,399,756 ----------- U.S. GOVERNMENT & AGENCY OBLIGATIONS - 66.4% 955,000 Federal Home Loan Bank, 6.0%, 4/15/32 $ 965,187 1,052,521 Federal Home Loan Mortgage Corp., 4.5%, 5/1/35 954,870 537,550 Federal Home Loan Mortgage Corp., 4.5%, 10/1/35 487,677 233,526 Federal Home Loan Mortgage Corp., 5.5%, 9/1/33 225,289 79,923 Federal Home Loan Mortgage Corp., 6.0%, 1/1/34 78,851 17,696 Federal Home Loan Mortgage Corp., 8.0%, 4/1/08 17,886 1,214,356 Federal National Mortgage Association, 4.78%, 12/1/12 1,161,574 1,196,486 Federal National Mortgage Association, 5.0%, 12/1/17 1,154,970 1,176,287 Federal National Mortgage Association, 5.0%, 3/1/33 1,104,888 588,223 Federal National Mortgage Association, 5.0%, 5/1/34 551,610 730,000 Federal National Mortgage Association, 5.24%, 8/7/18 692,503 763,327 Federal National Mortgage Association, 5.5%, 9/1/17 750,693 957,646 Federal National Mortgage Association, 5.5%, 2/1/18 942,020 456,997 Federal National Mortgage Association, 5.5%, 7/1/23 444,929 294,937 Federal National Mortgage Association, 5.5%, 4/1/36 283,299 64,992 Federal National Mortgage Association, 6.0%, 6/1/15 65,220 65,739 Federal National Mortgage Association, 6.0%, 1/1/29 65,892 104,571 Federal National Mortgage Association, 6.0%, 9/1/29 103,434 53,968 Federal National Mortgage Association, 7.0%, 3/1/12 54,962 48,300 Federal National Mortgage Association, 8.0%, 2/1/29 51,041 15,204 Federal National Mortgage Association, 8.0%, 2/1/30 16,064 6,286 Federal National Mortgage Association, 8.0%, 4/1/30 6,634 18,903 Federal National Mortgage Association, 8.0%, 7/1/30 19,949 39,527 Federal National Mortgage Association, 8.0%, 10/1/30 41,715 18,275 Federal National Mortgage Association, 8.0%, 1/1/31 19,287 221,432 Federal National Mortgage Association, 8.0%, 3/1/31 233,959 10,884 Federal National Mortgage Association, 8.0%, 5/1/31 11,486 21,369 Federal National Mortgage Association, 9.5%, 2/1/21 23,311 696,981 Government National Mortgage Association, 4.5%, 12/15/18 664,427 341,623 Government National Mortgage Association, 4.5%, 8/15/33 314,266 126,888 Government National Mortgage Association, 4.5%, 12/15/34 116,636 200,149 Government National Mortgage Association, 5.0%, 7/15/19 194,333 312,470 Government National Mortgage Association, 5.5%, 8/15/33 303,252 1,283,067 Government National Mortgage Association, 5.5%, 10/15/33 1,245,214 324,440 Government National Mortgage Association, 5.5%, 12/15/34 314,748 53,134 Government National Mortgage Association, 6.0%, 8/15/13 53,423 10,464 Government National Mortgage Association, 6.0%, 4/15/14 10,538 381,096 Government National Mortgage Association, 6.0%, 8/15/34 378,457 690,870 Government National Mortgage Association, 6.0%, 9/15/34 686,085 42,145 Government National Mortgage Association, 7.0%, 4/15/28 43,482 14,336 Government National Mortgage Association, 7.75%, 11/15/29 15,121 865,344 Government National Mortgage Association II, 5.5%, 11/20/34 835,980 170,000 U.S. Treasury Bonds, 5.25%, 11/15/28 169,203 685,000 U.S. Treasury Bonds, 7.125%, 2/15/23 819,538 787,094 U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 746,848
The accompanying notes are an integral part of these financial statements. 9 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount Value U.S. GOVERNMENT & AGENCY OBLIGATIONS - (continued) $ 177,615 U.S. Treasury Inflation Protected Security, 2.0%, 1/15/16 $ 169,615 187,189 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 196,081 104,168 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 108,957 150,000 U.S. Treasury Notes, 4.0%, 2/15/15 138,223 950,000 U.S. Treasury Notes, 5.5%, 8/15/28 976,051 525,000 U.S. Treasury Strip, 0.0%, 11/15/13 361,237 ----------- $19,390,915 ----------- TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost $20,180,926) $19,390,915 ----------- TOTAL INVESTMENT IN SECURITIES - 98.9% (Cost $30,039,387) $28,875,770 ----------- OTHER ASSETS AND LIABILITIES - 1.1% $ 308,056 ----------- TOTAL NET ASSETS - 100.0% $29,183,826 ===========
144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $1,772,232 or 6.1% of total net assets. NR Not rated by either S&P or Moody's (a) Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. 10 The accompanying notes are an integral part of these financial statements. Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/05 12/31/04(a) 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 10.79 $ 11.61 $ 11.24 $ 11.39 $ 11.12 $ 10.92 -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations: Net investment income $ 0.25 $ 0.59 $ 0.44 $ 0.46 $ 0.52 $ 0.59 Net realized and unrealized gain (loss) on investments (0.31) (0.29) (0.04) (0.09) 0.35 0.20 -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ (0.06) $ 0.30 $ 0.40 $ 0.37 $ 0.87 $ 0.79 Distributions to shareowners: Net investment income (0.27) (1.12) (0.03) (0.52) (0.60) (0.59) -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ (0.33) $ (0.82) $ 0.37 $ (0.15) $ 0.27 $ 0.20 -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 10.46 $ 10.79 $ 11.61 $ 11.24 $ 11.39 $ 11.12 ======== ======== ======== ======== ======== ======== Total return* (0.59)% 2.62% 3.56% 3.28% 7.79% 7.28% Ratio of net expenses to average net assets 0.62%** 0.62% 0.89% 0.86% 0.84% 0.82% Ratio of net investment income to average net assets 4.80%** 4.48% 3.61% 3.79% 4.87% 5.56% Portfolio turnover rate 18%** 31% 57% 56% 87% 133% Net assets, end of period (in thousands) $ 29,184 $ 33,332 $ 45,793 $ 51,565 $ 51,201 $ 44,847 Ratios with no waiver of management fees by PIM and no reduction for fees paid indirectly: Net expenses 0.92%** 0.83% 0.89% 0.86% 0.84% 0.82% Net investment income 4.50%** 4.27% 3.61% 3.79% 4.87% 5.56% Ratios with waiver of management fees by PIM and reduction for fees paid indirectly: Net expenses 0.62%** 0.62% 0.89% 0.86% 0.84% 0.82% Net investment income 4.80%** 4.48% 3.61% 3.79% 4.87% 5.56%
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and subsequently became the advisor on December 10, 2004. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 11 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (cost $30,039,387) $ 28,875,770 Cash 81,112 Receivables -- Dividends, interest and foreign taxes withheld 283,112 Other 3,265 ------------ Total assets $ 29,243,259 ------------ LIABILITIES: Payables -- Fund shares repurchased $ 30,379 Due to affiliates 566 Accrued expenses 28,488 ------------ Total liabilities $ 59,433 ------------ NET ASSETS: Paid-in capital $ 31,169,827 Distributions in excess of net investment income (93,467) Accumulated net realized loss on investments (728,917) Net unrealized loss on: Investments (1,163,617) ------------ Total net assets $ 29,183,826 ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 29,183,826 Shares outstanding 2,790,450 ------------ Net asset value per share $ 10.46
12 The accompanying notes are an integral part of these financial statements. Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Interest $ 840,268 Income on securities loaned, net 1,228 ---------- Total investment income $ 841,496 ---------- EXPENSES: Management fees $ 77,612 Transfer agent fees and expenses 716 Administrative reimbursements 9,460 Custodian fees 6,356 Professional fees 35,464 Printing expense 5,150 Fees and expenses of nonaffiliated trustees 1,994 Miscellaneous 6,545 ---------- Total expenses $ 143,297 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (47,059) ---------- Net expenses $ 96,238 ---------- Net investment income $ 745,258 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from: Investments $ 40,927 ---------- Change in net unrealized loss from: Investments $ (968,580) ---------- Net loss on investments $ (927,653) ========== Net decrease in net assets resulting from operations $ (182,395) ==========
The accompanying notes are an integral part of these financial statements. 13 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 745,258 $ 1,706,430 Net realized gain on investments 40,927 166,785 Change in net unrealized loss on investments (968,580) (885,532) ------------ ------------- Net increase (decrease) in net assets resulting from operations $ (182,395) $ 987,683 ------------ ------------- DISTRIBUTIONS TO SHAREOWNERS Net investment income: Class I $ (783,477) $ (3,723,847) ------------ ------------- Total distributions to shareholders $ (783,477) $ (3,723,847) ------------ ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 940,298 $ 440,667 Reinvestment of distributions 783,406 3,722,866 Cost of shares repurchased (4,905,618) (13,889,129) ------------ ------------- Net decrease in net assets resulting from Fund share transactions $ (3,181,914) $ (9,725,596) ------------ ------------- Net decrease in net assets $ (4,147,786) $ (12,461,760) NET ASSETS: Beginning of period 33,331,612 45,793,372 ------------ ------------- End of period $ 29,183,826 $ 33,331,612 ============ ============= Distributions in excess of net investment income, end of period $ (93,467) $ (55,248) ============ =============
14 The accompanying notes are an integral part of these financial statements. Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Bond VCT Portfolio (The Portfolio) (formerly Safeco RST Bond Portfolio) is a portfolio of Pioneer Variable Contracts Trust (the Trust), which is a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts, or by qualified pension and retirement plans. Bond Portfolio seeks current income from an investment grade portfolio with due regard to preservation of capital and prudent investment risk. Secondarily, the Portfolio seeks a relatively stable level of dividends. The Portfolio, organized on December 10, 2004, is the successor to the Safeco RST Bond Portfolio. Safeco RST Bond Portfolio, one of six series of portfolios that comprised Safeco Resource Series Trust, transferred all of the net assets of Trust shares in exchange for the Portfolio's Class I shares in a one-to-one exchange ratio, on December 10, 2004, pursuant to an agreement and plan of reorganization (the "reorganization" which was approved by the shareholders of Safeco RST Bond Portfolio on December 8, 2004). The Portfolio had no assets or liabilities prior to the reorganization. Accordingly, the reorganization, which was a tax-free exchange, had no effect on the Portfolio's operations. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: 15 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The Portfolio elected to defer $52,974 in capital losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ended December 31, 2006. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Bond VCT Portfolio had a net capital loss carryforward of $716,870, of which the following amounts will expire between 2008 and 2010, if not utilized: $136,015 in 2008 and $580,855 in 2010. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the distributions paid during the year ended December 31, 2005 and the components of distributable earnings (accumulated losses) as of December 31, 2005.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 3,723,847 Long-Term capital gain -- ------------ $ 3,723,847 Return of Capital -- ------------ Total distributions $ 3,723,847 ------------ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 86,609 Undistributed long-term gain/(capital loss carryforward) (716,870) Post-October loss deferred (52,974) Unrealized appreciation (depreciation) (336,894) ------------ Total $ (1,020,129) ------------ - --------------------------------------------------------------------------------
16 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax treatment of premium and amortization. C. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated at the annual rate of 0.50% of the Portfolio's average daily net assets. Prior to the reorganization, the Portfolio was advised by Safeco Asset Management, which received an annual fee equal to 0.74% of its average daily net assets. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and to assume other operating expenses of the Portfolio to the extent necessary to limit Class I expenses to 0.62% of the average daily net assets attributable to Class I shares. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006 $349 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent Since the reorganization PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $217 in transfer agent fees payable to PIMSS June 30, 2006. Prior to the reorganization Safeco services corporation was the transfer and shareholder servicing agent. 4. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------- Bond Portfolio $30,181,244 $65,702 $ (1,371,176) $ (1,305,474) =========== ======= ============ ============ - -------------------------------------------------------------------------------
17 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 5. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $370,337 and $2,517,564, respectively. The cost of purchases and the proceeds from sales of investments in U.S. Government obligations for the six months ended June 30, 2006, were $2,389,483 and $3,517,102, respectively. 6. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- --------------------------------------------------------------------------------------------- '06 Shares '06 Amount Bond Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - --------------------------------------------------------------------------------------------- CLASS I: Shares sold 88,079 $ 940,298 38,950 $ 440,667 Reinvestment of distributions 73,899 783,406 334,515 3,722,866 Shares repurchased (461,490) (4,905,618) (1,227,950) (13,889,129) -------------------------------------------------------- Net decrease (299,512) $ (3,181,914) (854,485) $ (9,725,596) ======================================================== - ---------------------------------------------------------------------------------------------
18 Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - -------------------------------------------------------------------------------- Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 19 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 21 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 22 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 24 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 25 [LOGO]PIONEER Investments(R) Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19617-00-0806 [Logo] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Value VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 5 Financial Statements 7 Notes to Financial Statements 11 Trustees, Officers and Service Providers 15
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S Common Stocks 86.3% Temporary Cash Investment 9.2% Depositary Receipts for International Stocks 3.1% International Common Stocks 1.4%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Financials 33.4% Consumer Staples 9.8% Health Care 9.6% Energy 8.7% Industrials 8.4% Utilities 7.7% Consumer Discretionary 7.1% Materials 5.5% Information Technology 5.2% Telecommunication Services 4.6%
Five Largest Holdings (As a percentage of equity holdings) 1. Wachovia Corp. 5.34% 2. Citigroup, Inc. 5.16 3. Bank of America Corp. 5.13 4. Dow Chemical Co. 4.32 5. ConocoPhillips 4.32
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 13.59 $ 13.92
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $0.0317 $ - $0.7902
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Value VCT Portfolio at net asset value, compared to that of the Russell 1000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING TABLE WAS DEPICTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Value Russell 1000 VCT Portfolio Value Index 5/03 10,000 10,000 6/03 10,193 10,125 6/04 12,002 12,265 6/05 12,960 13,989 6/06 14,063 15,682
The Russell 1000 Value Index measures the performance of the value-oriented stocks in the Russell 1000 Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 12.59% (5/1/03) 1 Year 8.51%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charge. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all funds. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Value VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - --------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,036.80 Expenses Paid During Period* $ 5.61
* Expenses are equal to the Portfolio's annualized expense ratio of 1.11% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Value VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - --------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,019.29 Expenses Paid During Period* $ 5.56
* Expenses are equal to the Portfolio's annualized expense ratio of 1.11% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Portfolio Manager Aaron C. Clark describes the economic background and investment strategies that affected results for Pioneer Value VCT Portfolio through the first half of 2006. Q. What was the investment background and how did the Portfolio perform during this period? A. The ongoing economic expansion has brought robust increases in corporate profits, a widespread strengthening of balance sheets and a lengthy rally in U.S. equity markets. But after recording solid gains in the first few months of the year, stocks suffered a period of volatility beginning in May. Investors grew anxious about the ultimate extent of the Federal Reserve Board's interest rates hikes, the economic impact of high energy prices, and mounting geopolitical tensions. For the six months ended June 30, 2006, the Portfolio returned 3.68% at net asset value. This result trailed the Portfolio's benchmark, the Russell 1000 Value Index, which returned 6.56% over the same period. The average return for the 98 portfolios in Lipper's Large-Cap Value category was 4.72%. The bulk of the portfolio's underperformance during this period traces back to stock selection, which we describe in further detail below. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. Which sectors or stocks helped performance? A. Energy stocks continued their strong run. We took profits in Devon Energy and Occidental Petroleum. Suncor, which extracts oil from sands found in Canada, again contributed to results. Cable operator Comcast, one of our largest holdings, rebounded when the market began to appreciate the revenue potential of Comcast's rollout of phone services to its many subscribers. Deere, a major farm equipment maker, benefited from robust business conditions and the focus on ethanol, derived from corn, as an alternative fuel. Deere's earnings could expand further because tight supplies are likely to keep corn prices high, contributing to farm income for some time to come. Texas-based utility TXU moved higher after announcing plans to invest in coal-powered plants with potential for high returns, allaying uncertainty over how TXU would deploy its significant free cash flow. Bank of America contributed to returns as its broad range of products and services provided some profit protection while traditional bank margins - the gap between rates paid on deposits and rates charged on loans - were shrinking. Strong equity markets and investment banking activity helped Goldman Sachs rack up impressive earnings increases and lead brokerage holdings. Q. Please discuss the stocks that contributed to underperformance versus the benchmark. A. Detractors included disability insurer Unum Provident, which continues to work through a turnaround. The company had been making progress, but hit a snag last quarter. Dow Chemical suffered when earnings growth failed to meet Wall Street's expectations and there were concerns that a slowing economy would adversely affect Dow's business. Schering Plough's shares fell despite good earnings. And earnings shortfalls dogged Tyco, an industrial conglomerate. An announced breakup of the company may realize greater value for shareholders, but investors also await better business execution. Insurance company, American International Group also turned in disappointing results. Q. What is your current outlook? A. We think the economy will go on growing, which should fuel further profit expansion, but at a slackening pace. Whether high interest rates and expensive energy will trigger a slowdown - and to what extent - remains an open question. As value investors, we watch for stresses to create investment opportunities by driving valuations down. But in recent months the range of valuations among companies has narrowed, eliminating the kinds of disparities we aim to exploit. An exception seems to be the pharmaceutical industry, where we have expanded commitments. We continue to search for companies that can prosper and raise prices in an environment of higher interest rates and more costly energy. We also seek companies that trade below our estimate of their intrinsic value, with good businesses that can grow that value over time. As the period ended, valuations were declining and a shift away from riskier assets toward more stable issuers seemed to be underway. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 91.8% Energy - 8.0% Integrated Oil & Gas - 7.1% 40,376 ConocoPhillips $ 2,645,839 5,321 Occidental Petroleum Corp. 545,669 14,321 Suncor Energy, Inc. 1,160,144 4,600 USX-Marathon Group, Inc. 383,180 ----------- $ 4,734,832 ----------- Oil & Gas Equipment & Services - 0.9% 10,938 Technip* $ 605,541 ----------- Total Energy $ 5,340,373 ----------- Materials - 5.0% Diversified Chemical - 3.9% 67,840 Dow Chemical Co. $ 2,647,795 ----------- Diversified Metals & Mining - 1.1% 12,907 Freeport-McMoRan Copper & Gold, Inc. (Class B) $ 715,177 ----------- Total Materials $ 3,362,972 ----------- Capital Goods - 7.7% Aerospace & Defense - 1.5% 16,240 United Technologies Corp. $ 1,029,941 ----------- Construction & Farm Machinery & Heavy Trucks - 3.3% 26,360 Deere & Co. $ 2,200,796 ----------- Industrial Conglomerates - 2.9% 70,563 Tyco International, Ltd. $ 1,940,483 ----------- Total Capital Goods $ 5,171,220 ----------- Media - 6.5% Broadcasting & Cable TV - 6.5% 57,890 Clear Channel Communications, Inc. $ 1,791,696 77,974 Comcast Corp.* 2,552,869 ----------- $ 4,344,565 ----------- Total Media $ 4,344,565 ----------- Food, Beverage & Tobacco - 6.7% Packaged Foods & Meats - 1.5% 19,300 General Mills, Inc. $ 997,038 ----------- Soft Drinks - 1.6% 17,883 PepsiCo, Inc. $ 1,073,695 ----------- Tobacco - 3.6% 32,550 Altria Group, Inc. $ 2,390,147 ----------- Total Food, Beverage & Tobacco $ 4,460,880 ----------- Household & Personal Products - 2.3% Household Products - 2.3% 25,200 Kimberly-Clark Corp. $ 1,554,840 ----------- Total Household & Personal Products $ 1,554,840 -----------
Shares Value Pharmaceuticals & Biotechnology - 8.8% Pharmaceuticals - 8.8% 75,220 Bristol-Myers Squibb Co. $ 1,945,189 43,700 Merck & Co., Inc. 1,591,991 122,770 Schering-Plough Corp. 2,336,313 ----------- $ 5,873,493 ----------- Total Pharmaceuticals & Biotechnology $ 5,873,493 ----------- Banks - 7.9% Diversified Banks - 4.9% 60,580 Wachovia Corp. $ 3,276,166 ----------- Thrifts & Mortgage Finance - 3.0% 44,118 Washington Mutual, Inc. $ 2,010,898 ----------- Total Banks $ 5,287,064 ----------- Diversified Financials - 14.0% Asset Management & Custody Banks - 0.5% 34,300 Amvescap Plc* $ 313,837 ----------- Investment Banking & Brokerage - 4.1% 5,475 Goldman Sachs Group, Inc. $ 823,604 27,720 Merrill Lynch & Co., Inc. 1,928,203 ----------- $ 2,751,807 ----------- Diversified Financial Services - 9.4% 65,324 Bank of America Corp. $ 3,142,084 65,534 Citigroup, Inc. 3,161,360 ----------- $ 6,303,444 ----------- Total Diversified Financials $ 9,369,088 ----------- Insurance - 8.7% Life & Health Insurance - 2.0% 71,595 UNUM Corp. $ 1,298,017 ----------- Multi-Line Insurance - 2.8% 31,858 American International Group, Inc. $ 1,881,215 ----------- Property & Casualty Insurance - 3.9% 47,709 Allstate Corp. $ 2,611,114 ----------- Total Insurance $ 5,790,346 ----------- Software & Services - 1.9% Data Processing & Outsourced Services - 1.9% 28,766 First Data Corp. $ 1,295,621 ----------- Total Software & Services $ 1,295,621 ----------- Technology Hardware & Equipment - 2.8% Communications Equipment - 1.4% 47,448 Nokia Corp. (A.D.R.)* $ 961,296 ----------- Computer Hardware - 1.4% 38,200 Dell, Inc.* $ 932,462 ----------- Total Technology Hardware & Equipment $ 1,893,758 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Telecommunication Services - 4.2% Integrated Telecommunication Services - 2.1% 41,200 Verizon Communications, Inc. $ 1,379,788 ----------- Wireless Telecommunication Services - 2.1% 72,104 Sprint Nextel Corp. $ 1,441,359 ----------- Total Telecommunication Services $ 2,821,147 ----------- Utilities - 7.1% Electric Utilities - 4.1% 22,890 Edison International $ 892,710 9,000 Exelon Corp. 511,470 24,290 Firstenergy Corp. 1,316,761 ----------- $ 2,720,941 ----------- Independent Power Producer & Energy Traders - 3.0% 33,730 TXU Corp. $ 2,016,718 ----------- Total Utilities $ 4,737,659 ----------- TOTAL COMMON STOCKS (Cost $56,084,636) $61,303,026 ----------- Principal Amount TEMPORARY CASH INVESTMENT - 9.3% Repurchase Agreement - 9.3% $6,200,000 UBS Warburg, Inc., 4.40% dated 6/30/06, repurchase price of $6,200,000 plus accrued interest on 7/3/06 collateralized by $6,612,000 U.S. Treasury Bill, 3.375%, 9/15/09 $ 6,200,000 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $6,200,000) $ 6,200,000 ----------- TOTAL INVESTMENT IN SECURITIES - 101.1% (Cost $62,284,636) $67,503,026 ----------- OTHER ASSETS AND LIABILITIES - (1.1)% $ (713,674) ----------- TOTAL NET ASSETS - 100.0% $66,789,352 ===========
* Non-income producing security. 6 The accompanying notes are an integral part of these financial statements. Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 5/1/03(a) 6/30/06 Year Ended Year Ended to Class II (unaudited) 12/31/05 12/31/04 12/31/03 Net asset value, beginning of period $ 13.92 $ 13.40 $ 12.04 $ 10.00 ------- ------- ------- ------- Increase from investment operations: Net investment income $ 0.09 $ 0.02 $ 0.02 $ 0.01 Net realized and unrealized gain on investments and foreign currency transactions 0.40 0.60 1.36 2.03 ------- ------- ------- ------- Net increase from investment operations $ 0.49 $ 0.62 $ 1.38 $ 2.04 Distributions to shareowners: Net income (0.03) (0.01) (0.01) - Net realized gain (0.79) (0.09) (0.01) - -------- ------- ------- -------- Net increase (decrease) in net asset value $ (0.33) $ 0.52 $ 1.36 $ 2.04 -------- ------- ------- -------- Net asset value, end of period $ 13.59 $ 13.92 $ 13.40 $ 12.04 -------- ------- ------- -------- Total return* 3.68% 4.67% 11.40% 20.40% Ratio of net expenses to average net assets+ 1.11%** 1.34% 1.50% 1.50%** Ratio of net investment income to average net assets+ 1.29%** 0.63% 0.27% 0.27%** Portfolio turnover rate 91%** 208% 52% 24% Net assets, end of period (in thousands) $66,789 $71,136 $10,879 $ 1,695 Ratios assuming no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.11%** 1.43% 3.61% 10.93%** Net investment income (loss) 1.29%** 0.54% (1.85)% (9.16)%** Ratios assuming waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.11%** 1.34% 1.50% 1.50%** Net investment income 1.29%** 0.63% 0.27% 0.27%**
(a) Class II shares were first publicly offered on May 1, 2003. * Assumes initial investment at net asset value at the beginning of the period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of the period. ** Annualized. + Ratios with no reduction for fees paid indirectly. Note: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 7 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (cost $62,284,636) $ 67,503,026 Foreign currencies, at value (cost $105,847) 107,859 Receivables - Investment securities sold 3,479,875 Dividends, interest and foreign taxes withheld 127,332 Other 3,659 ------------ Total assets $ 71,221,751 ------------ LIABILITIES: Payables - Investment securities purchased $ 4,312,165 Fund shares repurchased 36,002 Due to bank 33,917 Due to affiliates 3,151 Accrued expenses 47,164 ------------ Total liabilities $ 4,432,399 ------------ NET ASSETS: Paid-in capital $ 66,026,036 Undistributed net investment income 446,847 Accumulated net realized loss (4,891,401) Net unrealized gain (loss) on: Investments 5,218,390 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (10,520) ------------ Total net assets $ 66,789,352 ------------ NET ASSET VALUE PER SHARE: Class II: No par value (unlimited number of shares authorized) Net assets $ 66,789,352 Shares outstanding 4,914,589 ------------ Net asset value per share $ 13.59
8 The accompanying notes are an integral part of these financial statements. Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $3,190) $ 782,422 Interest 49,294 ---------- Total investment income $ 831,716 ---------- EXPENSES: Management fees $ 260,133 Transfer agent fees 950 Distribution fees (Class II) 87,865 Administrative fees 9,751 Custodian fees 10,136 Professional fees 14,868 Printing 181 Fees and expenses of nonaffiliated trustees 828 Miscellaneous 70 ---------- Total expenses $ 384,782 ---------- Net investment income $ 446,934 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $2,919,951 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (240) ---------- $2,919,711 ---------- Change in net unrealized gain or (loss) from: Investments $ (708,472) Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (10,516) ---------- $ (718,988) ---------- Net gain on investments and foreign currency transactions $2,200,723 ---------- Net increase in net assets resulting from operations $2,647,657 ==========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 446,934 $ 143,759 Net realized gain on investments 2,919,711 3,979,230 Change in net unrealized gain or loss on investments and foreign currency transactions (718,988) (2,014,683) ------------ ------------ Net increase in net assets resulting from operations $ 2,647,657 $ 2,108,306 ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS Net investment income: Class II $ (145,013) $ (12,530) Net realized gain Class II (3,614,807) (94,867) ------------ ------------ Total distributions to shareholders $ (3,759,820) $ (107,397) ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 1,878,493 $ 4,536,146 Shares issued in reorganization - 56,877,053 Reinvestment of distributions 3,759,820 104,862 Cost of shares repurchased (8,872,738) (3,262,015) ------------ ------------ Net increase (decrease) in net assets resulting from fund share transactions $ (3,234,425) $58,256,046 ------------ ------------ Net increase (decrease) in net assets $ (4,346,588) $60,256,955 NET ASSETS: Beginning of period 71,135,940 10,878,985 ------------ ------------ End of period $ 66,789,352 $71,135,940 ============ =========== Undistributed net investment income, end of period $ 446,847 $ 144,926 ============ ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Value VCT Portfolio (the Portfolio), is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty- seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer I bbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The Value VCT Portfolio commenced operations on May 1, 2003. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The Value Portfolio seeks reasonable income and capital growth. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risk is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic and political conditions. The following is a summary of significant accounting policies consistently followed by the Trust, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: 11 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. At June 30, 2006, there were no open forward foreign currency contracts. D. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Value Portfolio had a net capital loss carryforward of $7,737,092, of which the following amounts will expire in between 2009 and 2010, if not utilized: $5,070,587 in 2009 and $2,666,505 in 2010. 12 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The tax character of current year distributions paid will be determined at the end of the fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- ------------------------------------------------------------------------------- 2005 - ------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 20,216 Long-Term capital gain 87,181 Return of Capital -- ------------ Total distributions $ 107,397 ============ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 144,926 Undistributed long-term gain/ (capital loss carryforward) 3,614,768 Capital loss carryforward from AmSouth merger (7,737,092) Unrealized appreciation (depreciation) 5,852,878 ------------ Total $ 1,875,480 ============ - -------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is primarily attributable to the tax deferral of losses on wash sales. E. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. F. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. G. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $1,884 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses to the extent required to reduce Class II expenses to 1.30% of the average daily net assets attributable to class II shares. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $810 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net 13 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $457 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ----------------------------------------------------------------------------------------------------- Value Portfolio $62,358,616 $6,022,601 $ (878,191) $5,144,410 =========== ========== =========== ========== - -----------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $30,353,914 and $41,891,792, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ----------------------------------------------------------------------------------------------------- '06 Shares '06 Amount Value Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ----------------------------------------------------------------------------------------------------- CLASS II: Shares sold 136,668 $ 1,878,493 338,599 $ 4,536,146 Shares issued in reorganization -- -- 4,188,296 56,877,053 Reinvestment of distributions 283,332 3,759,820 7,796 104,862 Shares repurchased (615,835) (8,872,738) (236,328) (3,262,015) -------- ------------ --------- ------------ Net increase (decrease) (195,835) $ (3,234,425) 4,298,363 $ 58,256,046 ======== ============ ========= ============ - -----------------------------------------------------------------------------------------------------
8. Merger Information On November 4, 2005, beneficial owners of AmSouth VIF Value Portfolio approved a proposed Agreement and Plan of Reorganization that provided for the merger listed below. This tax-free reorganization was accomplished on November 4, 2005, by exchanging all of the AmSouth Fund's net assets for Class II shares as indicated below, based on Class II share's ending net asset value on the Closing Date. The following charts show the details of the reorganization as of that closing date ("Closing Date"):
- ----------------------------------------------------------------------------------------------------- Pioneer Portfolio Value VCT AmSouth Value VCT Portfolio VIF Value Portfolio (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - ----------------------------------------------------------------------------------------------------- Net Assets $14,728,843 $56,877,053 $71,605,896 Shares Outstanding 1,084,731 3,957,885 5,273,027 Class II Shares Issued 4,188,296 - -----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------- Unrealized Appreciation Realized (Loss) on Closing Date on Closing Date - ----------------------------------------------------------------------------------------------------- AmSouth VIF Value $6,995,580 $ (8,135,854) ========== ============= - -----------------------------------------------------------------------------------------------------
14 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - --------------------------------------------------------------------------------
Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Mary K. Bush Vincent Nave, Treasurer Margaret B.W. Graham Dorothy E. Bourassa, Secretary Thomas J. Perna Marguerite A. Piret John Winthrop
Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [Logo]PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19629-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Cullen Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Cullen Value VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 8 Notes to Financial Statements 12 Trustees, Officers and Service Providers 15
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - --------------------------------------------------------------------------------
Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] International Common Stocks 2.5% Temporary Cash Investments 7.1% Depositary Receipts for International Stocks 19.3% U.S. Common Stocks 71.1%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Consumer Discretionary 5.5% Telecommunication Services 6.4% Materials 6.5% Information Technology 6.7% Industrials 8.1% Energy 8.7% Health Care 9.7% Consumer Staples 18.6% Financials 29.8%
Five Largest Holdings (As a percentage of equity holdings) 1. BellSouth Corp. 3.49% 2. Pfizer, Inc. 3.40 3. Chubb Corp. 3.32 4. MetLife, Inc. 3.29 5. J.P. Morgan Chase & Co. 3.28
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 11.61 $ 10.99
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.0209 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Cullen Value VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index and the Russell 1000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Russell S&P Cullen Value 1000 500 VCT Portfolio Value Index Mar-05 10,000 10,000 10,000 Jun-05 10,137 10,131 10,167 Jun-06 11,011 11,702 11,398
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure of the broad U.S. stock market. The Russell 1000 Value Index measures the performance of large-cap U.S. value stocks. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Cumulative Total Returns (As of June 30, 2006)
- ---------------------------- Net Asset Value - ---------------------------- Life-of-Class 12.48% (3/18/05) 1 Year 15.51%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value - $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Cullen Value VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - ---------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,058.40 Expenses Paid During Period* $ 5.10
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Cullen Value VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - --------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,019.84 Expenses Paid During Period* $ 5.01
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- The domestic stock market experienced significant volatility during the first six months of 2006. Supported by a healthy economy and rising corporate earnings, equity prices generally rose early in the year. The favorable market environment abruptly changed in the second quarter of 2006, when investors became increasingly worried that the Federal Reserve Board might raise rates more than had been anticipated. In the following interview, James P. Cullen discusses the factors that influenced Pioneer Cullen Value VCT Portfolio's performance during the six months ended June 30, 2006. Mr. Cullen, President of Cullen Capital Management LLC, oversees the team responsible for the daily management of the Portfolio. Q: How did the Portfolio perform during the six months ended June 30, 2006? A: Pioneer Cullen Value VCT Portfolio Class II shares had a total return of 5.84% for the six months, at net asset value. During the same period, the Russell 1000 Value Index produced a total return of 6.56% while the average return of the 98 portfolios in Lipper's Large-Cap Value category was 4.72% The S&P 500 Index, a broad measure of market performance returned 2.71% over the six-month period. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q: What were the primary factors influencing performance? A: The Portfolio lagged somewhat early in the period when highly speculative stocks led the market rally. Our fundamentally-based value discipline leads us to de-emphasize such stocks. However, the speculative areas were among those hardest hit when the equity markets declined in May and June because of interest-rate fears. Our de-emphasis of speculative stocks, including emerging markets, commodities and small-cap stocks helped us during the late correction. We also had become more conservative in the first quarter of 2006 because we were concerned that stock prices were becoming inflated and driven by speculation. Pioneer Cullen Value VCT Portfolio follows a value-based strategy that we have used since 1982, with a concentrated portfolio - usually of between 30 and 35 stocks. A typical position in each company comprises about 3% of Portfolio assets. The Portfolio is constructed based on our intensive analysis of the strengths and potential of each company. We believe this focused portfolio allows our analysts to understand each company and has led to consistently good returns on a risk-adjusted basis over the long term. While the number of holdings is relatively low, we keep the Portfolio well diversified across a broad range of industries. We also add to diversification with some investments in international markets. About 25% of our holdings were international, including about five percent in emerging markets. These positions detracted from results during the correction of May and June. International investments from developed nations included Diageo, a major international marketer of beer, wine and liquor; UBS, the Swiss-based global investment bank; Nestle, the well-known international food company; Nokia, the telecommunications equipment corporation; Unilever, a diversified consumer staples firm; and GlaxoSmithKline, the London-based pharmaceutical company. Our emerging-market exposure was limited to three companies with global businesses: Petrobras, the Brazilian oil company; Cemex, the Mexican-based cement company; and Anglo-American, the U.K.-based mining company with gold, silver and diamond mine operations, principally in South Africa. Q: What types of investments most affected performance for the six months? A: Several of our more defensive holdings did very well. They included three consumer staples companies: Kraft Foods, General Mills and Kimberly Clark. These companies have defensive characteristics, including relatively stable earnings and very good dividend yields. Other investments that helped support results included Archer Daniels Midland, a leader in grain commodities, which has benefited from increased use of ethanol as a fuel additive. In addition, our positions in two Canadian railroads, Canadian Pacific and Canadian National, added to results as both companies benefited when rising energy costs made rail shipping more efficient. Canadian Pacific earns a major share of its business shipping commodities, while Canadian National does more business shipping industrial products. A Word About Risk: Investments in mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. The Portfolio invests in a limited number of securities and, as a result, the Portfolio's performance may be more volatile than the performance of other portfolios holding more securities. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Our investments in several traditional growth stocks gained and helped results. We found opportunities in a number of such companies in the fall of 2005 when, for various reasons, the prices of these companies had slipped enough for them to be considered value stocks. These included technology companies Hewlett-Packard and Motorola. Shares of Hewlett-Packard, which conducts 75% of its business overseas, rose as the company reorganized itself under a new chairman. The investment in Motorola enabled us to play on the fast-growing demand for wireless telecommunications products in emerging markets. We have taken profits and sold the position in Motorola during this reporting period. We did have some disappointments, however. One was Home Depot, another example of a growth stock in which we invested in 2005 when its price became attractive. We saw opportunities because of its new success in Mexico and because of its positioning to benefit from increased home-renovation activity. However, its stock price has fallen because of a controversy over compensation for its chief executive. Also detracting from results was the investment in Bunge, a global agricultural company, and Tidewater, an oil drill operator whose stock price was pulled down by the correction in small-cap shares. We have retained Tidewater as of June 30, 2006 because of its potential to benefit from increased oil drilling activity, but we sold Bunge. Q: What is your investment outlook? A: The stocks in the Portfolio have an average price of about 13.5 times earnings over the past 12 months. That is substantially lower than the average price/earnings ratio in the overall market. We are finding many companies that continue to do well for two basic reasons: they successfully have cut their costs, putting more cash on their balance sheets, and they have found ways to do business in the global marketplace. We think corporate earnings will continue to grow, although the rate of profit increase may start to slow somewhat. The economy appears to be in a relatively late stage of its growth cycle. Given this, we intend to be more defensive in our overall positioning. We think this is a good time to focus on a stock's total return - the combination of price change and dividend - and generally to avoid companies heavily dependent on movements in commodity prices. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 98.4% Energy - 8.6% Integrated Oil & Gas - 3.3% 2,900 ConocoPhillips $ 190,037 1,150 Petroleo Brasileiro SA* 102,707 ---------- $ 292,744 ---------- Oil & Gas Equipment & Services - 1.9% 3,400 Tidewater, Inc.* $ 167,280 ---------- Oil & Gas Exploration & Production - 3.4% 2,400 Anadarko Petroleum Corp. $ 114,456 3,500 Encana Corp. (a) 184,240 ---------- $ 298,696 ---------- Total Energy $ 758,720 ---------- Materials - 6.4% Construction Materials - 2.2% 3,500 Cemex SA (A.D.R.)* $ 199,395 ---------- Diversified Metals & Mining - 2.2% 9,440 Anglo American Plc $ 192,954 ---------- Forest Products - 2.0% 2,800 Weyerhaeuser Co. $ 174,300 ---------- Total Materials $ 566,649 ---------- Capital Goods - 4.7% Aerospace & Defense - 2.2% 4,300 Raytheon Co. $ 191,651 ---------- Industrial Conglomerates - 2.5% 6,700 General Electric Co. $ 220,832 ---------- Total Capital Goods $ 412,483 ---------- Transportation - 3.3% Railroads - 3.3% 3,220 Canadian National Railway Co. $ 140,875 3,000 Canadian Pacific Railway, Ltd. (a) 153,420 ---------- $ 294,295 ---------- Total Transportation $ 294,295 ---------- Automobiles & Components - 2.6% Auto Parts & Equipment - 2.6% 3,600 Borg-Warner Automotive Inc. $ 234,360 ---------- Total Automobiles & Components $ 234,360 ---------- Retailing - 2.8% Home Improvement Retail - 2.8% 6,900 Home Depot, Inc. $ 246,951 ---------- Total Retailing $ 246,951 ---------- Food, Beverage & Tobacco - 15.7% Agricultural Products - 2.4% 5,150 Archer Daniels Midland Co.* $ 212,592 ---------- Distillers & Vintners - 3.1% 4,100 Diageo Plc (A.D.R.) (a) $ 276,955 ----------
Shares Value Packaged Foods & Meats - 10.2% 4,400 General Mills, Inc. $ 227,304 5,200 Kraft Foods, Inc.*(a) 160,680 3,400 Nestle SA (A.D.R.)* 266,961 11,000 Unilever N.V. 248,050 ---------- $ 902,995 ---------- Total Food, Beverage & Tobacco $1,392,542 ---------- Household & Personal Products - 2.6% Household Products - 2.6% 3,700 Kimberly-Clark Corp. $ 228,290 ---------- Total Household & Personal Products $ 228,290 ---------- Pharmaceuticals & Biotechnology - 9.5% Pharmaceuticals - 9.5% 4,800 GlaxoSmithKline $ 267,840 12,600 Pfizer, Inc. 295,722 5,750 Sanofi-Synthelabo SA (A.D.R.) 280,025 ---------- $ 843,587 ---------- Total Pharmaceuticals & Biotechnology $ 843,587 ---------- Banks - 6.5% Diversified Banks - 3.3% 2,850 ICIC Bank, Ltd. $ 67,403 4,100 Wachovia Corp. 221,728 ---------- $ 289,131 ---------- Regional Banks - 3.2% 8,600 Regions Financial Corp. $ 284,832 ---------- Total Banks $ 573,963 ---------- Diversified Financials - 13.2% Diversified Capital Markets - 2.6% 2,100 UBS AG* $ 230,370 ---------- Investment Banking & Brokerage - 2.8% 3,600 Merrill Lynch & Co., Inc. $ 250,416 ---------- Diversified Financial Services - 7.8% 5,900 Bank of America Corp. $ 283,790 2,450 Citigroup, Inc. 118,188 6,800 J.P. Morgan Chase & Co. 285,600 ---------- $ 687,578 ---------- Total Diversified Financials $1,168,364 ---------- Insurance - 9.6% Life & Health Insurance - 3.2% 5,600 MetLife, Inc. $ 286,776 ---------- Multi-Line Insurance - 3.1% 3,200 Hartford Financial Services Group, Inc. $ 270,720 ---------- Property & Casualty Insurance - 3.3% 5,800 Chubb Corp. $ 289,420 ---------- Total Insurance $ 846,916 ----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Technology Hardware & Equipment - 6.6% Communications Equipment - 2.7% 12,000 Nokia Corp. (A.D.R.)* $ 243,120 ---------- Computer Hardware - 2.4% 6,700 Hewlett-Packard Co. $ 212,256 ---------- Technology Distributors - 1.5% 4,000 Arrow Electronics, Inc.* $ 128,800 ---------- Total Technology Hardware & Equipment $ 584,176 ---------- Telecommunication Services - 6.3% Integrated Telecommunication Services - 6.3% 8,400 BellSouth Corp. $ 304,080 7,450 Verizon Communications, Inc. 249,500 ---------- $ 553,580 ---------- Total Telecommunication Services $ 553,580 ---------- TOTAL COMMON STOCKS (Cost $8,216,886) $8,704,876 ---------- TEMPORARY CASH INVESTMENTS - 7.6% Security Lending Collateral - 7.6% 668,311 Securities Lending Investment Fund, 5.16% $ 668,311 ---------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $668,311) $ 668,311 ---------- TOTAL INVESTMENT IN SECURITIES - 106.0% (Cost $8,885,197) $9,373,187 ---------- OTHER ASSETS AND LIABILITIES $ (527,350) ---------- TOTAL NET ASSETS - 100.0% $8,845,837 ==========
(A.D.R.) American Depositary Receipt * Non-income producing security. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 2,970 Canadian Pacific Railway, Ltd. $151,886 2,707 Diageo Plc (A.D.R.) 182,858 3,019 Encana Corp. 158,920 5,148 Kraft Foods Inc.* 159,073 -------- Total $652,737 ========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 3/18/05 (a) 6/30/06 to Class II (unaudited) 12/31/05 Net asset value, beginning of period $ 10.99 $ 10.00 ------- ------- Increase from investment operations: Net investment income $ 0.05 $ 0.04 Net realized and unrealized gain on investments 0.59 0.95 ------- ------- Net increase from investment operations $ 0.64 $ 0.99 Distributions to shareowners: Net income (0.02) -- ------- ------- Net increase in net asset value $ 0.62 $ 0.99 ------- ------- Net asset value, end of period $ 11.61 $ 10.99 ======= ======= Total return* 5.84% 9.90%(b) Ratio of net expenses to average net assets 1.00%** 1.00%** Ratio of net investment income to average net assets 1.83%** 1.13%** Portfolio turnover rate 22%** 34%(b) Net assets, end of period (in thousands) $ 8,846 $ 4,523 Ratios assuming no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 2.43%** 5.71%** Net investment income (loss) 0.41%** (3.58)%**
(a) Class II shares were first publicly offered on March 18, 2005. * Assumes initial investment at net asset value at the beginning of the period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of the period. ** Annualized. (b) Not Annualized. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 8 The accompanying notes are an integral part of these financial statements. Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $652,737) (cost $9,373,187 $8,885,197) respectively) Receivables -- Investment securities sold 169,659 Dividends, interest and foreign taxes withheld 10,566 Due from Pioneer Investment Management, Inc. 2,976 Other 880 ---------- Total assets $9,557,268 ---------- LIABILITIES: Payables -- Fund shares repurchased $ 2,060 Upon return of securities loaned 668,311 Due to bank 15,590 Due to affiliates 572 Accrued expenses 24,737 ---------- Total liabilities $ 711,270 ---------- NET ASSETS: Paid-in capital $8,304,295 Undistributed net investment income 59,053 Accumulated undistributed net realized loss (5,340) Net unrealized gain on investments 487,990 ---------- Total net assets $8,845,998 ---------- NET ASSET VALUE PER SHARE: Class II: No par value (unlimited number of shares authorized) Net assets $8,845,998 Shares outstanding 761,650 ---------- Net asset value per share $ 11.61
The accompanying notes are an integral part of these financial statements. 9 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $4,336) $ 79,006 Interest 9,825 Income on securities loaned, net 2,537 --------- Total investment income $ 91,368 --------- EXPENSES: Management fees $ 22,576 Transfer agent fees 782 Distribution fees (Class II) 8,066 Administrative fees 9,469 Custodian fees 10,680 Professional fees 18,718 Printing 5,541 Fees and expenses of nonaffiliated trustees 1,923 Miscellaneous 468 --------- Total expenses $ 78,223 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (45,941) --------- Net expenses $ 32,282 --------- Net investment income $ 59,086 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from: Investments $ 36,337 --------- Change in net unrealized gain or (loss) from: Investments $ 227,773 --------- Net gain on investments $ 264,110 ========= Net increase in net assets resulting from operations $ 323,196 =========
10 The accompanying notes are an integral part of these financial statements. Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months 3/18/05 Ended (Commencement 6/30/06 of Operations) (unaudited) to 12/31/05 FROM OPERATIONS: Net investment income $ 59,086 $ 17,229 Net realized gain (loss) on investments 36,337 (41,677) Change in net unrealized gain or (loss) on investments 227,773 260,217 ------------ ---------- Net increase in net assets resulting from operations $ 323,196 $ 235,769 ------------ ---------- DISTRIBUTIONS TO SHAREOWNERS Net investment income: Class II $ (17,546) $ -- ------------ ---------- Total distributions to shareowners $ (17,546) $ -- ------------ ---------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 5,316,370 $4,361,712 Reinvestment of distributions 17,128 -- Cost of shares repurchased (1,316,243) (74,388) ------------ ---------- Net increase in net assets resulting from Fund share transactions $ 4,017,255 $4,287,324 ------------ ---------- Net increase in net assets $ 4,322,905 $4,523,093 NET ASSETS: Beginning of period 4,523,093 -- ------------ ---------- End of period $ 8,845,998 $4,523,093 ============ ========== Undistributed net investment income, end of period $ 59,053 $ 17,513 ============ ==========
The accompanying notes are an integral part of these financial statements. 11 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Cullen Value VCT Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The Cullen Value Portfolio commenced operations on March 18, 2005. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The Cullen Value VCT Portfolio seeks capital appreciation and, secondarily, it seeks income. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. Investing in mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. The following is a summary of significant accounting policies consistently followed by the Trust, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are 12 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At December 31, 2005, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Cullen Value Portfolio had a net capital loss carryforward of $38,265, which will expire in 2013, if not utilized. The Portfolio elected to defer $3,412 in capital losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ended December 31, 2006. The tax character of current year distributions paid will be determined at the end of the fiscal year. The following chart shows the distributions paid during the year ended December 31, 2005 and the components of distributable earnings (accumulated losses) as of December 31, 2005.
- ---------------------------------------------------------- 2005 - ---------------------------------------------------------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 17,513 Undistributed long-term gain/(capital loss carryforward) (38,265) Post-October loss deferred (3,412) Unrealized appreciation (depreciation) 260,217 -------- Total $236,053 ======== - ----------------------------------------------------------
C. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities 13 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.70% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $231 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses to the extent required to reduce Class II expenses to 1.00% of the average daily net assets attributable to Class II shares. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $282 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $59 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - --------------------------------------------------------------------------------------------- Cullen Value Portfolio $8,885,197 $608,879 $ (120,889) $487,990 ========== ======== =========== ======== - ---------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $5,013,239 and $674,711, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ------------------------------------------------------------------------------------------------- '06 Shares '06 Amount Fund Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ------------------------------------------------------------------------------------------------- CLASS II: Shares sold 464,882 $ 5,316,370 418,641 $4,361,712 Reinvestment of distributions 1,514 17,128 -- -- Shares repurchased (116,257) (1,316,243) (7,130) (74,388) ---------------------------------------------------------- Net increase 350,139 $ 4,017,255 411,511 $4,287,324 ========================================================== - -------------------------------------------------------------------------------------------------
14 Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - -------------------------------------------------------------------------------- Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Subadviser Cullen Capital Management, LLC Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19637-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Equity Opportunity VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Equity Opportunity VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 8 Notes to Financial Statements 12 Trustees, Officers and Service Providers 15
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - --------------------------------------------------------------------------------
Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Depositary Receipts for International Stocks 1.6% Temporary Cash Investments 6.1% U.S. Common Stocks 92.3%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Consumer Discretionary 0.7% Consumer Staples 2.6% Information Technology 3.0% Energy 7.7% Health Care 12.6% Utilities 15.6% Materials 16.7% Industrials 20.3% Financials 20.8%
Five Largest Holdings (As a percentage of equity holdings) 1. Host Hotels & Resorts, Inc. 4.22% 2. Southern Union Co. 4.18% 3. Kinder Morgan, Inc. 3.32% 4. Equity Office Properties Trust 3.18% 5. NRG Energy, Inc. 3.12%
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 11.51 $ 10.78
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.0398 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Equity Opportunity VCT Portfolio at net asset value, compared to that of the Russell 2500 Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Equity Russell Opportunity 2500 VCT Portfolio Index Mar-05 10,000 10,000 Jun-05 10,396 10,452 Jun-06 11,739 11,867
The Russell 2500 Index measures the performance of U.S. small- and mid-cap stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Cumulative Total Returns (As of June 30, 2006)
- --------------------------- Net Asset Value - --------------------------- Life-of-Class 11.88% (3/18/05) 1 Year 12.92%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value - $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Equity Opportunity VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,071.60 Expenses Paid During Period* $ 6.42
* Expenses are equal to the Portfolio's annualized expense ratio of 1.25% for Class II shares multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Equity Opportunity VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - ------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,018.60 Expenses Paid During Period* $ 6.26
* Expenses are equal to the Portfolio's annualized expense ratio of 1.25% for Class II shares multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Pioneer Equity Opportunity VCT Portfolio's focus on key sectors led to positive returns over the past six months. In the following discussion, portfolio manager Margie Patel details the market background and discusses some of the strategies she employed. Q: How did the Portfolio perform over this period? A: For the six months ended June 30, 2006, the Portfolio's Class II shares returned 7.16% at net asset value. The Portfolio's benchmark, the Russell 2500 Index, returned 6.32%. The Portfolio's 84 Mid-Cap Core peers returned 4.02% over the six months. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q: Please describe the investment background and the areas you have been emphasizing. A: Equity markets began moving higher in October and rose through the first half of 2006. Investors seemed eager to add to stock portfolios despite record prices for energy, rising interest rates and some hints that the economy's rate of expansion might decelerate. Stocks turned lower in May, however, especially for companies whose fortunes are linked to volatile commodity prices. Also contributing to the decline was uncertainty over how fast and how aggressively the Federal Reserve Board, under its new chairman, might hike interest rates as it sought to restrain inflationary forces. While the economy continues tracking close to its long-term growth rate, our industry analysis has led us to sectors that we believe are capable of outperforming the economy as a whole. In particular, we have been finding attractive investment candidates in the industrial, basic materials, financial services and health-care sectors. Within those sectors, we then sought individual issues whose current valuations appeared to understate the long-term potential we see in them. We think industrial firms should benefit from continued global growth. In addition, the current stretch of better business conditions has bolstered optimism among corporate managers. That increased confidence could translate into greater capital expenditures, benefiting a range of industrial suppliers. We believe that expanding demand for metals and other basic materials should absorb or exceed the new capacity that is coming on-line. Resulting higher operating rates could then lead to improved cash flows. Within the financials sector, we are emphasizing real estate investment trusts (REITs), whose holdings are diversified by geography and type, office buildings, shopping centers, and industrial facilities. The current relationship between supply and demand points to stronger rental markets, reversing the trend of recent years, when expired leases were often replaced by leases at lower rents. Further, we believe that increased economic activity should improve income, and some REITs are working to bolster their cash flow through new property development. Q: Which holdings had a beneficial impact on performance during this period? A: Our disciplined, value-centered approach seeks companies whose growth prospects exceed stock valuations at the time of purchase. Other investors also saw strong potential in some of our selections. As a result, four holdings -- paper and building materials maker Georgia-Pacific; gold miner Placer Dome; Fisher Scientific, which provides products for scientific research; and hotel operator MeriStar -- were targets of buyout offers. In addition, Kinder Morgan, an energy distribution company, has received a management offer to take it private. All of these transactions brought profits to the Portfolio. In materials, both Arch Chemicals and FMC rose as firmer prices for chemicals led to stronger earnings. Shares of metals producer Inco moved sharply higher thanks in part to two unsolicited takeover offers and strong demand for nickel. Forest City Enterprises, a major owner and developer of commercial and residential properties, also contributed to results, reflecting its positive rental outlook and slate of development projects. A Word About Risk: Investing in small and mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. When interest rates rise, the prices of fixed income securities in the Portfolio will generally fall. Conversely, when interest rates fall, the prices of fixed income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. Investments in high yield or lower-rated securities are subject to greater-than-average risk. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q: Which of your decisions hurt overall performance? A: We felt valuations among energy companies were too high, a decision that undercut comparative results as the sector moved higher. Shares of Getty Images, which provides visual content to filmmakers, broadcasters and others, slumped as growth prospects for the media image business appeared to stall. The possibility that energy prices had peaked drove down the stock of Edison International. Results were disappointing at NOVA Chemicals, a producer of commodity chemicals. At issue were operating difficulties at some of NOVA's facilities and concerns that excess supply might weaken prices for some core products. Getty, Edison and NOVA were not held in the Portfolio as of June 30, 2006. PDL BioPharma, a volatile biotechnology stock, fell. Earnings expectations were undercut by unexpectedly high research and development costs tied to clinical trials. Q: What is your outlook, and how does the Portfolio reflect that outlook? A: We believe that global and U.S. economies will continue to grow over the longer term. We also think that the impact of higher interest rates will not be so great as to stifle expansion. While volatile commodity prices have caused sharp price swings in some areas of emphasis, we anticipate continued growth in demand. Most importantly, we have selected the companies in the Portfolio based on our assessment of their potential to increase in value by expanding their earnings over the longer term. Historically, short-term profit swings have carried little weight in our stock selection process. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 93.2% Energy - 7.2% Coal & Consumable Fuels - 1.4% 151 Foundation Coal Holdings, Inc.* $ 7,086 ------- Oil & Gas Exploration & Production - 0.1% 15 Pogo Producing Co.* $ 692 ------- Oil & Gas Refining & Marketing - 2.6% 185 Tesoro Petroleum Corp. $13,757 ------- Oil & Gas Storage & Transportation - 3.1% 163 Kinder Morgan, Inc. $16,282 ------- Total Energy $37,817 ------- Materials - 15.5% Aluminum - 1.4% 231 Alcoa, Inc. $ 7,475 ------- Commodity Chemicals - 0.1% 20 Georgia Gulf Corp.* $ 500 ------- Construction Materials - 2.7% 269 Texas Industries, Inc. $14,284 ------- Diversified Chemical - 2.8% 155 FMC Corp.* $ 9,980 259 Olin Corp. 4,644 ------- $14,624 ------- Fertilizers & Agricultural Chemicals - 2.0% 254 The Scotts Miracle-Gro Co. $10,749 ------- Gold - 1.6% 280 Barrick Gold Corp.* $ 8,288 ------- Industrial Gases - 1.6% 133 Air Products & Chemicals, Inc. $ 8,501 ------- Metal & Glass Containers - 0.3% 100 Owens-Illinois, Inc.* $ 1,676 ------- Paper Products - 0.5% 1,000 Abitibi-Consolidated, Inc. $ 2,740 ------- Specialty Chemicals - 2.5% 200 Arch Chemicals, Inc. $ 7,210 322 RPM, Inc. 5,796 ------- $13,006 ------- Total Materials $81,843 ------- Capital Goods - 16.9% Aerospace & Defense - 1.4% 300 EDO Corp.* $ 7,302 ------- Building Products - 1.3% 267 Lennox International, Inc. $ 7,070 ------- Construction & Farm Machinery & Heavy Trucks - 0.4% 152 Wabash National Corp. $ 2,335 -------
Shares Value Electrical Component & Equipment - 4.6% 63 AMETEK, Inc. $ 2,985 100 Franklin Electric Co., Inc.* 5,164 221 General Cable Corp.* 7,735 178 Roper Industries, Inc.* 8,322 ------- $24,206 ------- Industrial Machinery - 7.6% 187 Donaldson Co., Inc. $ 6,334 60 Gardner Denver, Inc.* 2,310 306 ITT Industries, Inc. 15,147 135 Kaydon Corp. 5,037 109 Kennametal, Inc. 6,785 55 Parker Hannifin Corp. 4,268 ------- $39,881 ------- Trading Companies & Distributors - 1.6% 123 Wesco International, Inc.* $ 8,487 ------- Total Capital Goods $89,281 ------- Commercial Services & Supplies - 1.9% Office Services & Supplies - 1.9% 175 Avery Dennison Corp.* $10,161 ------- Total Commercial Services & Supplies $10,161 ------- Media - 0.7% Advertising - 0.7% 426 The Interpublic Group of Companies, Inc.*(a) $ 3,557 ------- Total Media $ 3,557 ------- Food, Beverage & Tobacco - 1.6% Packaged Foods & Meats - 1.6% 257 McCormick & Co., Inc. $ 8,622 ------- Total Food, Beverage & Tobacco $ 8,622 ------- Household & Personal Products - 0.8% Personal Products - 0.8% 85 Alberto-Culver Co. (Class B) $ 4,141 ------- Total Household & Personal Products $ 4,141 ------- Health Care Equipment & Services - 4.7% Health Care Distributors - 0.7% 136 Owens & Minor, Inc. $ 3,890 ------- Health Care Equipment - 1.8% 69 Beckman Coulter, Inc.* $ 3,833 242 Steris Corp. 5,532 ------- $ 9,365 ------- Health Care Supplies - 2.2% 83 Haemonetics Corp.* $ 3,860 280 Inverness Medical Innovations, Inc.* 7,904 ------- $11,764 ------- Total Health Care Equipment & Services $25,019 -------
6 The accompanying notes are an integral part of these financial statements. Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Pharmaceuticals & Biotechnology - 7.0% Biotechnology - 1.5% 65 Cubist Pharmaceuticals, Inc.* $ 1,637 200 Human Genome Sciences, Inc.* 2,140 214 PDL BioPharma, Inc.* 3,940 -------- $ 7,717 -------- Life Sciences Tools & Services - 4.8% 125 Bio-Rad Laboratories, Inc.* $ 8,118 101 Fisher Scientific International, Inc.* 7,378 270 Thermo Electron Corp.* 9,785 -------- $ 25,281 -------- Pharmaceuticals - 0.7% 150 Bristol-Myers Squibb Co. $ 3,879 -------- Total Pharmaceuticals & Biotechnology $ 36,877 -------- Banks - 1.1% Thrifts & Mortgage Finance - 1.1% 280 Sovereign Bancorp, Inc. $ 5,694 -------- Total Banks $ 5,694 -------- Insurance - 0.7% Insurance Brokers - 0.7% 100 Aon Corp.* $ 3,482 -------- Total Insurance $ 3,482 -------- Real Estate - 17.7% Diversified Real Estate Investment Trust's - 2.8% 154 Liberty Property Trust (a) $ 6,807 214 Washington Real Estate Investment Trust* 7,854 -------- $ 14,661 -------- Office Real Estate Investment Trust's - 5.2% 428 Equity Office Properties Trust (a) $ 15,626 262 Mack-Cali Realty Corp. 12,031 -------- $ 27,657 -------- Real Estate Management & Development - 1.7% 175 Forest City Enterprises, Inc. $ 8,734 -------- Retail Real Estate Investment Trust's - 4.1% 100 Federal Realty Investment Trust $ 7,000 150 General Growth Pro TLB SC 6,759 187 Saul Centers, Inc. 7,626 -------- $ 21,385 -------- Specialized Real Estate Investment Trust's - 3.9% 948 Host Hotels & Resorts, Inc.* $ 20,733 -------- Total Real Estate $ 93,170 --------
Shares Value Technology Hardware & Equipment - 1.7% Electronic Equipment & Instruments - 1.7% 110 Amphenol Corp.* $ 6,155 50 Itron, Inc.* 2,963 -------- $ 9,118 -------- Total Technology Hardware & Equipment $ 9,118 -------- Semiconductors - 1.1% Semiconductor Equipment - 1.1% 252 FEI Co.*(a) $ 5,715 -------- Total Semiconductors $ 5,715 -------- Utilities - 14.5% Gas Utilities - 10.8% 404 Atmos Energy Corp. $ 11,276 275 National Fuel Gas Co. 9,664 108 Questar Corp. 8,693 567 SEMCO Energy, Inc.* 3,153 758 Southern Union Co.* 20,510 121 Washington Gas Light Co.* 3,503 -------- $ 56,799 -------- Independent Power Producer & Energy Traders - 2.9% 318 NRG Energy, Inc.* $ 15,321 -------- Multi-Utilities - 0.8% 127 OGE Energy Corp.* $ 4,449 -------- Total Utilities $ 76,569 -------- TOTAL COMMON STOCKS (Cost $456,585) $491,066 -------- TEMPORARY CASH INVESTMENTS - 6.1% Security Lending Collateral - 6.1% 31,953 Securities Lending Investment Fund, 5.16% $ 31,953 -------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $31,953) $ 31,953 -------- TOTAL INVESTMENT IN SECURITIES - 99.3% (Cost $488,538) $523,019 -------- OTHER ASSETS AND LIABILITIES - 0.7% $ 3,779 -------- TOTAL NET ASSETS - 100.0% $526,798 ========
* Non-income producing security. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Market Value 424 Equity Office Properties Trust $15,480 249 FEI Co.* 5,647 422 The Interpublic Group of Companies, Inc.* 3,524 152 Liberty Property Trust 6,719 ------- Total $31,370 =======
The accompanying notes are an integral part of these financial statements. 7 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 3/18/05 (a) 6/30/06 to Class II (unaudited) 12/31/05 Net asset value, beginning of period $ 10.78 $ 10.00 ------- ------- Increase from investment operations: Net investment income $ 0.01 $ 0.07 Net realized and unrealized gain on investments 0.76 0.71 ------- ------- Net increase from investment operations $ 0.77 $ 0.78 Distributions to shareholders: Net investment income $ (0.04) $ -- ------- ------- Net increase in net asset value $ 0.73 $ 0.78 ------- ------- Net asset value, end of period $ 11.51 $ 10.78 ======= ======== Total return* 7.16% 7.80%(b) Ratio of net expense to average net assets 1.25%** 1.25%** Ratio of net investment income to average net assets 0.76%** 1.05%** Portfolio turnover rate 50%** 3%(b) Net assets, end of period (in thousands) $ 527 $ 314 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 25.34%** 38.61%** Net investment loss (23.33)%** (36.32)%**
(a) Class II shares were first publicly offered on March 18, 2005. (b) Not annualized. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period. ** Annualized. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 8 The accompanying notes are an integral part of these financial statements. Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $31,370) (cost $ 523,019 $488,538) Cash 76,510 Receivables - Investment securities sold 6,149 Fund shares sold 10,304 Dividends, interest and foreign taxes withheld 634 Due from Pioneer Investment Management, Inc. 6,583 Other 455 --------- Total assets $ 623,654 --------- LIABILITIES: Payables - Investment securities purchased $ 33,643 Fund shares repurchased 189 Upon return of securities loaned 31,953 Due to affiliates 562 Accrued expenses 30,509 --------- Total liabilities $ 96,856 --------- NET ASSETS: Paid-in capital $ 483,636 Undistributed net investment income 1,852 Accumulated undistributed net realized gain 6,829 Net unrealized gain on investments 34,481 --------- Total net assets $ 526,798 --------- NET ASSET VALUE PER SHARE: Class II: No par value (unlimited number of shares authorized) Net assets $ 526,798 Shares outstanding 45,751 --------- Net asset value per share $ 11.51
The accompanying notes are an integral part of these financial statements. 9 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $18) $ 3,473 Interest 287 Income on securities loaned, net 9 --------- Total investment income $ 3,769 --------- EXPENSES: Management fees $ 1,409 Transfer agent fees 730 Distribution fees (Class II) 797 Administrative fees 9,441 Custodian fees 6,154 Professional fees 19,685 Printing 5,081 Fees and expenses of nonaffiliated trustees 4,164 Miscellaneous 99 --------- Total expenses $ 47,560 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (45,212) --------- Net expenses $ 2,348 --------- Net investment income $ 1,421 --------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain from: Investments $ 8,740 --------- Change in net unrealized gain from: Investments $ 16,603 --------- Net gain on investments $ 25,343 --------- Net increase in net assets resulting from operations $ 26,764 =========
10 The accompanying notes are an integral part of these financial statements. Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months 3/18/05 Ended (Commencement 6/30/06 of Operations) (unaudited) to 12/31/05 FROM OPERATIONS: Net investment income $ 1,421 $ 2,080 Net realized gain (loss) on investments 8,740 (1,911) Change in net unrealized gain or loss on investments 16,603 17,878 -------- --------- Net increase in net assets resulting from operations $ 26,764 $ 18,047 -------- --------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income: Class II $ (1,759) $ -- -------- --------- Total distributions to shareowners $ (1,759) $ -- -------- --------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $193,837 $ 339,533 Reinvestment of distributions 963 -- Cost of shares repurchased (7,056) (43,531) -------- --------- Net increase in net assets resulting from fund share transactions $187,744 $ 296,002 -------- --------- Net increase in net assets $212,749 $ 314,049 NET ASSETS: Beginning of period 314,049 -- -------- --------- End of period $526,798 $ 314,049 ======== ========= Undistributed net investment income, end of period $ 1,852 $ 2,190 ======== =========
The accompanying notes are an integral part of these financial statements. 11 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Equity Opportunity VCT Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The Equity Opportunity Portfolio commenced operations on March 18, 2005. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The Equity Opportunity Portfolio seeks long-term capital growth and secondarily, it seeks income. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. Investing in small and mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. The following is a summary of significant accounting policies consistently followed by the Trust, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. The Portfolio also may use the fair value of a security, 12 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Equity Opportunity Portfolio had a net capital loss carryforward of $437, which will expire in 2013, if not utilized. The Portfolio elected to defer $1,474 in capital losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ended December 31, 2006. The tax character of current year distributions paid will be determined at the end of the fiscal year. There were no distributions paid during the year ended December 31, 2005. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 on a tax basis.
- ----------------------------------------------------- 2005 - ----------------------------------------------------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income 2,190 Undistributed long-term gain/ (capital loss carryforward) (437) Post-October loss deferred (1,474) Unrealized appreciation (depreciation) 17,878 ------- Total $18,157 ======= - -----------------------------------------------------
C. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment 13 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $203 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses to the extent required to reduce Class II expenses to 1.25% of the average daily net assets attributable to class II shares. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $355 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $4 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ----------------------------------------------------------------------------------------------- Equity Opportunity Portfolio $488,538 $48,849 $ (14,368) $34,481 ======== ======= ========== ======= - -----------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, was $215,209 and $99,337, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ----------------------------------------------------------------------------------------------- '06 Shares '06 Amount Equity Opportunity Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ----------------------------------------------------------------------------------------------- CLASS II: Shares sold 17,139 $193,837 33,266 $ 339,533 Reinvestment of distributions 87 963 -- -- Shares repurchased (612) (7,056) (4,129) (43,531) ------------------------------------------------------- Net increase 16,614 $187,744 29,137 $ 296,002 ======================================================= - -----------------------------------------------------------------------------------------------
14 Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - -------------------------------------------------------------------------------- Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19638-00-0806 [Logo] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Small and Mid Cap Growth VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Small and Mid Cap Growth VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 8 Notes to Financial Statements 12 Trustees, Officers and Service Providers 15
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Common Stocks 85.0% Temporary Cash Investment 12.2% Depositary Receipts for International Stocks 2.8%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING TABLE WAS DEPICTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
Information Technology 26.7% Health Care 21.9% Consumer Discretionary 16.8% Industrials 11.9% Financials 10.0% Energy 6.6% Materials 3.3% Consumer Staples 2.8%
Five Largest Holdings (As a percentage of equity holdings) 1. Expeditors International of Washington, Inc. 3.75% 2. Sigma-Aldrich Corp. 3.32% 3. WPP Group Plc 3.18% 4. Fiserv, Inc. 3.13% 5. Trimble Navigation, Ltd. 3.08%
The Portfolio is actively managed and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $11.66 $11.37
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Small and Mid Cap Growth VCT Portfolio at net asset value, compared to that of the Russell 2500 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING TABLE WAS DEPICTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Small and Mid Cap Growth Russell 2500 VCT Portfolio Growth Index 3/04 10,000 10,000 6/04 10,742 10,013 6/05 10,504 10,761 6/06 11,533 12,334
The Russell 2500 Growth Index measures the performance of U.S. small- and mid-cap growth stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 6.93% (3/15/04) 1 Year 9.79%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers fund performance would be lower. Waivers may not be in effect for all funds. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Small and Mid Cap Growth VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II - -------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,025.50 Expenses Paid During Period* $ 5.02
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Small and Mid Cap Growth VCT Portfolio Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006
Share Class II - -------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,019.84 Expenses Paid During Period* $ 5.01
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- The nation's equity markets went through two very different periods during the first half of 2006. The first four months saw the major stock indexes rise, led by more volatile sectors, including small-cap stocks, emerging market companies and commodity-linked corporations. In May and June, however, market trends reversed themselves and the more volatile parts of the market tended to suffer the greatest declines. In the following interview, L. Roy Papp and Rosellen Papp, members of the management team of L. Roy Papp & Associates, LLP, which is responsible for the Fund's management, discuss the factors that influenced the performance of Pioneer Small and Mid Cap Growth VCT Portfolio during the six months ended June 30, 2006. Q: How did the Portfolio perform during the six months ended June 30, 2006? A: Class II shares of Pioneer Small and Mid Cap Growth VCT Portfolio had a total return of 2.55% for the six months, at net asset value. During the same period, the Russell 2500 Growth Index produced a total return of 4.98%, while the average return of the 138 funds in Lipper's Mid-Cap Growth category was 2.77%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q: How did the market environment influence performance? A: Even though several of our holdings fared relatively well in May and June, we trailed the Russell 2500 Growth Index, which focuses on smaller-cap companies than our Portfolio. The performance of the stock market did not reflect the underlying strength of the economy in the first six months of 2006. Economic growth was brisk, unemployment was low, and the second calendar quarter of 2006 is likely to be the seventeenth consecutive quarter in which corporate profits climb by more than 10%. For the first four months of 2006, the stock market averages climbed on this favorable news. However, on May 10, the trend reversed direction and stock prices started heading down. The immediate cause was the action of the U.S. Federal Reserve Board to raise the key Fed Funds rate from 4.75% to 5.00%, the 16th rate hike since the Fed began tightening in June 2004. The Fed followed up in late June by raising the rate once again, to 5.25%. Investors became increasingly concerned that the Fed might go too far in its effort to control growth and limit inflationary pressures and thereby increase the chances the economy could fall into recession. As a result, stocks began falling, consistent with the view that a recession was possible. The stock market rally in the first four months of 2006 was led by highly speculative parts of the markets, including basic materials, industrials, small-cap and emerging market companies. This was an environment that did not favor the strategy of Pioneer Small and Mid Cap Growth VCT Portfolio, which focuses on medium-sized, higher quality, industry-leading companies with good growth records. However, when volatility increased in May and June, our emphasis on quality helped the Portfolio better withstand the downward move in stock prices. Q: What were your principal strategies during the six months? A: One of the key decisions we made during the period was to place more emphasis on energy companies, which we had underweighted in the belief that oil and natural gas prices were too high. However, as world events unfolded, we revised our opinion because we believed that the higher prices reflected the worsening of international tensions. As a consequence, we added some energy positions, particularly in the oil field and gas services industries, where we saw significant opportunities. Among the new energy investments were Cameron International and FMC Technologies, two oil field services companies; Tetra Technologies, which specializes in de-commissioning older offshore drilling platforms; Chesapeake Energy, which is involved in natural gas exploration and production; and Pioneer Natural Resources, an oil and gas exploration and production company. While the Portfolio's underweight in the energy sector held back results early in the six months, the increased emphasis on energy helped later in the six-month period. Most of our decisions are based on long-term investment themes that we have been pursuing. Two of those themes relate to significant demographic changes occurring in our society as a result of the aging of the baby-boom generation, the first members of which are entering their 60s. The maturing of this generation is creating great demand for retirement products and services and provides an important opportunity for financial services firms that offer retirement products. The aging of this generation also creates new demands for health-care services and products -- demands that are likely to persist. A Word About Risk: Investing in small and mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. The Portfolio invests in a limited number of securities and, as a result, the Portfolio's performance may be more volatile than the performance of other portfolios holding more securities. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Two other trends relate to changes in the economy and in business. New information technology products have had a great impact on increasing the productivity and the competitiveness of corporations. At the same time, the globalization of the economy has created long-term opportunities for companies that have positioned themselves to benefit from international trade. For several years, small-cap stocks have outperformed mid-cap stocks. We've had to work harder in our research to uncover more compelling valuation opportunities in mid-cap companies as opposed to the small-caps that have continued to power the Russell 2500 Growth Index during the first half of 2006. Q: What types of investments had the greatest impact on results for the six months? A: During the first six months of the year, performance trailed the Russell 2500 Growth Index due to differentials in sector weighting and a few individual companies that experienced specific challenges. The Portfolio was underweighted in energy even though we did add significantly to this sector during the quarter. We were also underweighted in industrials which performed well. We were overweighted in health care and information technology which have not performed well over the first half of the year. Some of the individual holdings that experienced challenges include technology position Adobe Systems, a software company specializing in digital imaging; KLA, which produces test equipment for the semiconductor manufacturing process; and Micros, which makes software for restaurants. In health care, Express-Scripts, a pharmacy benefits manager, declined because of profit taking by investors. Stryker, a leading producer of orthopedic devices, fell because of concerns that developing Medicare reimbursement formulas might adversely affect its revenues. In financial services, Federated Investors, a prominent manager of money market products, declined because of low short-term interest rates. We remain optimistic about the long-term opportunities for each of these companies. We also experienced weakness in Polaris, the recreational vehicle company that was hurt by inventory problems; Waters, which sells equipment to biotechnology industry but was beset by inconsistent earnings; and Plantronics, a headset manufacturer that attracted margin-eroding competition. During the first six months of the year, we liquidated each of these positions. Our underweight position in the consumer discretionary area helped results during period; however, we did add to our investments in that area finding attractive opportunities in upscale retailer, Coach, which is growing its international business and in International Speedway, which operates auto raceways and is benefiting from the growing popularity of NASCAR and other racing circuits. In health care, two holdings that helped results included Dentsply, which supplies dental equipment, and ResMed, which specializes in products for treating sleep disorders. Sigma-Aldrich, a newer position, also helped results. While Sigma-Aldrich is technically classified as a materials company, they supply equipment and chemicals for medical laboratories and pharmaceutical and related companies. Also supporting performance was our investment in Expeditors International of Washington state which handles logistical planning and is a beneficiary of increased trade between China and the United States. We also enjoyed good results from our investment in Trimble Navigation, which develops and produces software for global positioning satellite systems. Q: What is your investment outlook? A: Entering the second half of 2006, the overall economy appears to be sound, which should be good for stocks. We think the correction in stock prices that occurred during the second quarter of the year was an overreaction. A Wall Street Journal poll of 56 professional economists on July 5, 2006 revealed that 54 of those economists believe the economy will continue to grow at a healthy pace for the remainder of 2006, perhaps with gross domestic product (GDP) growth in the range of 21/2% to 31/2%. We think the Federal Reserve Board may raise short-term interest rates once or twice more, before pausing. A look at historical trends reveals that when the economy is strong and the Fed stops raising interest rates, stocks generally perform well. At this stage, we think many stocks look inexpensive and represent a good long-term value. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 98.2% Energy - 6.5% Oil & Gas Equipment & Services - 4.1% 1,200 Cameron International Corp.* $ 57,324 1,100 FMC Technologies, Inc.* 74,206 2,500 TETRA Technologies, Inc.* 75,725 ---------- $ 207,255 ---------- Oil & Gas Exploration & Production - 2.4% 1,600 Chesapeake Energy Corp.*(a) $ 48,400 1,500 Pioneer Natural Resources Co. 69,615 ---------- $ 118,015 ---------- Total Energy $ 325,270 ---------- Materials - 3.3% Specialty Chemicals - 3.3% 2,250 Sigma-Aldrich Corp. $ 163,440 ---------- Total Materials $ 163,440 ---------- Capital Goods - 2.9% Building Products - 2.9% 4,000 Simpson Manufacturing Co., Inc. (a) $ 144,200 ---------- Total Capital Goods $ 144,200 ---------- Commercial Services & Supplies - 5.1% Diversified Commercial Services - 5.1% 2,750 ChoicePoint, Inc.* $ 114,868 3,598 Cintas Corp.*(a) 143,056 ---------- $ 257,924 ---------- Total Commercial Services & Supplies $ 257,924 ---------- Transportation - 3.7% Air Freight & Couriers - 3.7% 3,300 Expeditors International of Washington, Inc.* $ 184,833 ---------- Total Transportation $ 184,833 ---------- Consumer Durables & Apparel - 1.5% Apparel, Accessories & Luxury Goods - 1.5% 2,500 Coach, Inc.* $ 74,750 ---------- Total Consumer Durables & Apparel $ 74,750 ---------- Consumer Services - 6.2% Education Services - 1.5% 3,500 DeVry, Inc.* $ 76,895 ---------- Leisure Facilities - 2.5% 2,700 International Speedway Corp.* $ 125,199 ---------- Restaurants - 2.2% 3,000 Brinker International, Inc. $ 108,900 ---------- Total Consumer Services $ 310,994 ----------
Shares Value Media - 6.0% Advertising - 6.0% 5,600 Harte-Hanks, Inc. $ 143,584 2,600 WPP Group Plc 156,754 ---------- $ 300,338 ---------- Total Media $ 300,338 ---------- Retailing - 2.8% Automotive Retail - 2.8% 4,500 O'Reilly Automotive, Inc.* $ 140,355 ---------- Total Retailing $ 140,355 ---------- Household & Personal Products - 2.8% Household Products - 2.8% 2,300 Clorox Co. $ 140,231 ---------- Total Household & Personal Products $ 140,231 ---------- Health Care Equipment & Services - 16.0% Health Care Distributors - 1.6% 2,400 Patterson Co's.* $ 83,832 ---------- Health Care Equipment - 7.4% 1,700 C. R. Bard, Inc. $ 124,542 2,200 ResMed, Inc.* 103,290 3,400 Stryker Corp.* 143,174 ---------- $ 371,006 ---------- Health Care Services - 4.0% 1,500 Express Scripts, Inc.* $ 107,610 1,600 Medco Health Solutions, Inc.* 91,648 ---------- $ 199,258 ---------- Health Care Supplies - 3.0% 2,500 Dentsply International, Inc. $ 151,500 ---------- Total Health Care Equipment & Services $ 805,596 ---------- Pharmaceuticals & Biotechnology - 5.5% Life Sciences Tools & Services - 5.5% 4,500 Molecular Devices Corp.* $ 137,520 2,700 Techne Corp.* 137,484 ---------- $ 275,004 ---------- Total Pharmaceuticals & Biotechnology $ 275,004 ---------- Banks - 2.7% Regional Banks - 2.7% 8,300 UCBH Holdings, Inc. (a) $ 137,282 ---------- Total Banks $ 137,282 ----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Diversified Financials - 7.0% Asset Management & Custody Banks - 7.0% 4,100 Federated Investors, Inc.* $ 129,150 1,800 Investors Financial Services Corp. (a) 80,820 3,800 T. Rowe Price Associates, Inc. 143,678 ---------- $ 353,648 ---------- Total Diversified Financials $ 353,648 ---------- Software & Services - 11.0% Application Software - 2.0% 3,300 Adobe Systems, Inc.* $ 100,188 ---------- Data Processing & Outsourced Services - 6.0% 2,500 DST Systems, Inc.* $ 148,750 3,400 Fiserv, Inc.* 154,224 ---------- $ 302,974 ---------- Systems Software - 3.0% 3,400 Micros Systems, Inc.* $ 148,512 ---------- Total Software & Services $ 551,674 ---------- Technology Hardware & Equipment - 7.9% Electronic Equipment & Instruments - 3.6% 2,450 Mettler-Toledo International, Inc.* $ 148,397 1,100 National Instruments Corp. 30,140 ---------- $ 178,537 ---------- Electronic Manufacturing Services - 4.3% 2,300 Molex, Inc. $ 66,078 3,400 Trimble Navigation, Ltd.* 151,776 ---------- $ 217,854 ---------- Total Technology Hardware & Equipment $ 396,391 ---------- Semiconductors - 7.3% Semiconductor Equipment - 1.9% 2,300 KLA-Tencor Corp. $ 95,611 ---------- Semiconductors - 5.4% 3,600 Linear Technology Corp. (a) $ 120,564 4,500 Microchip Technology 150,975 ---------- $ 271,539 ---------- Total Semiconductors $ 367,150 ---------- TOTAL COMMON STOCKS (Cost $4,366,072) $4,929,080 ----------
Shares Value TEMPORARY CASH INVESTMENT - 13.6% Security Lending Collateral - 13.6% 683,349 Securities Lending Investment Fund, 5.16% $ 683,349 ---------- TOTAL TEMPORARY CASH INVESTMENT (Cost $683,349) $ 683,349 ---------- TOTAL INVESTMENT IN SECURITIES - 111.8% (Cost $5,049,421) $5,612,429 ---------- OTHER ASSETS AND LIABILITIES - (11.8)% $ (593,769) ---------- TOTAL NET ASSETS - 100.0% $5,018,660 ==========
* Non-income producing security. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 1,584 Chesapeake Energy Corp.* $ 47,916 3,562 Cintas Corp.* 141,625 1,782 Investors Financial Services Corp. 80,012 3,564 Linear Technology Corp. 119,358 3,960 Simpson Manufacturing Co., Inc. 142,758 8,217 UCBH Holdings, Inc. 135,909 -------- Total $667,578 ========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year 3/15/04(a) 6/30/06 Ended to Class II (unaudited) 12/31/05 12/31/04 Net asset value, beginning of period $ 11.37 $ 10.87 $ 10.00 ------- ------- ------- Increase (decrease) from investment operations: Net investment loss $ (0.02) $ (0.03) $ (0.02) Net realized and unrealized gain on investments 0.31 0.53 0.89 -------- ------- -------- Net increase from investment operations $ 0.29 $ 0.50 $ 0.87 -------- ------- -------- Net increase in net asset value $ 0.29 $ 0.50 $ 0.87 -------- ------- -------- Net asset value, end of period $ 11.66 $ 11.37 $ 10.87 -------- ------- -------- Total return* 2.55% 4.60% 8.70%(b) Ratio of net expenses to average net assets+ 1.00%** 1.00% 1.00%** Ratio of net investment loss to average net assets+ (0.27)%** (0.36)% (0.51)%** Portfolio turnover rate 32%** 13% 44% Net assets, end of period (in thousands) $ 5,019 $ 4,602 $ 2,579 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 2.63%** 3.25% 7.50%** Net investment loss (1.90)%** (2.61)% (7.01)%** Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.00%* * 1.00% 1.00%** Net investment loss (0.27)%** (0.36)% (0.51)%**
(a) The Portfolio commenced operations on March 15, 2004. (b) Not annualized. * Assumes initial investment at net asset value at the beginning of the period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of the period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 8 The accompanying notes are an integral part of these financial statements. Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $667,578) (cost $5,612,429) $5,049,421 Cash 100,498 Receivables - Investment securities sold 34,854 Fund shares sold 9,521 Dividends, interest and foreign taxes withheld 2,404 Due from Pioneer Investment Management, Inc. 3,656 Other 1,026 ---------- Total assets $5,764,388 ---------- LIABILITIES: Payables - Investment securities purchased $ 36,030 Fund shares repurchased 539 Upon return of securities loaned 683,349 Due to affiliates 789 Accrued expenses 25,021 ---------- Total liabilities $ 745,728 ---------- NET ASSETS: Paid-in capital $4,594,788 Accumulated net investment loss (6,545) Accumulated net realized loss on investments (132,591) Net unrealized gain on: Investments 563,008 ---------- Total net assets $5,018,660 ---------- NET ASSET VALUE PER SHARE: Class II: (No par value, unlimited number of shares authorized) Net assets $5,018,660 Shares outstanding 430,509 ---------- Net asset value per share $ 11.66
The accompanying notes are an integral part of these financial statements. 9 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends $ 15,973 Interest 1,982 Income on securities loaned, net 124 --------- Total investment income $ 18,079 --------- EXPENSES: Management fees $ 18,478 Transfer agent fees and expenses 732 Distribution fees 6,159 Administrative reimbursements 9,750 Custodian fees 9,050 Professional fees 15,619 Printing expense 4,272 Fees and expenses of nonaffiliated trustees 746 Miscellaneous 4 --------- Total expenses $ 64,810 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (40,186) --------- Net expenses $ 24,624 --------- Net investment loss $ (6,545) --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss from: Investments $ (23,221) --------- Change in net unrealized gain from: Investments $ 138,638 --------- Net gain on investments $ 115,417 --------- Net increase in net assets resulting from operations $ 108,872 =========
The accompanying notes are an integral part of these financial statements. 10 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 Year Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment loss $ (6,545) $ (13,587) Net realized loss on investments (23,221) (56,634) Change in net unrealized gain on investments 138,638 279,248 ---------- ---------- Net increase in net assets resulting from operations $ 108,872 $ 209,027 ---------- ---------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 632,779 $2,273,067 Cost of shares repurchased (325,358) (458,251) ---------- ---------- Net increase in net assets resulting from Fund share transactions $ 307,421 $1,814,816 ---------- ---------- Net increase in net assets $ 416,293 $2,023,843 NET ASSETS: Beginning of period 4,602,367 2,578,524 ---------- ---------- End of period $5,018,660 $4,602,367 ========== ========== Accumulated net investment loss, end of period $ (6,545) $ -- ========== ==========
The accompanying notes are an integral part of these financial statements. 11 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Small and Mid Cap Growth VCT Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The Small and Mid Cap Growth VCT Portfolio commenced operations on March 15, 2004. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts, or by qualified pension and retirement plans. Small and Mid Cap Growth Portfolio seeks long-term capital growth. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market 12 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no securities fair valued. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Investing in small and mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Small and Mid Cap Growth Portfolio had a net capital loss carryforward of $65,546, of which the following amounts will expire between 2012 and 2013, if not utilized: $25,641 in 2012 and $39,905 in 2013. The Portfolio elected to defer $25,174 in capital losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ended December 31, 2006. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005. There were no distributions paid during the year ended December 31, 2005.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Capital loss carryforward (65,546) Post-October loss deferred (25,174) Unrealized appreciation (depreciation) 405,720 -------- Total $315,000 ======== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is attributable to the tax deferral of losses on wash sales. C. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in 13 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.75% of the Portfolio's average daily net assets up to $1 billion and 0.70% on assets over $1 billion. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses of the Portfolio to the extent required to reduce Class II expenses to 1.00% of the average daily net assets attributable to Class II shares. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $513 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $242 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $34 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - --------------------------------------------------------------------------------------------------------------- Small and Mid Cap Growth Portfolio $5,068,071 $657,986 $ (113,628) $544,358 ========== ======== =========== ======== - ---------------------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $1,019,567 and $787,912, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- --------------------------------------------------------------------------------------------------------------- '06 Shares '06 Amount Small & Mid Cap Growth Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - --------------------------------------------------------------------------------------------------------------- CLASS II: Shares sold 53,518 $ 632,779 209,164 $2,273,067 Shares repurchased (27,656) (325,358) (41,774) (458,251) ------- ---------- ------- ---------- Net increase 25,862 $ 307,421 167,390 $1,814,816 ======== ========== ======= ========== - ---------------------------------------------------------------------------------------------------------------
14 Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - --------------------------------------------------------------------------------
Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Mary K. Bush Vincent Nave, Treasurer Margaret B.W. Graham Dorothy E. Bourassa, Secretary Thomas J. Perna Marguerite A. Piret John Winthrop
Investment Adviser and Administrator Pioneer Investment Management, Inc. Subadviser L. Roy Papp & Associates, LLP Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19633-00-0806 [Logo] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Oak Ridge Large Cap Growth VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Oak Ridge Large Cap Growth VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 8 Notes to Financial Statements 12 Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] U.S. Common Stocks 94.2% Depositary Receipts for International Stocks 3.3% Temporary Cash Investment 2.5%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] Information Technology 26.3% Industrials 19.5% Financials 14.3% Health Care 14.1% Consumer Discretionary 13.9% Consumer Staples 7.0% Energy 4.5% Materials 0.4%
Five Largest Holdings (As a percentage of equity holdings) 1. Cognizant Tech Solutions Corp. 3.73% 2. FedEx Corp. 3.66% 3. General Electric Co. 3.65% 4. Staples, Inc. 3.27% 5. Qualcomm, Inc. 3.04%
The Portfolio is actively managed and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 11.29 $ 11.98
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.0036 $ - $ 0.1652
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Oak Ridge Large Cap Growth VCT Portfolio at net asset value, compared to that of the Russell 1000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Oak Ridge Russell 1000 Large Cap Growth Growth VCT Portfolio Index 3/04 $10,000 $10,000 6/04 10,147 10,194 6/05 10,759 10,365 6/06 11,231 10,999
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 6.19% (3/15/04) 1 Year 4.39%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers fund performance would be lower. Waivers may not be in effect for all funds. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Oak Ridge Large Cap Growth VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 956.70 Expenses Paid During Period* $ 4.61
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Oak Ridge Large Cap Growth VCT Portfolio Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,020.08 Expenses Paid During Period* $ 4.76
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- In the following interview, David Klaskin, Pioneer Oak Ridge Large Cap Growth VCT Portfolio's Lead Portfolio Manager, discusses the factors that influenced performance during the six months ended June 30, 2006. Q. How did the market and the Portfolio perform during the reporting period? A. Although the U.S. stock market performed relatively well, concerns about building inflation pressures and rising interest rates began to weigh heavily on stock prices in May. Two additional factors combined to create a challenging environment for the Portfolio. First, lower-quality stocks (as measured by their S&P rating) outperformed their higher-quality counterparts. Given our emphasis on the latter, the Portfolio did not participate in the more speculative nature of the market. Second, a number of stocks that outperformed in 2005, most notably those in the health-care sector, gave back some ground during the past half-year. We did not take profits in some of these holdings until their fundamentals weakened and share prices had declined. With this as a backdrop, the Portfolio's Class II shares returned -4.33% at net asset value during the past six months, trailing the -0.93% return of its benchmark, the Russell 1000 Growth Index. The primary reason for underperformance was the performance of certain individual stock selections, which we discuss in greater detail below. It is important to note, however, that we employ a long-term approach that seeks to identify fast-growing, reasonably valued companies that we believe have the potential to perform well over a three- to five-year period. As a result, any six month period is a very short window in which to measure our performance as managers. We always prefer to focus on longer-term results. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. How did the Portfolio's holdings in health care affect performance? A. Health care was the most significant area of underperformance. A substantial overweight in the sector detracted from performance, given that health-care shares in general trailed the overall market in 2006. In addition, the Portfolio's holding in the vision care products company Alcon - which performed very well for us in 2005 - suffered from a significant downturn before we eliminated it from the Portfolio during this reporting period. We also hesitated to sell shares of UnitedHealth Group, a benefits manager that dropped considerably from its December 2005 high throughout the course of the period. The biotechnology company Genentech, a position that we pared in the wake of the stock's strong advance of the past two-plus years, detracted from performance as well. As of June 30, 2006 we continue to hold a position in Genentech on our belief that the stock is attractively valued relative to its earnings prospects. Our active decisions to trim or eliminate many of the Portfolio's holdings in health care caused our weighting in this sector to decline. At the start of the period, roughly 24% of the Portfolio was invested in health-care stocks, compared with about 20% for the Russell 1000 Growth Index. By the end of the reporting period, this weighting had fallen to about 14%. Q. Where did you redeploy the proceeds of these sales? A. We put a significant portion of these assets to work in the technology sector. Although tech stocks did not perform well in May, we believe the sector includes to a number of companies that are poised to take advantage of the likely strength in corporate spending. While consumer spending could come under pressure from a variety of sources - such as rising energy prices and the sluggish housing market - many corporations appear to be flush with cash that is available to be put to work in the form of new capital investment. The Portfolio is now overweight in technology, and we believe that this positioning should prove beneficial to performance in the months ahead. Recent additions to the Portfolio include Microchip Technology, Jabil Circuit, Cisco Systems and Corning. A Word About Risk: The Portfolio invests in a limited number of securities and, as a result, the Portfolio's performance may be more volatile than the performance of other portfolios holding more securities. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In terms of performance over the past six months, our positioning in the tech sector was helpful to returns. A top performer was Cognizant Technology Solutions, which continues to benefit from the trend of American companies outsourcing elements of their business to India. Performance was also boosted by the Portfolio's holding in software giant Oracle, which held up well amid the downdraft in the broader market late in the period. Q. What other elements of the Portfolio's positioning helped and hurt performance? A. Our stock selection in the industrials sector also was a source of positive performance. As is the case with the technology sector, many industrial companies are positioned to capitalize on rising corporate spending. Rockwell Automation, Ingersoll Rand, and Danaher all made positive contributions during the period. Even though the economic cycle is mature at this juncture, we believe these companies may continue to perform well given that a longer-than-normal cycle appears likely and the financial strength of their customers seems to be at unprecedented levels. On the other side of the ledger, stocks in both the consumer staples and consumer discretionary sectors detracted from performance. In the former, the Portfolio's holding in Procter & Gamble delivered a weak performance on concerns that its profits will be dampened by the fact that Wal-Mart (which accounts for about 20% of P&G's sales) is pressuring its suppliers to bear the cost of holding inventories. We continue to like the stock from a long-term perspective. In consumer discretionary, Carnival Cruise Lines was hurt by concerns about weaker consumer spending, rising fuel costs, and the reduced demand for Caribbean cruises that followed the destructive autumn hurricane season. We sold the stock from the Portfolio during this reporting period. We made two new purchases in the consumer discretionary sector during the period: Marriott International and Harrah's Entertainment. While we are not positive on the outlook for consumer spending, we believe these two companies have the ability to outperform due to their catering to business spending. With respect to Marriott, we believe the company can benefit from the fact that demand for hotel rooms has been rising faster than the supply. We believe Harrah's, meanwhile, is a well managed hotel and casino operator that has been successfully integrating its purchase of Caesars and has shown good results from its customer awards programs. Q. What is your outlook for growth stocks? A. Growth stocks have underperformed value by a wide margin in recent years, and we believe this creates an excellent opportunity. Traditionally, the ten-year returns of the Russell 1000 Growth Index and Russell 1000 Value Index compare closely with one another. However, the two indices have diverged quite sharply in recent years. During the past 12 months, for instance, the return on the value index was more than double that of its growth counterpart. The three- and five-year differences also are quite large. The result is that the ten-year return differential is at the high end of historical standards, with an average annualized return of 10.79% for the Russell 1000 Value and 5.48% for the Russell 1000 Growth. There are valid reasons for this disparity, such as the excesses of the late 1990s and the changes in the accounting practices regarding employee stock options - issues that had a disproportionately large impact on growth stocks. However, we believe that these problems are now largely in the past. With growth stocks enjoying significantly better prospects for earnings expansion and trading at nearly the same earnings multiples as value stocks, we believe the asset class should begin closing the performance gap in relation to value. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 94.8% Energy - 4.2% Oil & Gas Equipment & Services - 2.0% 7,895 Schlumberger, Ltd. $ 514,043 ---------- Oil & Gas Exploration & Production - 2.2% 12,605 XTO Energy, Inc. $ 558,023 ---------- Total Energy $1,072,066 ---------- Materials - 0.4% Specialty Chemicals - 0.4% 2,300 Ecolab, Inc. $ 93,334 ---------- Total Materials $ 93,334 ---------- Capital Goods - 15.0% Aerospace & Defense - 4.5% 6,995 L-3 Communications Holdings, Inc. $ 527,563 9,660 United Technologies Corp. 612,637 ---------- $1,140,200 ---------- Electrical Component & Equipment - 2.7% 9,335 Rockwell International Corp. $ 672,213 ---------- Industrial Conglomerates - 3.5% 26,470 General Electric Co. $ 872,451 ---------- Industrial Machinery - 4.3% 8,540 Danaher Corp. (a) $ 549,293 12,620 Ingersoll-Rand Co. 539,884 ---------- $1,089,177 ---------- Total Capital Goods $3,774,041 ---------- Transportation - 3.5% Air Freight & Couriers - 3.5% 7,485 FedEx Corp. $ 874,697 ---------- Total Transportation $ 874,697 ---------- Consumer Durables & Apparel - 1.9% Apparel, Accessories & Luxury Goods - 1.9% 16,200 Coach, Inc.* $ 484,380 ---------- Total Consumer Durables & Apparel $ 484,380 ---------- Consumer Services - 4.3% Casinos & Gaming - 1.9% 6,920 Harrah's Entertainment, Inc.* $ 492,566 ---------- Hotels, Resorts & Cruise Lines - 2.4% 15,850 Marriott International, Inc.* $ 604,202 ---------- Total Consumer Services $1,096,768 ---------- Retailing - 6.9% Computer & Electronics Retail - 2.0% 9,425 Best Buy Co., Inc. $ 516,867 ---------- General Merchandise Stores - 1.8% 9,200 Target Corp. $ 449,604 ---------- Specialty Stores - 3.1% 32,082 Staples, Inc.* $ 780,234 ---------- Total Retailing $1,746,705 ----------
Shares Value Food & Drug Retailing - 2.1% Drug Retail - 2.1% 11,730 Walgreen Co. $ 525,973 ---------- Total Food & Drug Retailing $ 525,973 ---------- Food, Beverage & Tobacco - 2.2% Soft Drinks - 2.2% 9,085 PepsiCo, Inc. $ 545,463 ---------- Total Food, Beverage & Tobacco $ 545,463 ---------- Household & Personal Products - 2.4% Household Products - 2.4% 10,835 Procter & Gamble Co. $ 602,426 ---------- Total Household & Personal Products $ 602,426 ---------- Health Care Equipment & Services - 7.2% Health Care Equipment - 5.0% 9,175 Medtronic, Inc. $ 430,491 9,450 Varian Medical Systems, Inc.* 447,458 6,715 Zimmer Holdings, Inc.* 380,875 ---------- $1,258,824 ---------- Health Care Services - 2.2% 10,960 Caremark Rx, Inc.* $ 546,575 ---------- Total Health Care Equipment & Services $1,805,399 ---------- Pharmaceuticals & Biotechnology - 6.2% Biotechnology - 4.4% 6,060 Amgen, Inc.* $ 395,294 8,845 Genentech, Inc.* 723,521 ---------- $1,118,815 ---------- Pharmaceuticals - 1.8% 14,200 Teva Pharmaceutical Industries, Ltd. (a) $ 448,578 ---------- Total Pharmaceuticals & Biotechnology $1,567,393 ---------- Banks - 2.4% Diversified Banks - 2.4% 19,310 U.S. Bancorp $ 596,293 ---------- Total Banks $ 596,293 ---------- Diversified Financials - 9.1% Asset Management & Custody Banks - 1.8% 4,635 Legg Mason, Inc.* $ 461,275 ---------- Consumer Finance - 3.9% 8,660 American Express Co. $ 460,885 9,630 SLM Corp. 509,620 ---------- $ 970,505 ---------- Investment Banking & Brokerage - 1.9% 30,165 Charles Schwab Corp.* $ 482,037 ---------- Diversified Financial Services - 1.5% 7,905 Citigroup, Inc. $ 381,337 ---------- Total Diversified Financials $2,295,154 ----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Insurance - 2.1% Life & Health Insurance - 2.1% 11,435 Aflac, Inc. $ 530,012 ----------- Total Insurance $ 530,012 ----------- Software & Services - 10.6% Internet Software & Services - 2.6% 1,574 Google, Inc.* $ 660,025 ----------- IT Consulting & Other Services - 3.5% 13,230 Cognizant Tech Solutions Corp.* $ 891,305 ----------- Systems Software - 4.5% 23,635 Microsoft Corp. $ 550,696 39,175 Oracle Corp.* 567,646 ----------- $ 1,118,342 ----------- Total Software & Services $ 2,669,672 ----------- Technology Hardware & Equipment - 8.8% Communications Equipment - 6.7% 25,250 Cisco Systems, Inc.* $ 493,133 19,540 Corning, Inc.* 472,673 18,130 Qualcomm, Inc. 726,469 ----------- $ 1,692,275 ----------- Computer Hardware - 0.8% 3,665 Apple Computer, Inc.* $ 209,345 ----------- Electronic Manufacturing Services - 1.3% 12,540 Jabil Circuit, Inc.* $ 321,024 ----------- Total Technology Hardware & Equipment $ 2,222,644 ----------- Semiconductors - 5.5% Semiconductors - 5.5% 8,125 Marvell Technology Group, Ltd.* $ 360,181 14,700 Microchip Technology 493,185 17,860 Texas Instruments, Inc. 540,979 ----------- $ 1,394,345 ----------- Total Semiconductors $ 1,394,345 ----------- TOTAL COMMON STOCKS (Cost $22,885,673) $23,896,765 -----------
Shares Value TEMPORARY CASH INVESTMENT - 2.4% Security Lending Collateral - 2.4% 617,506 Securities Lending Investment Fund, 5.16% $ 617,506 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $617,506) $ 617,506 ----------- TOTAL INVESTMENT IN SECURITIES - 97.2% (Cost $23,503,179) $24,514,271 ----------- OTHER ASSETS AND LIABILITIES - 2.8% $ 700,347 ----------- TOTAL NET ASSETS - 100.0% $25,214,618 ===========
* Non-income producing security. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 2,641 Danaher Corp. $169,869 13,850 Teva Pharmaceutical Industries, Ltd. 437,522 -------- Total $607,391 ========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 3/15/04 (a) 6/30/06 Year Ended to CLASS II (unaudited) 12/31/05 12/31/04 Net asset value, beginning of period $ 11.98 $ 11.09 $ 10.00 -------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.01 $ (0.01) $ 0.03 Net realized and unrealized gain (loss) on investments (0.53) 0.92 1.06 -------- ------- ------- Net increase (decrease) from investment operations $ (0.52) $ 0.91 $ 1.09 Distributions to shareowners: Net investment income 0.00(c) (0.02) -- Net realized gain (0.17) -- -- -------- ------- ------- Net increase (decrease) in net asset value $ (0.69) $ 0.89 $ 1.09 -------- ------- ------- Net asset value, end of period $ 11.29 $ 11.98 $ 11.09 ======== ======= ======= Total return* (4.33)% 8.18% 10.90%(b) Ratio of net expenses to average net assets 0.95%** 0.95% 0.95%* * Ratio of net investment income to average net assets 0.15%** 0.08% 0.79%* * Portfolio turnover rate 54%** 131% 21% Net assets, end of period (in thousands) $ 25,215 $25,908 $ 4,397 Ratios with no waiver of management fees and assumption of expenses by PIM: Net expenses 1.37%* * 1.93% 6.22%** Net investment loss (0.27)%** (0.90)% (4.48)%**
(a) The Portfolio commenced operations on March 15, 2004. (b) Not annualized. (c) Amount rounds to less than one cent per share. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period. ** Annualized. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 8 The accompanying notes are an integral part of these financial statements. Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $607,391) (cost $23,503,179) $ 24,514,271 Cash 1,354,676 Receivables - Fund shares sold 8,322 Dividends, interest and foreign taxes withheld 18,616 Other 2,288 ------------ Total assets $ 25,898,173 ------------ LIABILITIES: Payables - Investment securities purchased $ 23,723 Fund shares repurchased 3,058 Upon return of securities loaned 617,506 Due to affiliates 1,556 Accrued expenses 37,712 ------------ Total liabilities $ 683,555 ------------ NET ASSETS: Paid-in capital $ 24,096,173 Undistributed net investment income 19,776 Accumulated net realized gain on investments 87,577 Net unrealized gain on: Investments 1,011,092 ------------ Total net assets $ 25,214,618 ------------ NET ASSET VALUE PER SHARE: Class II: (No par value, unlimited number of shares authorized) Net assets $ 25,214,618 Shares outstanding 2,232,722 ------------ Net asset value per share $ 11.29
The accompanying notes are an integral part of these financial statements. 9 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $380) $ 116,091 Interest 27,023 Income on securities loaned, net 195 ------------ Total investment income $ 143,309 ------------ EXPENSES: Management fees $ 97,429 Transfer agent fees and expenses 1,117 Distribution fees 32,476 Administrative reimbursements 9,490 Custodian fees 18,941 Professional fees 12,734 Printing expense 3,584 Fees and expenses of nonaffiliated trustees 1,972 Miscellaneous 378 ------------ Total expenses $ 178,121 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (54,679) ------------ Net expenses $ 123,442 ------------ Net investment income $ 19,867 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from: Investments $ 477,483 ------------ Change in net unrealized gain from: Investments $ (1,630,696) ------------ Net loss on investments $ (1,153,213) ------------ Net decrease in net assets resulting from operations $ (1,133,346) ============
10 The accompanying notes are an integral part of these financial statements. Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 19,867 $ 7,863 Net realized gain on investments 477,483 432,428 Change in net unrealized gain on investments (1,630,696) 703,415 ------------ ------------ Net increase (decrease) in net assets resulting from operations $ (1,133,346) $ 1,143,706 ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS Net investment income: Class II $ (7,919) $ (10,689) Net realized gain Class II (363,376) - ------------ ------------ Total distributions to shareholders $ (371,295) $ (10,689) ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 3,229,278 $ 6,123,375 Shares issued in reorganization -- 15,272,045 Reinvestment of distributions 371,295 10,533 Cost of shares repurchased (2,789,322) (1,027,637) ------------ ------------ Net increase in net assets resulting from Fund share transactions $ 811,251 $ 20,378,316 ------------ ------------ Net increase (decrease) in net assets $ (693,390) $ 21,511,333 NET ASSETS: Beginning of period 25,908,008 4,396,675 ------------ ------------ End of period $ 25,214,618 $ 25,908,008 ============ ============ Undistributed net investment income, end of period $ 19,776 $ 7,828 ============ ============
The accompanying notes are an integral part of these financial statements. 11 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Oak Ridge Large Cap Growth VCT Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts, or by qualified pension and retirement plans. Oak Ridge Large Cap Growth Portfolio seeks capital appreciation. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued 12 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carry forwards are available to offset future realized capital gains. At December 31, 2005, Oak Ridge Large Cap Growth Portfolio had a net capital loss carry forward of $376,066, of which the following amounts will expire between 2009 and 2013, if not utilized: $295,876 in 2009, $14,739 in 2010, $10,529 in 2011, $16,924 in 2012 and $37,998 in 2013. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 10,689 Long-Term capital gain -- ---------- Total distributions $ 10,689 ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 7,828 Undistributed long-term gain/ (capital loss carryforward) 363,286 Capital loss carryforward from AmSouth Capital Growth VIF (376,066) Unrealized appreciation (depreciation) 2,628,038 ---------- Total $2,623,086 ========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is primarily attributable to the tax deferral of losses on wash sales. C. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. 13 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.75% of the Portfolio's average daily net assets up to $1 billion and 0.70% on assets over $1 billion. Pioneer, and not the Portfolio, pays a portion of the fee it receives from the Portfolio to Oak Ridge Investments, LLC (Oak Ridge) as compensation for Oak Ridge's subadvisory services to the Portfolio. On January 7, 2005, Pioneer Investment Management USA Inc. ("PIMUSA") acquired a 49% ownership interest in Oak Ridge from the existing shareholders of Oak Ridge. As part of the acquisition, PIMUSA also obtained the right to purchase from the existing shareholders of Oak Ridge (i) an additional 11% ownership interest in Oak Ridge two years from the date on which the acquisition was consummated, and (ii) the remaining ownership interest twelve years from the date on which the acquisition is consummated. Consequently, the acquisition provides PIMUSA the ability to own 100% of Oak Ridge over time. PIMUSA is the direct parent of PIM. On December 28, 2004, shareholders of the Portfolio approved a new Sub-Advisory Agreement between PIM and Oak Ridge, in anticipation of the acquisition causing the existing agreement to terminate. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses of the Portfolio to the extent required to reduce Class II expenses to 0.95% of the average daily net assets attributable to Class II shares. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $462 is payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $921 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $173 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - -------------------------------------------------------------------------------------------------------------- Oak Ridge Large Cap Growth Portfolio $23,516,929 $1,911,304 $(913,962) $997,342 =========== ========== ========= ======== - --------------------------------------------------------------------------------------------------------------
14 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $6,949,888 and $6,656,221, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- --------------------------------------------------------------------------------------------------------- '06 Shares '06 Amount '05 Shares '05 Amount Oak Ridge Large Cap Growth Portfolio (unaudited) (unaudited) - --------------------------------------------------------------------------------------------------------- CLASS II: Shares sold 272,533 $ 3,229,278 550,434 $ 6,123,375 Shares issued in reorganization -- -- 1,303,076 15,272,045 Reinvestment of distributions 33,420 371,295 957 10,533 Shares repurchased (235,515) (2,789,322) (88,477) (1,027,637) ---------------------------------------------------------- Net increase 70,438 $ 811,251 1,765,990 $20,378,316 ========================================================== - ---------------------------------------------------------------------------------------------------------
8. Merger Information On November 4, 2005, beneficial owners of AmSouth VIF Capital Growth Portfolio approved a proposed Agreement and Plan of Reorganization that provided for the merger listed below. This tax-free reorganization was accomplished on November 4, 2005, by exchanging all of the AmSouth's net assets for Class II shares as indicated below, based on Class II share's ending net asset value on the Closing Date. The following charts show the details of the reorganization as of that closing date ("Closing Date"):
- --------------------------------------------------------------------------------------------------------- Pioneer Oak Ridge Pioneer Oak Ridge Large Cap Growth AmSouth VIF Large Cap Growth VCT Portfolio Capital Growth VCT Portfolio (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - --------------------------------------------------------------------------------------------------------- Net Assets $9,574,427 $15,272,045 $24,846,472 Shares Outstanding 816,966 1,726,097 2,120,042 Class II Shares Issued 1,303,076 - ---------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------- Unrealized Appreciation Realized Gain/(Loss) on on Closing Date Closing Date - --------------------------------------------------------------------------------------------------------- AmSouth VIF Capital Growth $1,590,957 $(409,691) ==================================== - ---------------------------------------------------------------------------------------------------------
15 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Mary K. Bush Vincent Nave, Treasurer Margaret B.W. Graham Dorothy E. Bourassa, Secretary Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Subadviser Oak Ridge Investments, LLC Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19634-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer AmPac Growth VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer AmPac Growth VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 8 Notes to Financial Statements 12 Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - --------------------------------------------------------------------------------
Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Depositary Receipts for International Stocks 4.9% Temporary Investments 5.8% U.S. Common Stocks 89.3%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Energy 3.3% Consumer Staples 6.7% Consumer Discretionary 9.4% Financials 12.3% Health Care 15.7% Industrials 21.5% Information Technology 31.1%
Five Largest Holdings (As a percentage of equity holdings) 1. WPP Group Plc 5.19% 2. State Street Corp. 5.00 3. Microchip Technology 4.81 4. T. Rowe Price Associates, Inc. 4.77 5. Expeditors International of Washington, Inc. 4.50
The Portfolio is actively managed and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 10.27 $ 10.22
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.0442 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in PioneerSS AmPac Growth VCT Portfolio at net asset value, compared to that of the Russell 1000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Pioneer Russell AmPac Growth 100 Growth VCT Portfolio* Index Mar-04 10,000 10,000 Jun-04 10,109 10,194 Jun-05 9,673 10,365 Jun-06 10,233 10,999
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 1.54% (3/15/04) 1 Year 5.79%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Please refer to the variable product's semiannual report for performance that reflects the deduction of the variable products fees and charges. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value - $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer AmPac Growth VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,009.20 Expenses Paid During Period* $ 4.73
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer AmPac Growth VCT Portfolio Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,020.08 Expenses Paid During Period* $ 4.76
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for Class II, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Concerns about higher interest rates and their potential impact on economic growth depressed stock prices in the final weeks of the Portfolio's reporting period. However, as Rosellen Papp, a member of the Portfolio's management team discusses in the following interview, the outlook is far from bleak, and the correction is providing attractive buying opportunities. Q: The first four months of 2006 were marked by generally strong economic reports and rising stock prices. What precipitated the subsequent decline? A: The Federal Reserve Board (the Fed) raised short-term interest rates to 5% on May 10, a development that was widely expected. This event is generally considered to be the catalyst to the drop in stock prices, although the Fed has not signaled a change in course or policy, and we do not believe that the underlying economic fundamentals have changed materially. The correction appears to reflect a general reduction in risk appetite rather than a response to a specific fundamental deterioration. Q: How did the Portfolio perform in this environment? A: With investors demonstrating an increased aversion to risk, we witnessed a flight to quality during the stock market correction. This benefited the more well-established, higher-quality companies, such as those included in your Portfolio. For the six months ended June 30, 2006, Class II shares rose 0.92% at net asset value. In comparison, the average return of the 140 Multi-Capitalization Growth Funds tracked by Lipper Inc., the Portfolio's peer group, was -0.68%. The Russell 1000 Growth Index posted a return of 0.93% for the same period. Investments in the industrial and financial sectors proved rewarding, but a slight emphasis on technology stocks detracted from performance as this sector underperformed for the six months. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q: Technology stocks have languished for several months. Why is that? A: The market generally remains nervous about the technology sector, but we think the successful application of new technologies will be a key driver of global growth for years to come. We have focused the Portfolio's holdings in what we believe to be the highest-quality, most dominant companies in the technology sector - including Applied Materials and Adobe Systems Inc. Another holding, Intel, struggled during the six months, but we think its tremendous research and development capabilities will help it regain market share. Overall, the Portfolio's slight greater-than-benchmark weighting in technology stocks worked against it during the period. Q: Investments in the industrial and financial sectors were positive contributors to performance. Could you mention some of them? A: Certainly. Expeditor's International of Washington, which operates an airfreight forwarding company with China-to-Europe and China-to-United States trade routes, has been very successful. New business and air-freight tonnage have grown rapidly without corresponding increases in expenses. Emerson Electric has experienced rising order growth, and United Parcel Services (UPS) has benefited from the increased growth of its small package and international businesses. In the financial sector, both State Street Corp. and T. Rowe Price have enjoyed strong global demand for their retirement services. UCBH Holdings Inc., which is a commercial bank that caters to the Chinese-American population, is expanding its presence in New York, Hong Kong and China. While this build out is pressuring earnings near term, we think the investment in infrastructure will pay off longer term. Q: Any notable purchases or sales in the Portfolio? A: We like to buy companies with the intention of holding them for the long term to keep the Portfolio's turnover rate well below the industry average. However, the prices of many stocks became quite compelling during the market correction. As a result, we added three new stocks to the Portfolio - Coach Inc., the designer of classic leather accessories, International Speedway Corp., a leading promoter of motor sports activities in the United States, and the high-end discounter Target. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest a substantial amount of its assets in issuers located in a limited number of countries and therefore is susceptible to adverse economic, political or regulatory developments affecting those countries. Investing in the securities of U.S. issuers with substantial foreign activities involves many of the same risks as investing in the securities of foreign issuers. The Portfolio invests in a limited number of securities and, as a result, the Portfolio's performance may be more volatile than the performance of other portfolios holding more securities. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- To help purchase these holdings, we scaled back investments in State Street Corp., Expeditors International and Emerson Electric and sold American International Group (AIG). We have concerns about the quality of AIG's future earnings, especially in light of the impact of recent hurricanes on the property and casualty insurance business. Q: Are you optimistic about the balance of the Portfolio's fiscal year? A: We are upbeat and looking past the market's reaction this spring. We do not believe the underlying economic fundamentals have changed or that we have reached a turning point in the economy. We expect the Fed to raise short-term interest rates into late summer, but we believe the economy is strong and should be able to absorb them. We'll be keeping a sharp eye on stock valuations to ensure that prices remain reasonable relative to earnings prospects in this market environment. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 97.4% Energy - 3.3% Integrated Oil & Gas - 3.3% 940 Chevron Corp. $ 58,336 ---------- Total Energy $ 58,336 ---------- Capital Goods - 12.4% Electrical Component & Equipment - 4.2% 900 Emerson Electric Co. $ 75,429 ---------- Industrial Conglomerates - 8.2% 950 3M Co. $ 76,732 2,100 General Electric Co. 69,216 ---------- $ 145,948 ---------- Total Capital Goods $ 221,377 ---------- Transportation - 8.5% Air Freight & Couriers - 8.5% 1,400 Expeditors International of Washington, Inc.* $ 78,414 900 United Parcel Service 74,097 ---------- $ 152,511 ---------- Total Transportation $ 152,511 ---------- Consumer Durables & Apparel - 1.3% Apparel, Accessories & Luxury Goods - 1.3% 800 Coach, Inc.* $ 23,920 ---------- Total Consumer Durables & Apparel $ 23,920 ---------- Consumer Services - 1.7% Leisure Facilities - 1.7% 670 International Speedway Corp.* $ 31,068 ---------- Total Consumer Services $ 31,068 ---------- Media - 5.1% Advertising - 5.1% 1,500 WPP Group Plc $ 90,435 ---------- Total Media $ 90,435 ---------- Retailing - 1.0% General Merchandise Stores - 1.0% 350 Target Corp. $ 17,105 ---------- Total Retailing $ 17,105 ---------- Food, Beverage & Tobacco - 2.6% Packaged Foods & Meats - 2.6% 1,025 William Wrigley Jr. Co. $ 46,494 ---------- Total Food, Beverage & Tobacco $ 46,494 ---------- Household & Personal Products - 3.9% Household Products - 3.9% 1,170 Colgate-Palmolive Co. $ 70,083 ---------- Total Household & Personal Products $ 70,083 ---------- Health Care Equipment & Services - 9.4% Health Care Equipment - 8.1% 1,650 Medtronic, Inc. $ 77,418 1,600 Stryker Corp.* 67,376 ---------- $ 144,794 ----------
Shares Value Health Care Technology - 1.3% 900 IMS Health, Inc. $ 24,165 ---------- Total Health Care Equipment & Services $ 168,959 ---------- Pharmaceuticals & Biotechnology - 5.9% Pharmaceuticals - 5.9% 550 Eli Lilly & Co. $ 30,399 1,250 Johnson & Johnson 74,900 ---------- $ 105,299 ---------- Total Pharmaceuticals & Biotechnology $ 105,299 ---------- Banks - 2.5% Regional Banks - 2.5% 2,700 UCBH Holdings, Inc. (a) $ 44,658 ---------- Total Banks $ 44,658 ---------- Diversified Financials - 9.5% Asset Management & Custody Banks - 9.5% 1,500 State Street Corp. $ 87,135 2,200 T. Rowe Price Associates, Inc. 83,182 ---------- $ 170,317 ---------- Total Diversified Financials $ 170,317 ---------- Software & Services - 7.6% Application Software - 3.7% 2,200 Adobe Systems, Inc.* $ 66,792 ---------- Systems Software - 3.9% 3,000 Microsoft Corp. $ 69,900 ---------- Total Software & Services $ 136,692 ---------- Technology Hardware & Equipment - 10.8% Communications Equipment - 4.2% 3,800 Cisco Systems, Inc.* $ 74,214 ---------- Computer Hardware - 3.0% 700 IBM Corp.* $ 53,774 ---------- Computer Storage & Peripherals - 2.9% 4,800 EMC Corp.* $ 52,656 ---------- Electronic Equipment & Instruments - 0.7% 429 National Instruments Corp. $ 11,755 ---------- Total Technology Hardware & Equipment $ 192,399 ---------- Semiconductors - 11.9% Semiconductor Equipment - 0.5% 500 Applied Materials, Inc. $ 8,140 ---------- Semiconductors - 11.4% 3,200 Intel Corp. $ 60,640 1,800 Linear Technology Corp. (a) 60,281 2,500 Microchip Technology 83,875 ---------- $ 204,796 ---------- Total Semiconductors $ 212,936 ---------- TOTAL COMMON STOCKS (Cost $1,636,011) $1,742,589 ----------
6 The accompanying notes are an integral part of these financial statements. Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value TEMPORARY CASH INVESTMENT - 6.0% Security Lending Collateral - 6.0% 107,009 Securities Lending Investment Fund, 5.16% $ 107,009 ---------- TOTAL TEMPORARY CASH INVESTMENT (Cost $107,009) $ 107,009 ---------- TOTAL INVESTMENT IN SECURITIES - 103.4% (Cost $1,743,020) $1,849,598 ---------- OTHER ASSETS AND LIABILITIES - (3.4)% $ (61,107) ---------- TOTAL NET ASSETS - 100.0% $1,788,491 ==========
* Non-income producing security. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 1,782 Linear Technology Corp. $ 59,679 2,673 UCBH Holdings, Inc. 44,211 -------- Total $103,890 ========
The accompanying notes are an integral part of these financial statements. 7 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 3/15/04 (a) 6/30/06 Year Ended to Class II (unaudited) 12/31/05 12/31/04 Net asset value, beginning of period $ 10.22 $ 10.14 $ 10.00 ------- ------- ------- Increase from investment operations: Net investment income $ 0.04 $ 0.03 $ 0.05 Net realized and unrealized gain on investments 0.05 0.09 0.09 ------- ------- ------- Net increase from investment operations $ 0.09 $ 0.12 $ 0.14 Distributions to shareowners: Net investment income (0.04) (0.04) -- -------- ------- ------- Net increase in net asset value $ 0.05 $ 0.08 $ 0.14 -------- ------- ------- Net asset value, end of period $ 10.27 $ 10.22 $ 10.14 -------- ------- ------- Total return* 0.92% 1.19% 1.40%(b) Ratio of net expenses to average net assets+ 0.95%** 0.95% 0.95%** Ratio of net investment income to average net assets+ 0.59%** 0.43% 1.40%** Portfolio turnover rate 18%** 16% 7% Net assets, end of period (in thousands) $ 1,788 $ 1,872 $ 1,424 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 4.58%** 6.62% 15.01%** Net investment loss (3.04)%** (5.24)% (12.68)%** Ratios with waivers of management fees and assumptions of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.95%** 0.95% 0.95%** Net investment income 0.59%** 0.43% 1.40%**
(a) The Portfolio commenced operations on March 15, 2004. (b) Not annualized. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 8 The accompanying notes are an integral part of these financial statements. Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $103,890) (cost $1,849,598 $1,743,020) Cash 56,680 Receivables - Fund shares sold 12,894 Dividends, interest and foreign taxes withheld 1,861 Due from Pioneer Investment Management, Inc. 7,108 Other 826 ---------- Total assets $1,928,967 ---------- LIABILITIES: Payables - Fund shares repurchased $ 271 Upon return of securities loaned 107,009 Due to affiliates 738 Accrued expenses 32,458 ---------- Total liabilities $ 140,476 ---------- NET ASSETS: Paid-in capital $1,693,130 Undistributed net investment income 5,576 Accumulated net realized loss on investments (16,793) Net unrealized gain on: Investments 106,578 ---------- Total net assets $1,788,491 ---------- NET ASSET VALUE PER SHARE: Class II: (No par value, unlimited number of shares authorized) Net assets $1,788,491 Shares outstanding 174,088 ---------- Net asset value per share $ 10.27
The accompanying notes are an integral part of these financial statements. 9 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $89) $ 13,975 Interest 596 Income on securities loaned, net 1 --------- Total investment income $ 14,572 --------- EXPENSES: Management fees $ 7,089 Transfer agent fees and expenses 696 Distribution fees 2,363 Administrative reimbursements 9,522 Custodian fees 8,954 Professional fees 8,971 Printing expense 3,724 Fees and expenses of nonaffiliated trustees 1,869 Miscellaneous 110 --------- Total expenses $ 43,298 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (34,319) --------- Net expenses $ 8,979 --------- Net investment income $ 5,593 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from: Investments $ 30,524 --------- Change in net unrealized gain from: Investments $ (17,732) --------- Net gain on investments $ 12,792 --------- Net increase in net assets resulting from operations $ 18,385 =========
10 The accompanying notes are an integral part of these financial statements. Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 Year Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 5,593 $ 7,536 Net realized gain (loss) on investments 30,524 (39,329) Change in net unrealized gain on investments (17,732) 62,350 ---------- ---------- Net increase in net assets resulting from operations $ 18,385 $ 30,557 ---------- ---------- DISTRIBUTIONS TO SHAREOWNERS Net investment income: Class II $ (7,547) $ (7,006) ---------- ---------- Total distributions to shareowners $ (7,547) $ (7,006) ---------- ---------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 178,992 $ 633,120 Reinvestment of distributions 7,104 6,611 Cost of shares repurchased (280,619) (215,562) ---------- ---------- Net increase (decrease) in net assets resulting from Fund share transactions $ (94,523) $ 424,169 ---------- ---------- Net increase (decrease) in net assets $ (83,685) $ 447,720 NET ASSETS: Beginning of period 1,872,176 1,424,456 ---------- ---------- End of period $1,788,491 $1,872,176 ========== ========== Undistributed net investment income, end of period $ 5,576 $ 7,530 ========== ==========
The accompanying notes are an integral part of these financial statements. 11 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer AmPac Growth VCT Portfolio (the Portfolio), is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (formerly America Pacific Rim Portfolio) (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The AmPac Growth VCT Portfolio commenced operations on March 15, 2004. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. AmPac Growth Portfolio seeks capital appreciation. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is 12 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no securities fair valued. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest a substantial amount of its assets in issuers located in a limited number of countries and therefore is susceptible to adverse economic, political or regulatory developments affecting those countries. Investing in the securities of U.S. issuers with substantial foreign activities involves many of the same risks as investing in the securities of foreign issuers. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus. Please refer to those documents when considering the Portfolio's risks. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, AmPac Growth Portfolio had a net capital loss carryforward of $26,565, of which the following amounts will expire between 2012 and 2013, if not utilized: $7,988 in 2012 and $18,577 in 2013. The Portfolio elected to defer $20,752 in capital losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ended December 31, 2006. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the distributions paid during the year ended December 31, 2005 and the components of distributable earnings (accumulated losses) as of December 31, 2005.
- --------------------------------------------------- 2005 - --------------------------------------------------- Distributions paid from: Ordinary Income $ 7,006 Long-term capital gain -- ------- $ 7,006 ------- Return of capital -- ------- Total distributions $ 7,006 ------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 7,530 Undistributed long-term gain/ (capital loss carryforward) (26,565) Post October Loss Deferred (20,752) Unrealized appreciation (depreciation) 124,310 ------- Total $84,523 ======= - ---------------------------------------------------
C. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair 13 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- value of the securities loaned that may occur during the term of the loan, will be for the account of Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.75% of the Portfolio's average daily net assets up to $1 billion and 0.70% on assets over $1 billion. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses of the Portfolio to the extent required to reduce Class II expenses to 0.95% of the average daily net assets attributable to Class II shares. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $284 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $442 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $12 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Portfolio Tax Cost Appreciation Depreciation (Depreciation) - --------------------------------------------------------------------------------------------- AmPac Growth Portfolio $1,743,020 $183,967 $(77,389) $106,578 - ---------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $169,340 and $383,131, respectively. 14 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ----------------------------------------------------------------------------------------------- '06 Shares '06 Amount AmPac Growth Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ----------------------------------------------------------------------------------------------- CLASS II: Shares sold 17,174 $ 178,992 63,412 $ 633,120 Reinvestment of distributions 696 7,104 669 6,611 Shares repurchased (26,927) (280,619) (21,368) (215,562) --------------------------------------------------------- Net increase (decrease) (9,057) $ (94,523) 42,713 $ 424,169 ========================================================= - -----------------------------------------------------------------------------------------------
15 Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - -------------------------------------------------------------------------------- Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19635-00-0806 [LOGO]PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Core Bond VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Core Bond VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 9 Notes to Financial Statements 13 Trustees, Officers and Service Providers 17
Before investing consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment in securities) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Asset Backed Securities 0.4% Collateralized Mortgage Obligations 0.8% U.S. Corporate Bonds 10.0% U.S. Government Securities 88.8%
Quality Distribution (As a percentage of total investment in securities) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Commercial Paper 0.8% B & Lower 0.9% BB 2.1% BBB 6.9% AAA 0.5% Treasury/Agency 88.8%
Five Largest Holdings (As a percentage of long-term holdings) 1. Government National Mortgage Association, 4.5%, 3/15/20 22.58% 2. Government National Mortgage Association, 5.0%, 8/15/35 22.39 3. U.S. Treasury Notes, 3.625%, 6/30/07 15.46 4. U.S. Treasury Strip, 0.0%, 11/15/13 3.71 5. Federal National Mortgage Association, 5.5%, 3/1/36 3.43
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 9.58 $ 9.88
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.2018 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Core Bond VCT Portfolio at net asset value, compared to that of the Lehman Brothers Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Lehman Bros. Core Bond Aggregate VCT Portfolio Bond Index 7/05 $10,000 $10,000 6/06 10,001 10,011
The Lehman Brothers Aggregate Bond Index is a market value-weighted measure of treasury and agency issues, corporate bond issues and mortgage-backed securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (as of June 30, 2006)
- -------------------------- Net Asset Value - -------------------------- Life-of-Class (7/15/05) -0.59%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Please refer to variable product's semiannual report for performance that reflects the deduction of the variable products fees and charges. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Core Bond VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II - --------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 990.00 Expenses Paid During Period* $ 4.19
* Expenses are equal to the Portfolio's annualized expense ratio of 0.85% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Core Bond VCT Portfolio Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006
Share Class II - --------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,020.58 Expenses Paid During Period* $ 4.26
* Expenses are equal to the Portfolio's annualized expense ratio of 0.85% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Against a backdrop of strong economic growth throughout the globe, inflation concerns grew steadily during the first six months of 2006. With dramatic increases in commodity prices - most notably in energy prices - fears built that inflationary pressures were starting to spread throughout the general economy. Given these concerns, the U.S. Federal Reserve Board continued to raise short-term interest rates to relieve inflationary pressures and control economic growth. The Fed raised its Fed funds rate four successive times over the six months, from 4.25% to 5.25%. As the Fed acted, rates across securities of all maturities also rose, and bond prices generally declined. In the following interview, Kenneth J. Taubes discusses the factors that influenced Pioneer Core Bond VCT Portfolio's performance during the six months ended June 30, 2006. Mr. Taubes, Director of Pioneer's Fixed Income Group, oversees the team responsible for the daily management of the Portfolio. Q. How did the Portfolio perform during the six months ended June 30, 2006? A. Pioneer Core Bond VCT Portfolio, Class II shares, had a total return of -1.00% for the six months, at net asset value. During the same six months, the Lehman Aggregate Bond Index produced a total return of -0.72%. The Portfolio's 30-day SEC yield on June 30, 2006 was 4.38%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What were the primary factors influencing performance? A. It was a challenging period in the bond market, given the persistent economic growth and the Federal Reserve Board's increasing concern about rising inflationary pressures. The Fed raised short-term rates at each of the board's four meetings during the six months and rates rose across the board and in almost parallel fashion among securities of all maturities. Over the half year, the yield on the six-month Treasury bill rose by about 90 basis points (nine-tenths of one percentage point). Yields of two- to three-year Treasury securities rose by about 79 basis points, the yields of 10-year Treasuries climbed by 78 basis points, and the yields of 30-year Treasuries rose by 67 basis points. As these rate changes occurred, bond prices - especially among higher-quality securities - tended to depreciate, with most high-grade securities recording negative total returns. The most notable exceptions were issues with short maturities of two years and less, which were the best-performing over the six months. Corporate bonds, including high-yield securities, performed somewhat better than Treasuries, as the yield advantages of corporate bonds compensated for the erosion in the market value of high-yield bonds. Q. What were your principal strategies during the period? A. In general, as the period progressed we became increasingly defensive to guard against the risks of a slowing economy as the impacts of the Federal Reserve's rate hikes worked their way through the economy. When interest rates rose, we gradually increased duration - a measure of a bond's price sensitivity to changes in interest rates -- as longer-maturity bonds began to decline and started to offer greater value. The Portfolio's effective duration on June 30, 2006, was 4.86 years. We maintained an exposure to Treasury Inflation Protected Securities (TIPS) for most of the period, although we did reduce our positions late in the period after these investments had performed particularly well. Over the six months, we maintained the Portfolio's primary focus on very high quality bonds, including Treasuries, TIPS and high-quality, mortgage-backed securities. At the end of the fiscal period on June 30, 2006, average credit quality was AA+, and 88.3% of assets were invested in Treasury and U.S. government agency securities, including agency-backed mortgage securities. As of the same date, only 3.0% of Portfolio assets were invested in high-yield, below investment-grade bonds. A Word About Risk: When interest rates rise, the prices of fixed- income securities in the Portfolio will generally fall. Conversely, when interest rates fall, the prices of fixed-income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. Investments in high yield or lower-rated securities are subject to greater-than-average risk. The securities issued by U.S. Government- sponsored entities (i.e., FNMA, Freddie Mac) are neither guaranteed nor issued by the U.S. Government. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-Backed securities are also subject to pre-payments. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q. What types of investments had the greatest impact on Portfolio performance? A. Our positions in TIPS had the greatest positive influence on results. Holding back results somewhat was our investment in individual bonds of Host Marriot. These bonds underperformed the Portfolio's benchmark index. However, industry, as well as company, fundamentals remain sound. We continue to like the security, which remains a Portfolio holding. Q. What is your investment outlook? A. We anticipate that we will see increased evidence that the Federal Reserve has been successful in slowing the rate of economic growth. We also see a drying up of liquidity in the global markets because of widespread hikes in short-term interest rates by central banks across the globe. Given these factors, we believe it makes sense to lengthen the Portfolio's duration and to maintain exposure to Treasury and high-quality mortgage securities. We believe these maneuvers can help to protect the Portfolio in a slowing economy while positioning it for the time when the Federal Reserve ends its cycle of rate hikes. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings (unaudited) Value ASSET BACKED SECURITIES - 0.4% Utilities - 0.4% Electric Utilities - 0.4% $ 3,960 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) $ 3,955 ------------ Total Utilities $ 3,955 ------------ TOTAL ASSET BACKED SECURITIES (Cost $4,013) $ 3,955 ------------ COLLATERALIZED MORTGAGE OBLIGATIONS - 0.8% Government - 0.8% Government - 0.8% 8,749 AAA/Aaa Freddie Mac, 6.1%, 9/15/18 $ 8,717 ------------ Total Government $ 8,717 ------------ TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $8,820) $ 8,717 ------------ CORPORATE BONDS - 10.2% Capital Goods - 0.9% Electrical Component & Equipment - 0.5% 5,000 NR/WD Orcal Geothermal, 6.21%, 12/30/20 (144A) $ 4,868 ------------ Trading Companies & Distributors - 0.4% 5,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 4,566 ------------ Total Capital Goods $ 9,434 ------------ Consumer Durables & Apparel - 0.4% Home Furnishings - 0.4% 5,000 BBB-/Baa3 Mohawk Industries, Inc., 6.125%, 1/15/16 $ 4,820 ------------ Total Consumer Durables & Apparel $ 4,820 ------------ Consumer Services - 0.5% Education Services - 0.5% 5,000 AAA/Aaa President & Fellows of Harvard, 6.3%, 10/1/37 $ 5,029 ------------ Total Consumer Services $ 5,029 ------------ Media - 0.9% Broadcasting & Cable TV - 0.9% 10,000 BBB+/Baa2 Comcast Corp., 5.85%, 11/15/15 $ 9,631 ------------ Total Media $ 9,631 ------------ Retailing - 0.4% Specialty Stores - 0.4% 5,000 BBB-/Baa3 Tanger Factory Outlet Centers, Inc., 6.15%, 11/15/15 $ 4,858 ------------ Total Retailing $ 4,858 ------------ Insurance - 3.2% Life & Health Insurance - 0.4% 5,000 B-/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 4,975 ------------ Multi-Line Insurance - 0.5% 5,000 BB+/Ba1 Hanover Insurance Group, 7.625%, 10/15/25 $ 5,012 ------------ Property & Casualty Insurance - 1.4% 5,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 4,951 10,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 10,114 ------------ $ 15,065 ------------
6 The accompanying notes are an integral part of these financial statements. Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings (unaudited) Value Reinsurance - 0.9% $ 10,000 BBB/NA Platinum Underwriters Holdings, 7.5%, 6/1/17 $ 9,810 -------- Total Insurance $ 34,862 -------- Real Estate - 2.6% Real Estate Investment Trusts - 2.6% 10,000 BBB-/Baa3 Health Care, Inc., 6.0%, 11/15/13 $ 9,666 5,000 BBB/Baa2 Hospitality Properties Trust, 5.125%, 2/15/15 4,586 10,000 BB/Ba2 Host Marriott LP, 6.375%, 3/15/15 9,400 5,000 B+/B1 Trustreet Properties, Inc., 7.5%, 4/1/15 4,925 -------- $ 28,577 -------- Total Real Estate $ 28,577 -------- Semiconductors - 0.9% Semiconductors - 0.9% 10,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 9,547 -------- Total Semiconductors $ 9,547 -------- Utilities - 0.4% Electric Utilities - 0.4% 5,000 BBB+/Baa3 Entergy Gulf States, 5.7%, 6/1/15 $ 4,704 -------- Total Utilities $ 4,704 -------- TOTAL CORPORATE BONDS (Cost $115,979) $111,462 --------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount Value U.S. GOVERNMENT & AGENCY OBLIGATIONS - 90.8% $ 23,965 Federal Home Loan Mortgage Corp., 5.0%, 8/1/35 $ 22,399 10,000 Federal Home Loan Mortgage Corp., 5.25%, 2/24/11 9,841 39,806 Federal National Mortgage Association, 5.5%, 3/1/36 38,235 24,578 Federal National Mortgage Association, 5.5%, 4/1/36 23,608 24,951 Federal National Mortgage Association, 5.5%, 5/1/36 23,966 264,004 Government National Mortgage Association, 4.5%, 3/15/20 251,516 263,408 Government National Mortgage Association, 5.0%, 8/15/35 249,374 36,000 U.S. Treasury Bonds, 5.25%, 11/15/28 35,831 22,784 U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 21,619 5,075 U.S. Treasury Inflation Protected Security, 2.0%, 1/15/16 4,846 5,075 U.S. Treasury Inflation Protected Security, 2.375%, 4/15/11 5,054 1,120 U.S. Treasury Inflation Protected Security, 3.0%, 7/15/12 1,154 175,000 U.S. Treasury Notes, 3.625%, 6/30/07 172,204 25,000 U.S. Treasury Notes, 4.0%, 11/15/12 23,498 25,000 U.S. Treasury Notes, 4.625%, 2/29/08 24,772 10,000 U.S. Treasury Notes, 5.375%, 2/15/31 10,175 5,000 U.S. Treasury Notes, 5.5%, 8/15/28 5,137 35,000 U.S. Treasury Strip, 0.0%, 2/15/13 25,049 60,000 U.S. Treasury Strip, 0.0%, 11/15/13 41,284 ---------- $ 989,562 ---------- TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost $1,025,707) $ 989,562 ---------- TOTAL INVESTMENT IN SECURITIES - 102.2% (Cost $1,154,519) $1,113,696 ---------- OTHER ASSETS AND LIABILITIES - (2.2)% $ (24,107) ---------- TOTAL NET ASSETS - 100.0% $1,089,589 ==========
144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $13,389 or 1.2% of total net assets. NR Not rated by either S&P or Moody's. 8 The accompanying notes are an integral part of these financial statements. Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 7/15/05 (a) 6/30/06 to Class II (unaudited) 12/31/05 Net asset value, beginning of period $ 9.88 $ 10.00 ------ ------- Increase (decrease) from investment operations: Net investment income $ 0.20 $ 0.16 Net realized and unrealized loss on investments (0.30) (0.12) ------ ------- Net increase (decrease) in net assets from investment operations $(0.10) $ 0.04 ------ ------- Distributions to shareowners: Net investment income (0.20) (0.16) ------ ------- Net decrease in net asset value $(0.30) $ (0.12) ------ ------- Net asset value, end of period $ 9.58 $ 9.88 ====== ======= Total return* (1.00)% 0.42%(b) Ratio of net expenses to average net assets 0.85%** 0.85%** Ratio of net investment income to average net assets 4.20%** 3.57%** Portfolio turnover rate 29%** 7%(b) Net assets, end of period (in thousands) $1,090 $ 994 Ratios with no waiver of management fees and assumption of expenses by PIM Net expenses 11.40%** 10.10%** Net investment loss (6.35)%** (5.68)%**
(a) The Portfolio commenced operations on July 15, 2005. (b) Not annualized. * Assumes initial investment at net asset value at the beginning of the period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of the period. ** Annualized. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 9 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (cost $1,154,519) $1,113,696 Cash 10,931 Receivables -- Dividends, interest and foreign taxes withheld 5,803 Due from Pioneer Investment Management, Inc. 3,928 Other 447 ---------- Total assets $1,134,805 ---------- LIABILITIES: Payables -- Fund shares repurchased $ 9 Dividends 3,748 Due to affiliates 8,949 Accrued expenses 32,510 ---------- Total liabilities $ 45,216 ---------- NET ASSETS: Paid-in capital $1,134,523 Undistributed net investment income 332 Accumulated net realized loss on investments (4,443) Net unrealized loss on investments (40,823) ---------- Total net assets $1,089,589 ---------- NET ASSET VALUE PER SHARE: Class II: (No par value, unlimited number of shares authorized) Net assets $1,089,589 Shares outstanding 113,749 ---------- Net asset value per share $ 9.58
10 The accompanying notes are an integral part of these financial statements. Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Interest $ 26,390 --------- Total investment income $ 26,390 --------- EXPENSES: Management fees $ 4,229 Transfer agent fees and expenses 599 Distribution fees 1,279 Administrative reimbursements 11,486 Custodian fees 5,470 Professional fees 18,922 Printing expense 5,561 Fees and expenses of nonaffiliated trustees 11,374 Miscellaneous 628 --------- Total expenses $ 59,548 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (55,108) --------- Net expenses $ 4,440 --------- Net investment income $ 21,950 --------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS: Net realized loss from: Investments $ (3,505) --------- Change in net unrealized loss from: Investments $ (29,455) --------- Net loss on investments $ (32,960) --------- Net decrease in net assets resulting from operations $ (11,010) =========
The accompanying notes are an integral part of these financial statements. 11 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
For the period Six Months from 7/15/05 Ended (Commencement 6/30/06 of Operations) (unaudited) to 12/31/05 FROM OPERATIONS: Net investment income $ 21,950 $ 16,387 Net realized loss on investments (3,505) (915) Change in net unrealized gain or loss on investments (29,455) (11,368) ---------- ---------- Net increase (decrease) in net assets resulting from operations $ (11,010) $ 4,104 ---------- ---------- DISTRIBUTIONS TO SHAREOWNERS Net investment income: Class II $ (21,983) $ (16,140) ---------- ---------- Total distributions to shareowners $ (21,983) $ (16,140) ---------- ---------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 129,675 $1,006,348 Reinvestment of distributions 1,805 63 Cost of shares repurchased (3,254) (19) ---------- ---------- Net increase in net assets resulting from Fund share transactions $ 128,226 $1,006,392 ---------- ---------- Net increase in net assets $ 95,233 $ 994,356 NET ASSETS: Beginning of period 994,356 -- ---------- ---------- End of period $1,089,589 $ 994,356 ========== ========== Undistributed net investment income, end of period $ 332 $ 365 ========== ==========
12 The accompanying notes are an integral part of these financial statements. Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Core Bond VCT Portfolio (The Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty -seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The Portfolio commenced operations on July 15, 2005. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. Core Bond Portfolio seeks to provide current income from an investment grade portfolio with due regard to preservation of capital and prudent investment risk. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Temporary cash investments are valued at amortized cost. Fixed income securities with remaining maturity of more than 60 days are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and 13 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. At times, the Portfolio's Investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The Portfolio elected to defer $945 in capital losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ended December 31, 2006. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the distributions paid during the period ended December 31, 2005 and the components of distributable earnings (accumulated losses) as of December 31, 2005.
- ----------------------------------------------------------------------- 2005 - ----------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 16,140 Long-Term capital gain/capital loss carryforward -- -------- $ 16,140 Return of Capital -- -------- Total distributions $ 16,140 -------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 562 Undistributed long-term gain/(capital loss carryforward) -- Post-October Loss Deferred (945) Unrealized appreciation (depreciation) (11,558) -------- Total $(11,941) ======== - -----------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax treatment of amortization on securities purchased at premium. C. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns 14 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the portfolios. Management fees are calculated daily at the annual rate of 0.50% of the Portfolio's average daily net assets. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and to assume other operating expenses of the Portfolio to the extent necessary to limit Class II expenses to 0.85% of the average daily net assets attributable to Class II shares. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $6,286 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano, provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $1,207 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $1,456 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At December 31, 2005, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------ Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------ Core Bond Portfolio $1,154,709 $47 $ (41,060) $ (41,013) ========== ==== ========== ========== - ------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $39,031 and $1,480, respectively. The cost of purchases and the proceeds from sales of investments in U.S. Government obligations for the six months ended June 30, 2006, were $271,783 and $153,077, respectively. 15 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the period ended December 31, 2005:
- -------------------------------------------------------------------------------------------- '06 Shares '06 Amount '05 Shares '05 Amount Core Bond VCT (unaudited) (unaudited) - -------------------------------------------------------------------------------------------- CLASS II: Shares sold 13,253 $129,675 100,642 $1,006,348 Reinvestment of distributions 187 1,805 7 63 Shares repurchased (338) (3,254) (2) (19) ------------------------------------------------------- Net increase 13,102 $128,226 100,647 $1,006,392 =======================================================
16 Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - -------------------------------------------------------------------------------- Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19639-00-0806 [LOGO]PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Ibbotson Asset Allocation Series VCT Portfolios -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Ibbotson Asset Allocation Series VCT Portfolios Moderate Allocation Portfolio - Portfolio and Performance Update 2 Growth Allocation Portfolio - Portfolio and Performance Update 3 Aggressive Allocation Portfolio - Portfolio and Performance Update 4 Comparing Ongoing Portfolio Expenses 5 Market Overview and Strategy 8 Portfolio Reviews 9 Schedule of Investments 10 Financial Statements 13 Notes to Financial Statements 21 Trustees, Officers and Service Providers 24
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Ibbotson Moderate Allocation VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Target Asset Allocations [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Equity 60% Fixed Income 40%
Large Cap Growth Stocks 15.5% - --------------------------------------------------- Large Cap Value Stocks 15.5 - --------------------------------------------------- Mid/Small Cap Growth Stocks 6.0 - --------------------------------------------------- Mid/Small Cap Value Stocks 6.0 - --------------------------------------------------- International Stocks 12.0 - --------------------------------------------------- Emerging Markets 2.0 - --------------------------------------------------- Real Estate (REITs) 3.0 - --------------------------------------------------- High Yield Bonds 8.0 - --------------------------------------------------- Bonds 9.0 - --------------------------------------------------- Short Term Bonds 17.0 - --------------------------------------------------- Cash Equivalents 6.0 - ---------------------------------------------------
Actual Portfolio Holdings (Based on total portfolio) U.S. Stocks Pioneer Growth Opportunities 2.11% - -------------------------------------------------------------------------------- Pioneer Fund 7.35% International Stocks - -------------------------------------------------------------------------------- Pioneer Research 10.47 Pioneer International Equity 11.68 - -------------------------------------------------------------------------------- Pioneer Oak Ridge Large Pioneer Emerging Markets 2.14 ----------------------------------------- Cap Growth 13.58 Bonds - -------------------------------------------------------------------------------- Pioneer Value 3.15 Pioneer High Yield 6.35 - -------------------------------------------------------------------------------- Pioneer Cullen Value 3.15 Pioneer Bond 9.49 - -------------------------------------------------------------------------------- Pioneer Mid Cap Growth 3.15 Pioneer Short Term Income 16.83 - -------------------------------------------------------------------------------- Pioneer Mid Cap Value 1.05 Pioneer Government Income 3.16 - -------------------------------------------------------------------------------- Pioneer Small Cap Value 3.16 - -------------------------------------------------------------------------------- Pioneer Real Estate 3.18 - --------------------------------------------------------------------------------
This list excludes temporary cash and derivative instruments. Portfolio holdings will vary for other periods. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 10.72 $ 10.63
Distributions per Share Short-Term Long-Term (1/1/06 - 6/30/06) Dividends Capital Gains Capital Gains $ 0.0397 $ - $ 0.0949
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Ibbotson Moderate Allocation VCT Portfolio at net asset value, compared to that of the Standard & Poor's 500 Stock Index and Lehman Brothers Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Ibbotson Moderate Allocation Lehman Brothers VCT Portfolio S&P 500 Aggregate Bond Index 3/05 $10,000 $10,000 $10,000 6/05 10,111 10,137 10,301 6/06 10,912 11,011 10,218
The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market. The Standard & Poor's Stock Index (the S&P 500) is a commonly used measure of the broad U.S. stock market. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June, 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class (3/18/05) 6.61% 1 Year 7.93%
All total returns shown assume reinvestment of distributions at net asset value. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Please refer to variable product's semiannual report for performance that reflects the deduction of the variable products fees and charges. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Ibbotson Growth Allocation VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Target Asset Allocations Equity 75% Fixed Income 25%
Large Cap Growth Stocks 16.5% - --------------------------------------------------- Large Cap Value Stocks 17.5 - --------------------------------------------------- Mid/Small Cap Growth Stocks 8.5 - --------------------------------------------------- Mid/Small Cap Value Stocks 8.5 - --------------------------------------------------- International Stocks 16.0 - --------------------------------------------------- Emerging Markets 4.0 - --------------------------------------------------- Real Estate (REITs) 4.0 - --------------------------------------------------- High Yield Bonds 5.0 - --------------------------------------------------- Bonds 7.5 - --------------------------------------------------- Short Term Bonds 12.5 - ---------------------------------------------------
Actual Portfolio Holdings (Based on total portfolio) U.S. Stocks Pioneer Growth Opportunities 4.01% - -------------------------------------------------------------------------------- Pioneer Fund 7.97% International Stocks - -------------------------------------------------------------------------------- Pioneer Research 10.93 Pioneer International Equity 15.11 - -------------------------------------------------------------------------------- Pioneer Oak Ridge Large Pioneer Emerging Markets 4.06 ----------------------------------------- Cap Growth 12.88 Bonds - -------------------------------------------------------------------------------- Pioneer Value 3.98 Pioneer High Yield 3.01 - -------------------------------------------------------------------------------- Pioneer Cullen Value 3.99 Pioneer Bond 8.00 - -------------------------------------------------------------------------------- Pioneer Mid Cap Growth 3.99 Pioneer Short Term Income 11.96 - -------------------------------------------------------------------------------- Pioneer Mid Cap Value 1.99 Pioneer Government Income 1.09 - -------------------------------------------------------------------------------- Pioneer Small Cap Value 3.00 - -------------------------------------------------------------------------------- Pioneer Real Estate 4.03 - --------------------------------------------------------------------------------
This list excludes temporary cash and derivative instruments. Portfolio holdings will vary for other periods. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 11.01 $ 10.78
Distributions per Share Short-Term Long-Term (1/1/06 - 6/30/06) Dividends Capital Gains Capital Gains $ 0.0185 $ - $ 0.049
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Ibbotson Growth Allocation VCT Portfolio at net asset value, compared to that of the Standard & Peer's 500 Stock Index and Lehman Brothers Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Ibbotson Moderate Allocation Lehman Brothers VCT Portfolio S&P 500 Aggregate Bond Index 3/05 $10,000 $10,000 $10,000 6/05 10,111 10,137 10,301 6/06 11,180 11,011 10,218
The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market. The Standard & Poor's Stock Index (the S&P 500) is a commonly used measure of the broad U.S. stock market. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
Net Asset Value Life-of-Class (3/18/05) 8.30% 1 Year 10.02%
All total returns shown assume reinvestment of distributions at net asset value. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Please refer to variable product's semiannual report for performance that reflects the deduction of the variable products fees and charges. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 3 Pioneer Ibbotson Aggressive Allocation VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Target Asset Allocations [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Equity 90% Fixed Income 10%
Large Cap Growth Stocks 19.0% - --------------------------------------------------- Large Cap Value Stocks 19.0 - --------------------------------------------------- Mid/Small Cap Growth Stocks 10.5 - --------------------------------------------------- Mid/Small Cap Value Stocks 10.5 - --------------------------------------------------- International Stocks 21.0 - --------------------------------------------------- Emerging Markets 5.0 - --------------------------------------------------- Real Estate (REITs) 5.0 - --------------------------------------------------- High Yield Bonds 0.0 - --------------------------------------------------- Bonds 7.0 - --------------------------------------------------- Short Term Bonds 3.0 - ---------------------------------------------------
Actual Portfolio Holdings (Based on total portfolio) U.S. Stocks Pioneer Small Cap Value 2.99% - -------------------------------------------------------------------------------- Pioneer Fund 8.93% Pioneer Real Estate 5.03 - -------------------------------------------------------------------------------- Pioneer Research 11.90 Pioneer Growth 5.02 Opportunities - -------------------------------------------------------------------------------- Pioneer Oak Ridge Large International Stocks ----------------------------------------- Cap Growth 14.81 Pioneer International Equity 20.36 - -------------------------------------------------------------------------------- Pioneer Value 3.97 Pioneer Emerging Markets 5.14 - -------------------------------------------------------------------------------- Pioneer Cullen Value 4.97 Bonds - -------------------------------------------------------------------------------- Pioneer Mid Cap Growth 4.96 Pioneer Bond 5.97 - -------------------------------------------------------------------------------- Pioneer Mid Cap Value 2.98 Pioneer Short Term Income 2.97 - --------------------------------------------------------------------------------
This list excludes temporary cash and derivative instruments. Portfolio holdings will vary for other periods. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 11.22 $ 10.98
Distributions per Share Short-Term Long-Term (1/1/06 - 6/30/06) Dividends Capital Gains Capital Gains $ 0.027 $ - $ 0.1006
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Ibbotson Aggressive Allocation VCT Portfolio at net asset value, compared to that of the Standard & Poor's 500 Stock Index and Lehman Brothers Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Ibbotson Moderate Allocation Lehman Brothers VCT Portfolio S&P 500 Aggregate Bond Index 3/05 $10,000 $10,000 $10,000 6/05 10,151 10,137 10,301 6/06 11,397 11,011 10,218
The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market. The Standard & Poor's Stock Index (the S&P 500) is a commonly used measure of the broad U.S. stock market. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
Net Asset Value Life-of-Class (3/18/05) 10.37% 1 Year 12.28%
All total returns shown assume reinvestment of distributions at net asset value. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Please refer to variable product's semiannual report for performance that reflects the deduction of the variable products fees and charges. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Ibbotson Moderate Allocation VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Ibbotson Moderate Allocation VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,021.40 Expenses Paid During Period* $ 2.91
* Expenses are equal to the Portfolio's annualized expense ratio of 0.58% for Class II Shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads). Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Ibbotson Moderate Allocation VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,021.92 Expenses Paid During Period* $ 2.91
* Expenses are equal to the Portfolio's annualized expense ratio of 0.58% for Class II Shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 5 Pioneer Ibbotson Growth Allocation VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES (continued) - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Ibbotson Growth Allocation VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,027.80 Expenses Paid During Period* $ 2.92
* Expenses are equal to the Portfolio's annualized expense ratio of 0.58% for Class II Shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads). Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Ibbotson Growth Allocation VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1.021.92 Expenses Paid During Period* $ 2.91
* Expenses are equal to the Portfolio's annualized expense ratio of 0.58% for Class II Shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 6 Pioneer Ibbotson Growth Allocation VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Ibbotson Aggressive Allocation VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,033.80 Expenses Paid During Period* $ 3.73
* Expenses are equal to the Portfolio's annualized expense ratio of 0.74% for Class II Shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads). Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Ibbotson Aggressive Allocation VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,021.12 Expenses Paid During Period* $ 3.71
* Expenses are equal to the Portfolio's annualized expense ratio of 0.74% for Class II Shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 7 Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- MARKET OVERVIEW AND STRATEGY 6/30/06 - -------------------------------------------------------------------------------- In the following interview, Portfolio manager Peng Chen, Chief Investment Officer for Ibbotson Associates Advisors, LLC, discusses the market environment and investment strategies that applied to the Portfolios in the Pioneer Ibbotson Asset Allocation Series VCT Portfolios for the semiannual period ended June 30, 2006. Q. Could you characterize the economic backdrop during the first six months of 2006? A. The economic situation has been difficult to interpret for a while. While growth was solid in the first quarter of 2006 after a slight slowdown at the end of 2005, the more recent employment data have failed to provide a clear picture. In particular, job creation in manufacturing has been disappointing. The Federal Reserve (the Fed) continued to raise short-term rates gradually throughout the period, despite the transition to Chairman Bernanke. However, the Fed has announced a shift from a course of measured rate increases to a data-driven approach to policy. As a result, many economists have been paying even more attention than usual to economic releases, which are expected to affect short-term interest rates and, through them, the economy and the markets. After a positive start, U.S. equity markets fell in the second quarter, erasing most of the year-to-date's gains. The downturn impacted growth stocks the most, while large-cap and value-oriented stocks held up relatively well. International equities generally provided strong returns for the six months, although their performance also eased considerably as the period progressed. In the fixed-income markets, intermediate and longer-term bond prices generally fell as yields rose. Q. What were the strategic considerations that you applied to the three Portfolios in allocating assets? A. For each Portfolio, assets have been invested in keeping with their broad asset allocation and specific mutual fund targets. In addition, we have implemented three strategies across all the Portfolios. Within the U.S. stock portion of the Portfolios, we introduced during the period a slight overweighting of U.S. large-capitalization stocks relative to small-cap stocks. We did this for a number of reasons. First, although small cap stocks have historically outperformed large caps over long periods, there is a cyclical aspect to this performance leadership. After several years of small cap outperformance, this trend seems to have become less pronounced. In our view this suggests that a cycle of large cap performance leadership may begin reasonably soon. Supporting this view as well is the fact that small cap stocks are currently trading at valuations approximately double those for large caps. Finally, if as many expect the economy slows as a result of higher interest rates, large cap stocks may be more resilient. With respect to the other equity categories, exposure remained neutral throughout the period. We have also maintained neutral target weightings in the non-U.S. equity market alternatives, both developed and emerging. A second strategic emphasis is within the bond portion of the Portfolios, where we have continued to underweight the long-term bond vehicle, with the difference allocated to the shorter-term fixed-income alternative. While we do not see a clear direction for long-term interest rates over the short term, over time we do expect long-term bond yields to continue to trend higher, with corresponding downward pressure on prices of these issues. In addition, short-term rates have become much more attractive given the Fed's raising of the benchmark rate. In view of these factors, we believe the risk/reward profile is more favorable among shorter term issues. Elsewhere within fixed income, we have maintained neutral positions in the high yield bond offering, as well as in the non-U.S. fixed income option. Finally, we continue to underweight REITs (Real Estate Investment Trusts). REITs are traditionally most attractive to investors seeking income return, and these issues benefited from the period of low interest rates experienced in the recent past. As rates have risen, REIT yields have reached historically low levels relative to Treasury bonds. At the same time, REITs in the aggregate are priced at roughly double the general stock market, as gauged by traditional valuation measures such as price-to-earnings ratio. In addition to appearing fully valued when compared to both bonds and the rest of the stock market, REITs may be vulnerable to higher market interest rate levels, which we expect to lead to continued cooling in the real estate sector. Q. What factors are you watching most closely as you determine strategy for the Portfolios going forward? Going forward, we will continue to monitor economic indicators and interest rates to evaluate whether we need to adjust the views underlying our strategic allocations. The Federal deficit has been stable around four percent of Gross Domestic Product (GDP); the trade deficit reached a record six percent of GDP; meanwhile, the absence of household savings persists. While the markets do not seem to be especially focused on these numbers, the persistence of these imbalances is something we are watching. The markets are, however, focused on the Fed's next moves. On the one hand, we have limited employment growth and core inflation that remains relatively low; on the other hand, core inflation is increasing and GDP growth is solid. Will Chairman Bernanke keep increasing the benchmark rate to strengthen his reputation as an inflation hawk, or will he keep the rate stable while waiting for the effects of the 17 consecutive increases to kick in? In the meantime, the U.S. yield curve remains rather flat, meaning there is very little reward for buying longer maturities, and the stock market appears to be treading water pending economic data that will enable participants to forecast Fed actions more effectively. We continue to view the financial markets as lacking in clear direction, making appropriate diversification across asset classes vitally important as we enter the second half of 2006. Please see Portfolio Reviews beginning on page 9 for information on specific weightings and performance for each of the three Portfolios in the Pioneer Ibbotson Asset Allocation Series VCT Portfolios. Any information in this shareholder report regarding market or economic trends or the factors influencing a Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: The Portfolio performance depends on the adviser's skill in determining the strategic asset class allocations, the mix of underlying Pioneer funds, as well as the performance of those underlying funds. The underlying funds' performance may be lower than the performance of the asset class that they were selected to represent. Stocks and bonds can decline due to adverse issuer, market, regulatory, or economic developments. International markets may be less liquid and can be more volatile than U.S. markets. These risk factors, including those associated with currency exchange rates, also apply to investments in international markets, all of which make international markets more volatile and less liquid than investments in domestic markets. Some of the underlying portfolios can invest in either high-yield securities or small/emerging growth companies. Investments in these types of securities generally are subject to greater volatility than either higher-grade securities or more-established companies, respectively. Before making an investment in a Portfolio, you should consider all the risks associated with it. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for each Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all Portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 8 Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO REVIEWS 6/30/06 - -------------------------------------------------------------------------------- Moderate Allocation The Portfolio's total return for the semiannual period ended June 30, 2006 was 2.14% for Class II shares. The Portfolio targeted an asset allocation of 60% equities, 40% fixed income during the semiannual period ended June 30, 2006. Within the equity portion of the Portfolio, Pioneer Oak Ridge Large Cap Growth Fund was the largest holding at 13.58% of investments on June 30, 2006. Pioneer International Equity Fund was the next largest equity holding at 11.68% of investments. Large capitalization holdings were weighted slightly above target at the end of the period, reflecting management's view that these stocks were more attractive than their smaller cap counterparts. Within the fixed-income portion of the Portfolio, the largest holding at the end of the period was in a shorter duration bond fund, Pioneer Short Term Income Fund, at 16.83%, while a longer duration bond fund, Pioneer Bond Fund represented 9.49% of investments. Growth Allocation The Portfolio's total return for the semiannual period ended June 30, 2006 was 2.78% for Class II shares. The Portfolio targeted an asset allocation of 75% equities, 25% fixed income during the period. Within the equity portion of the fund, Pioneer International Equity Fund was the largest holding at 15.11% of investments on June 30, 2006. The largest domestic equity allocation was to Pioneer Oak Ridge Large Cap Growth Fund (12.88%) followed by Pioneer Research Fund (10.93%). Large capitalization holdings were weighted slightly above target at the end of the period, reflecting management's view that these stocks were more attractive than their smaller cap counterparts. Within the fixed-income portion of the Portfolio, the largest holding at the end of the period was in a shorter term bond fund, Pioneer Short Term Income Fund, at 11.96% of investments, while a longer duration bond fund, Pioneer Bond Fund represented 8.00% of investments. Aggressive Allocation The Portfolio's total return for the semiannual period ended June 30, 2006, was 3.38% for Class II shares. The Portfolio targeted an asset allocation of 90% equities, 10% fixed income during the period. Within the equity portion of the fund, Pioneer International Equity Fund was the largest holding at 20.36% of investments on June 30, 2006. On the domestic side, Pioneer Oak Ridge Large Cap Growth Fund (14.81%) and Pioneer Research Fund (11.90%) were the largest holdings. Large capitalization holdings were weighted slightly above target at the end of the period, reflecting management's view that these stocks were more attractive than their smaller cap counterparts. Within the fixed-income portion of the Portfolio, the largest holding at the end of the period was in a long-term bond fund, Pioneer Bond Fund, at 5.97% of assets, while a shorter term bond fund, Pioneer Short Term Income Fund represented 2.97% of assets. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: The Portfolio performance depends on the adviser's skill in determining the strategic asset class allocations, the mix of underlying Pioneer funds, as well as the performance of those underlying funds. The underlying funds' performance may be lower than the performance of the asset class that they were selected to represent. Stocks and bonds can decline due to adverse issuer, market, regulatory, or economic developments. International markets may be less liquid and can be more volatile than U.S. markets. These risk factors, including those associated with currency exchange rates, also apply to investments in international markets, all of which make international markets more volatile and less liquid than investments in domestic markets. Some of the underlying portfolios can invest in either high-yield securities or small/emerging growth companies. Investments in these types of securities generally are subject to greater volatility than either higher-grade securities or more-established companies, respectively. Before making an investment in a Portfolio, you should consider all the risks associated with it. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for each Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all Portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 9 Pioneer Ibbotson Moderate Allocation VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value MUTUAL FUNDS - 94.7% PIONEER FUNDS - 94.7 % 392,642 Pioneer Bond Fund Class Y $ 3,467,026 ----------- 62,742 Pioneer Cullen Value Fund Class Y 1,150,686 ----------- 27,024 Pioneer Emerging Markets Fund Class Y 780,183 ----------- 58,121 Pioneer Fund Class Y 2,682,885 ----------- 126,324 Pioneer Government Income Fund Class Y 1,155,866 ----------- 24,912 Pioneer Growth Opportunities Fund Class Y 772,011 ----------- 216,360 Pioneer High Yield Fund Class Y 2,319,375 ----------- 170,760 Pioneer International Equity Fund Class Y 4,263,868 ----------- 76,606 Pioneer Mid Cap Growth Fund Class Y 1,150,627 ----------- 15,684 Pioneer Mid Cap Value Fund Class Y 383,462 ----------- 382,569 Pioneer Oak Ridge Large Cap Growth Fund Class Y 4,958,099 ----------- 39,703 Pioneer Real Estate Shares Class Y 1,161,707 ----------- 371,766 Pioneer Research Fund Class Y 3,821,751 ----------- 634,139 Pioneer Short Term Income Fund Class Y 6,144,811 ----------- 34,204 Pioneer Small Cap Value Fund Class Y 1,153,361 ----------- 63,333 Pioneer Value Fund Class Y 1,148,863 ----------- TOTAL INVESTMENTS IN SECURITIES - 94.7% (Cost $36,187,413)(a) $36,514,581 ----------- OTHER ASSETS AND LIABILITIES - 5.3% 2,053,548 ----------- TOTAL NET ASSETS - 100.0% $38,568,129 ===========
(a) At June 30, 2006, the net unrealized gain on investments based on cost for federal tax purposes of $36,251,476 was as follows: Aggregate gross unrealized gain for all investments in which there is an excess of value over tax cost $661,039 Aggregate gross unrealized loss for all investments in which there is an excess of tax cost over value (397,934) -------- Net unrealized gain $263,105 ========
Purchases and sales of securities (excluding temporary cash investments) for the period ended June 30, 2006 aggregated $17,348,059 and $0, respectively. 10 The accompanying notes are an integral part of these financial statements. Pioneer Ibbotson Growth Allocation VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value MUTUAL FUNDS - 99.5% PIONEER FUNDS - 99.5% 491,924 Pioneer Bond Fund Class Y $ 4,343,685 ----------- 118,012 Pioneer Cullen Value Fund Class Y 2,164,345 ----------- 76,299 Pioneer Emerging Markets Fund Class Y 2,202,758 ----------- 93,699 Pioneer Fund Class Y 4,325,131 ----------- 64,752 Pioneer Government Income Fund Class Y 592,478 ----------- 70,325 Pioneer Growth Opportunities Fund Class Y 2,179,374 ----------- 152,523 Pioneer High Yield Fund Class Y 1,635,044 ----------- 328,660 Pioneer International Equity Fund Class Y 8,206,642 ----------- 144,109 Pioneer Mid Cap Growth Fund Class Y 2,164,519 ----------- 44,253 Pioneer Mid Cap Value Fund Class Y 1,081,976 ----------- 539,681 Pioneer Oak Ridge Large Cap Growth Fund Class Y 6,994,261 ----------- 74,699 Pioneer Real Estate Shares Class Y 2,185,694 ----------- 577,043 Pioneer Research Fund Class Y 5,932,004 ----------- 670,384 Pioneer Short Term Income Fund Class Y 6,496,023 ----------- 48,268 Pioneer Small Cap Value Fund Class Y 1,627,610 ----------- 119,139 Pioneer Value Fund Class Y 2,161,181 ----------- TOTAL INVESTMENTS IN SECURITIES - 99.5 % (Cost $54,191,871)(a) $54,292,725 ----------- OTHER ASSETS AND LIABILITIES - 0.5% 291,248 ----------- TOTAL NET ASSETS - 100.0% $54,583,973 ===========
(a) At June 30, 2006, the net unrealized gain on investments based on cost for federal tax purposes of $54,233,055 was as follows: Aggregate gross unrealized gain for all investments in which there is an excess of value over tax cost $585,257 Aggregate gross unrealized loss for all investments in which there is an excess of tax cost over value (525,587) -------- Net unrealized gain $ 59,670 ========
Purchases and sales of securities (excluding temporary cash investments) for the period ended June 30, 2006 aggregated $41,253,503 and $111,973, respectively. The accompanying notes are an integral part of these financial statements. 11 Pioneer Ibbotson Aggressive Allocation VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value MUTUAL FUNDS - 100.3% PIONEER FUNDS - 100.3% 51,556 Pioneer Bond Fund Class Y $ 455,238 ---------- 20,667 Pioneer Cullen Value Fund Class Y 379,037 ---------- 13,590 Pioneer Emerging Markets Fund Class Y 392,350 ---------- 14,755 Pioneer Fund Class Y 681,080 ---------- 12,353 Pioneer Growth Opportunities Fund Class Y 382,828 ---------- 62,223 Pioneer International Equity Fund Class Y 1,553,704 ---------- 25,197 Pioneer Mid Cap Growth Fund Class Y 378,453 ---------- 9,296 Pioneer Mid Cap Value Fund Class Y 227,283 ---------- 87,173 Pioneer Oak Ridge Large Cap Growth Fund Class Y 1,129,765 ---------- 13,114 Pioneer Real Estate Shares Class Y 383,702 ---------- 88,298 Pioneer Research Fund Class Y 907,701 ---------- 23,439 Pioneer Short Term Income Class Y 227,126 ---------- 6,767 Pioneer Small Cap Value Fund Class Y 228,184 ---------- 16,684 Pioneer Value Fund Class Y 302,652 ---------- TOTAL INVESTMENTS IN SECURITIES - 100.3% (Cost $7,521,383)(a) $7,629,103 ---------- OTHER ASSETS AND LIABILITIES - (0.3%) (24,897) ---------- TOTAL NET ASSETS - 100.0% $7,604,206 ----------
(a) At June, 30, 2006, the net unrealized gain on investments based on cost for federal tax purposes of $7,532,989 was as follows: Aggregate gross unrealized gain for all investments in which there is an excess of value over tax cost $172,751 Aggregate gross unrealized loss for all investments in which there is an excess of tax cost over value (76,637) -------- Net unrealized gain $ 96,114 ========
Purchases and sales of securities (excluding temporary cash investments) for the period ended June 30, 2006 aggregated $4,614,176 and $129,280, respectively. 12 The accompanying notes are an integral part of these financial statements. Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
For the six months For the period ended 3/18/05(a) 06/30/06 to (unaudited) 12/31/05 ----------- -------------- Moderate Allocation VCT Portfolio Class II Class II Net asset value, beginning of period $ 10.63 $ 10.00 -------- -------- Increase from investment operations: Net investment income (b) $ 0.07 $ 0.15 Net realized and unrealized gain on investments 0.15 0.48 -------- -------- Net increase from investment operations $ 0.22 $ 0.63 -------- -------- Distributions to shareowners: Net investment income $ (0.04) -- Net realized gain (0.09) -- -------- -------- Total distributions to shareowners $ (0.13) -- -------- -------- Net increase in net asset value $ 0.09 $ 0.63 -------- -------- Net asset value, end of period $ 10.72 $ 10.63 ======== ======== Total return* (c) 2.14% 6.30% Ratio of net expenses to average net assets** 0.58% 0.74%++ Ratio of net investment income to average net assets** 1.43% 1.73% Portfolio turnover rate (c) 0% 27% Net assets, end of period (in thousands) $ 38,568 $ 20,067
(a) Commencement of operations. (b) Calculated using average shares outstanding for the period. (c) Not Annualized. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period. ** Annualized. ++ In the absence of expense reimbursement, expenses on an annualized basis for the period ended 12/31/05, would have been 1.42% of average net assets for Class II shares. Note: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges and sales charges. The accompanying notes are an integral part of these financial statements. 13 Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
For the six months For the period ended 3/18/05(a) 06/30/06 to (unaudited) 12/31/05 ----------- -------------- Growth Allocation VCT Portfolio Class II Class II Net asset value, beginning of period $ 10.78 $ 10.00 -------- -------- Increase from investment operations: Net investment income (b) $ 0.05 $ 0.11 Net realized and unrealized gain on investments 0.25 0.67 -------- -------- Net increase from investment operations $ 0.30 $ 0.78 -------- -------- Distributions to shareowners: Net investment income $ (0.02) -- Net realized gain ( 0.05) -- -------- -------- Total distributions to shareowners $ (0.07) -- -------- -------- Net increase in net asset value $ 0.23 $ 0.78 -------- -------- Net asset value, end of period $ 11.01 $ 10.78 ======== ======== Total return* (c) 2.78% 7.80% Ratio of net expenses to average net assets** 0.58% 0.74%++ Ratio of net investment income to average net assets** 0.97% 1.34% Portfolio turnover rate (c) 0.39% 20% Net assets, end of period (in thousands) $ 54,584 $ 13,245
(a) Commencement of operations. (b) Calculated using average shares outstanding for the period. (c) Not Annualized. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period. ** Annualized. ++ In the absence of expense reimbursement, expenses on an annualized basis for the period ended 12/31/05, would have been 1.74% of average net assets for Class II shares. Note: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges and sales charges. 14 The accompanying notes are an integral part of these financial statements. Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
For the six months For the period ended 3/18/05(a) 06/30/06 to (unaudited) 12/31/05 ----------- -------------- Aggressive Allocation VCT Portfolio Class II Class II Net asset value, beginning of period $ 10.98 $ 10.00 -------- -------- Increase from investment operations: Net investment income (b) $ 0.01 $ 0.08 Net realized and unrealized gain on investments 0.36 0.90 -------- -------- Net increase from investment operations $ 0.37 $ 0.98 -------- -------- Distributions to shareowners: Net investment income $ (0.03) -- Net realized gain (0.10) -- -------- -------- Total distributions to shareowners $ (0.13) -- -------- -------- Net increase in net asset value $ 0.24 $ 0.98 -------- -------- Net asset value, end of period $ 11.22 $ 10.98 ======== ======== Total return* (c) 3.38% 9.80% Ratio of net expenses to average net assets**++ 0.74% 0.74% Ratio of net investment income to average net assets** 0.17% 0.90% Portfolio turnover rate (c) 3% 17% Net assets, end of period (in thousands) $ 7,604 $ 3,077
(a) Commencement of operations. (b) Calculated using average shares outstanding for the period. (c) Not Annualized. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period. ** Annualized. ++ In the absence of expense reimbursement, expenses on an annualized basis would have been 1.51% and 5.94% for the periods ended 6/30/06 and 12/31/05, respectively, for Class II shares. Note: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges and sales charges. The accompanying notes are an integral part of these financial statements. 15 Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Moderate Growth Aggressive Allocation Allocation Allocation VCT Portfolio VCT Portfolio VCT Portfolio ASSETS: Investments in securities of affiliated issuers, at value (at cost $36,187,413, $54,191,871 and $7,521,383, respectively) $36,514,581 $54,292,725 $7,629,103 Cash 2,825,721 1,340,118 53,851 Receivable for: Fund shares sold 186,750 306,876 2,453 Due from Pioneer Investment Management, Inc. -- -- 2,399 Other 459 426 429 ----------- ----------- ---------- Total assets $39,527,511 $55,940,145 $7,688,235 ----------- ----------- ---------- LIABILITIES: Payables for: Securities purchased $ 918,319 $ 1,309,856 $ 54,403 Fund shares redeemed -- -- 1,350 Due to affiliates 11,917 16,023 2,430 Accrued expenses and other liabilities 29,146 30,293 25,846 ----------- ----------- ---------- Total liabilities $ 959,382 $ 1,356,172 $ 84,029 ----------- ----------- ---------- NET ASSETS: Paid-in capital $38,103,055 $54,375,938 $7,505,463 Undistributed net investment income 193,264 137,340 4,311 Accumulated net realized loss on investments (55,358) (30,159) (13,288) Net unrealized gain on investments 327,168 100,854 107,720 ----------- ----------- ---------- Total net assets $38,568,129 $54,583,973 $7,604,206 =========== =========== ========== NET ASSET VALUE PER SHARE: (No par value, unlimited number of shares authorized) Net Assets of Class II Shares $38,568,129 $54,583,973 $7,604,206 Class II Shares outstanding 3,597,989 4,955,892 677,519 ----------- ----------- ---------- Net Asset Value--Class II Shares $ 10.72 $ 11.01 $ 11.22
16 The accompanying notes are an integral part of these financial statements. Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- For the Six Months Ended 6/30/06
Moderate Growth Aggressive Allocation Allocation Allocation VCT Portfolio VCT Portfolio VCT Portfolio INVESTMENT INCOME: Dividend income received from securities of affiliated issuers $230,562 $ 192,738 $ 20,304 Interest 41,662 27,318 2,838 -------- ---------- --------- Total investment income $272,224 $ 220,056 $ 23,142 -------- ---------- --------- EXPENSES: Management fees $ 17,621 $ 18,399 $ 3,306 Transfer agent fees 708 708 723 Distribution fees 33,887 35,382 6,357 Custodian fees 7,020 8,230 8,129 Professional fees 15,325 15,325 15,325 Printing fees 1,483 1,498 1,632 Fees and expenses of nonaffiliated trustees 2,583 2,583 2,667 Miscellaneous 190 200 199 -------- ---------- --------- Total expenses $ 78,817 $ 82,325 $ 38,338 Less expenses reimbursed by Pioneer Investment Management, Inc. -- -- (19,521) -------- ---------- --------- Net expenses $ 78,817 $ 82,325 $ 18,817 -------- ---------- --------- Net investment income $193,407 $ 137,731 $ 4,325 -------- ---------- --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS IN SECURITIES OF AFFILIATED ISSUERS: Net realized gain (loss) on investments $ -- $ 5,379 $ (3,326) Realized gain distributions received from investment company shares 8,710 5,765 1,660 Change in net unrealized gain (loss) on investments 111,948 (152,405) 20,965 -------- ---------- --------- Net gain (loss) on investments $120,658 $ (141,261) $ 19,299 -------- ---------- --------- Net increase (decrease) in net assets resulting from operations $314,065 $ (3,530) $ 23,624 ======== ========== =========
The accompanying notes are an integral part of these financial statements. 17 Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Moderate Allocation Growth Allocation VCT Portfolio VCT Portfolio ------------------------------------ ------------------------------------ Six Months Ended Six Months Ended June 30, 2006 March 18, 2005* to June 30, 2006 March 18, 2005* to (unaudited) December 31, 2005 (unaudited) December 31, 2005 FROM OPERATIONS: Net investment income $ 193,407 $ 99,539 $ 137,731 $ 55,335 Net realized gain (loss) on investments 8,710 293,310 11,144 219,398 Change in net unrealized gain (loss) on investments 111,948 215,220 (152,405) 253,259 ------------ ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations $ 314,065 $ 608,069 $ (3,530) $ 527,992 ------------ ----------- ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income $ (135,015) $ -- $ (86,886) $ -- Net capital gains (322,743) -- (230,130) -- ------------ ----------- ----------- ----------- Total distributions to shareowners $ (457,758) $ -- $ (317,016) $ -- ------------ ----------- ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 20,148,385 $20,272,067 $42,070,845 $13,118,169 Cost of shares repurchased (1,503,629) (913,070) (410,939) (501,548) ------------ ----------- ----------- ----------- Net increase in net assets resulting from fund share transactions $ 18,644,756 $19,358,997 $41,659,906 $12,616,621 ------------ ----------- ----------- ----------- Net increase in net assets $ 18,501,063 $19,967,066 $41,339,360 $13,144,613 NET ASSETS: Beginning of period (Initial capitalization - 10,000 shares per fund) $ 20,067,066 $ 100,000 $13,244,613 $ 100,000 ------------ ----------- ----------- ----------- End of period (including undistributed net investment income of $193,264, $134,872, $137,340 and $86,495 respectively) $ 38,568,129 $20,067,066 $54,583,973 $13,244,613 ============ =========== =========== ===========
18 The accompanying notes are an integral part of these financial statements. Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (continued) - --------------------------------------------------------------------------------
Aggressive Allocation VCT Portfolio ------------------------------------- Six Months Ended June 30, 2006 March 18, 2005* to (unaudited) December 31, 2005 FROM OPERATIONS: Net investment income $ 4,325 $ 9,138 Net realized gain (loss) on investments (1,666) 63,857 Change in net unrealized gain (loss) on investments 20,965 86,755 ---------- ---------- Net increase in net assets resulting from operations $ 23,624 $ 159,750 ---------- ---------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income $ (17,942) $ -- Net capital gains (66,851) -- ---------- ---------- Total distributions to shareowners $ (84,793) $ -- ---------- ---------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $5,018,211 $2,893,199 Cost of shares repurchased (430,085) (75,700) ---------- ---------- Net increase in net assets resulting from fund share transactions $4,588,126 $2,817,499 ---------- ---------- Net increase in net assets $4,526,957 $2,977,249 NET ASSETS: Beginning of period (Initial capitalization - 10,000 shares per fund) $3,077,249 $ 100,000 ---------- ---------- End of period (including undistributed net investment income of $4,311 and 17,928 $7,604,206 $3,077,249 ========== ========== respectively)
* Commencement of operations. The accompanying notes are an integral part of these financial statements. 19 Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (continued) - --------------------------------------------------------------------------------
Moderate Allocation VCT Portfolio ------------------------------------------------------- Six Months Ended June 30, 2006 March 18, 2005* to (unaudited) December 31, 2005 Shares Amount Shares Amount Class II Shares sold 1,850,327 $ 20,148,385 1,965,325 $20,272,067 Less shares repurchased (139,848) (1,503,629) (87,815) (913,070) --------- ------------ --------- ----------- Net increase 1,710,479 $ 18,644,756 1,877,510 $19,358,997 ========= ============ ========= ===========
Growth Allocation VCT Portfolio ------------------------------------------------------- Six Months Ended June 30, 2006 March 18, 2005* to (unaudited) December 31, 2005 Shares Amount Shares Amount Class II Shares sold 3,764,181 $42,070,845 1,266,361 $13,118,169 Less shares repurchased (36,635) (410,939) (48,015) (501,548) --------- ----------- --------- ----------- Net increase 3,727,546 $41,659,906 1,218,346 $12,616,621 ========= ============ ========= ===========
Aggressive Allocation VCT Portfolio ------------------------------------------------------- Six Months Ended June 30, 2006 March 18, 2005* to (unaudited) December 31, 2005 Shares Amount Shares Amount Class II Shares sold 434,830 $ 5,018,211 277,535 $ 2,893,199 Less shares repurchased (37,610) (430,085) (7,236) (75,700) --------- ----------- --------- ----------- Net increase 397,220 $ 4,588,126 270,299 $ 2,817,499 ========= ============ ========= ===========
* Commencement of operations. 20 The accompanying notes are an integral part of these financial statements. Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (unaudited) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Ibbotson Moderate Allocation VCT Portfolio, Pioneer Ibbotson Growth Allocation VCT Portfolio and Pioneer Ibbotson Aggressive Allocation VCT Portfolio (the Portfolios) are Portfolios of the Pioneer Variable Contracts Trust (the Trust) which is a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. Each of these Portfolios is a "fund of funds" which means that it seeks to achieve its investment objective by investing in other funds ("underlying funds") rather than direct investment in securities. These Portfolios indirectly pay a portion of the expenses incurred by the underlying funds. Consequently, an investment in these Portfolios entails more direct and indirect expenses than direct investment in the underlying funds. The Trust consists of twenty seven separate portfolios, thirteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II Shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Moderate Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Growth Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Aggressive Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The investment objective of the Moderate Portfolio is to seek a balance between long-term capital growth and current income. The Growth Portfolio seeks a balance between long-term capital growth and current income. The Aggressive Portfolio seeks long-term capital growth. The financial statements and financial highlights of all other Portfolios are presented in separate books. The financial statements have been prepared in accordance with United States generally accepted accounting principles that require the management of the Portfolios to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from these estimates. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements, which are in conformity with those generally accepted in the investment company industry. A. Security Valuation Security transactions are recorded as of the trade date. The net asset value is computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset value, holdings of mutual fund shares are valued at the net asset value. Dividend 21 Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (unaudited) (continued) - -------------------------------------------------------------------------------- income is recorded on the ex-dividend date. Temporary cash investments are valued at amortized cost. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and Federal income tax purposes. B. Federal Income Taxes It is the Portfolios' policy to comply with the requirements of the Internal Revenue Service Code applicable to regulated investment companies and to distribute all taxable income and net realized capital gains, if any, to its shareowners. Therefore, no Federal income tax provisions are required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of the Portfolios' distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the current fiscal year. There were no distributions paid for the period ended December 31, 2005. The following shows the components of distributable earnings on a federal income tax basis for the period ended December 31, 2005:
- -------------------------------------------------------------------------------- Undistributed Undistributed Net Unrealized Ordinary Long-Term Appreciation Portfolio Income Capital Gains (Depreciation) - -------------------------------------------------------------------------------- Moderate VCT Portfolio $134,872 $322,738 $151,157 Growth VCT Portfolio $ 86,495 $230,011 $212,075 Aggressive VCT Portfolio $ 17,928 $ 66,835 $ 75,149 - --------------------------------------------------------------------------------
C. Portfolio Shares The Portfolios record sales and repurchases of each of their shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of each Portfolio. Dividends and distributions to shareowners are recorded on the ex-dividend date. 2. Management Agreement Pioneer Investment Management, Inc. (PIM), a wholly owned indirect subsidiary of UniCredito Italiano, is the Portfolios' investment adviser, and manages the Portfolios. Management fees are calculated daily at the following annual rates on Pioneer managed assets:
- -------------------------------------------------------------------------------- Management Fee as a Percentage of each Fund's Average Fund Daily Net Assets - -------------------------------------------------------------------------------- Moderate VCT Portfolio 0.13% Growth VCT Portfolio 0.13% Aggressive VCT Portfolio 0.13% - --------------------------------------------------------------------------------
22 Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PIM has entered into a sub-advisory agreement with Ibbotson Associates, LLC. PIM, not the Portfolios, pays a portion of the fee it receives from each Portfolio to Ibbotson Associates as compensation for its services to the Portfolios. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, will be paid by the Portfolios. At June 30, 2006, the following fees were payable to PIM relating to management fees and certain other services and are included in due to affiliates:
- -------------------------------------------------------------------------------- Fund Amount - -------------------------------------------------------------------------------- Moderate VCT Portfolio $3,920 Growth VCT Portfolio $5,325 Aggressive VCT Portfolio $ 804 - --------------------------------------------------------------------------------
From March 18, 2005 through June 30, 2006, PIM did not impose all or a portion of its management fees and assumed other operating expenses of the Portfolios to the extent necessary to limit Class II expenses to the following annual expense limitations:
- -------------------------------------------------------------------------------- Fund Class II - -------------------------------------------------------------------------------- Moderate VCT Portfolio 0.74% Growth VCT Portfolio 0.74% Aggressive VCT Portfolio 0.74% - --------------------------------------------------------------------------------
3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides substantially all transfer agent and shareowner services to the Portfolios at negotiated rates. Included in due to affiliates are the following amounts of transfer agent fees payable to PIMSS at June 30, 2006:
- -------------------------------------------------------------------------------- Fund Amount - -------------------------------------------------------------------------------- Moderate VCT Portfolio $458 Growth VCT Portfolio $458 Aggressive VCT Portfolio $ 80 - --------------------------------------------------------------------------------
4. Distribution Plans The Portfolios have adopted a Plan of Distribution with respect to Class II shares (Class II Plan) in accordance with Rule 12b-1 of the Investment Company Act of 1940. Pursuant to the Class II Plan, the Portfolios will pay PFD a service fee of up to 0.25% of the Fund's average daily net assets attributable to Class II shares in reimbursement of its actual expenditures to finance activities primarily intended to result in the sale of Class II shares. At June 30, 2006, the following fees were payable to PFD relating to service fees and are included in due to affiliates:
- -------------------------------------------------------------------------------- Fund Amount - -------------------------------------------------------------------------------- Moderate VCT Portfolio $ 7,539 Growth VCT Portfolio $10,240 Aggressive VCT Portfolio $ 1,546 - --------------------------------------------------------------------------------
23 Pioneer Ibbotson Asset Allocation Series VCT Portfolios PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - -------------------------------------------------------------------------------- Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Subadviser Ibbotson Associates Advisors, LLC Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 24 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 25 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19640-00-0806 [LOGO}PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Strategic Income VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Strategic Income VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 17 Notes to Financial Statements 21 Trustees, Officers and Service Providers 26
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Goverment Securities 49.9% U.S. Corporate Bonds 36.6% Foreign Government Bonds 6.3% Asset Backed Securities 3.5% Temporary Cash Investment 1.6% Municipal Bonds 1.2% Collateralized Mortgage Obligations 0.6% Convertible Corporate Bonds 0.3%
Maturity Distribution (As a percentage of total investment portfolio) [THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
0-1 year 5.1% 1-3 years 12.5% 3-4 years 13.9% 4-6 years 43.5% 6-8 years 14.9% 8+ years 10.1%
Five Largest Holdings (As a percentage of long-term holdings) 1. U.S. Treasury Bonds, 5.25%, 11/15/28 3.75% 2. U.S. Treasury Strip, 0.0%, 11/15/13 2.22 3. U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 2.09 4. U.S. Treasury Notes, 5.0%, 2/15/11 2.01 5. U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 1.98
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 10.52 $ 10.76
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.2995 $ 0.0270 $ 0.0254
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Strategic Income VCT Portfolio at net asset value, compared to that of the Lehman Brothers U.S. Universal Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING TABLE WAS DEPICTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Strategic Income VCT Lehman Brothers U.S. Portfolio Universal Index 7/99 10,000 10,000 6/00 10,157 10,520 6/01 10,861 11,652 6/02 11,695 12,551 6/03 14,966 14,137 6/05 16,677 15,186 6/06 17,008 15,146
Index comparison begins July 31, 1999. The Lehman Brothers U.S. Universal Index is the union of the U.S. Aggregate Index, the U.S. High Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, the non-ERISA portion of the CMBS Index and the CMBS High Yield Index. Municipal debt, private placements and non-dollar-denominated issues are excluded from the Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
Net Asset Value Life-of-Class 7.97% (5/1/03) 1 Year 1.98%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value - $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Strategic Income VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II ------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,010.40 Expenses Paid During Period* $ 5.53
* Expenses are equal to the Portfolio's annualized expense ratio of 1.11% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Strategic Income VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II ------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,019.29 Expenses Paid During Period* $ 5.56
* Expenses are equal to the Portfolio's annualized expense ratio of 1.11% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Against a backdrop of strong economic growth throughout the globe, inflation concerns grew steadily during the first six months of 2006. With dramatic increases in commodity prices - most notably in energy prices - fears built that inflationary pressures would start to spread throughout the general economy. Given these concerns, the U.S. Federal Reserve Board continued to raise short-term interest rates to relieve inflationary pressures and control economic growth. The Fed raised its Fed funds rate four successive times over the six months, from 4.25% to 5.25%. As the Fed acted, rates across the yield curve - among securities of all maturities - also rose, and bond prices generally declined. While lower-rated bonds tended to outperform early in the period, worries grew in the final two months that the Fed might become too aggressive and stall the global economic resurgence. As a result, lower-quality, higher-yielding bonds - most notably emerging market debt - suffered price declines in the final two months of the period. In the following interview, Kenneth J. Taubes discusses the factors that influenced Pioneer Strategic Income VCT Portfolio's performance during the six months ended June 30, 2006. Mr. Taubes, Director of Pioneer's Fixed Income Group, oversees the team responsible for the daily management of the Portfolio. Q. How did the Portfolio perform during the six months ended June 30, 2006? A. Pioneer Strategic Income VCT Portfolio, Class II shares, had a total return of 1.04% for the six months at net asset value. During the same six months, the benchmark Lehman Brothers U.S. Universal Index fell by 0.46%. The average return of the 52 portfolios in the Lipper General Bond variable annuity fund category was 0.09%. The Portfolio also continued to deliver a competitive yield. On June 30, 2006, the Portfolio's 30-day SEC yield was 4.98%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What was the investment environment during the six-months? A. The global fixed-income markets operated in a challenging environment during the first six months of the year. Among the primary factors influencing investors were the persistent actions of the U.S. Federal Reserve Board and other central banks to control economic growth and rein in inflationary pressures by raising short-term interest rates. Early in the period, the healthy economic and corporate profit growth resulted in continued good performance by lower-rated bonds, including emerging market debt and domestic high-yield bonds. The U.S. Treasury market was relatively stable. That environment abruptly changed in the second quarter of this year, when investors grew increasingly risk averse because of concerns that the Fed and other central banks might raise rates too far and cause an economic slowdown. After the Federal Reserve raised the fed funds rate to 5.00% on May 10 (the rate subsequently would be raised again, to 5.25% in late June), Treasury securities declined as longer-term interest rates rose. High yield bonds and commodities-exposed emerging market debt performed worse, as investors sought to lower their risk profiles. In this environment, the U.S. dollar lost value against most major currencies. Q. What were your principal strategies during the period, and how did they influence performance? A. Throughout the six months, we upgraded overall credit quality. Relative to many competitive funds, we were significantly underweighted in emerging market debt over the entire period. While this deemphasis initially detracted from results early in 2006, it was a significant help as the period progressed. As domestic high-yield bonds rallied in the first quarter, we sold into strength, reducing our high-yield exposure. Taking profits in high yield holdings also proved helpful as volatility increased in the second quarter and high-yield bonds slumped. Average credit quality of the Portfolio was a solid A on June 30, 2006, up from A- six months earlier and from BBB 12 months earlier. On June 30, 2006, 55% of the Portfolio's assets were invested in U.S. Treasury and government agency securities, while 19% were invested in U.S. high yield bonds and just 13.6% were invested in emerging market debt. As interest rates rose, we gradually increased the Portfolio's duration - or sensitivity to interest changes - to take advantage of the improving values in longer-maturity A Word About Risk: When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed-income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. The securities issued by U.S. Government sponsored entities (i.e., FNMA, Freddie Mac) are neither guaranteed nor issued by the U.S. Government. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-Backed securities are also subject to pre-payments. Investments in high yield or lower-rated securities are subject to greater-than-average risk. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- securities. Within our Treasury holdings, we had a greater-than-benchmark weighting in Treasury Inflation Protected Securities (TIPS) for most of the period. Those securities, which tend to do well in rising-interest rate environments, outperformed straight Treasuries and contributed to performance results. The Portfolio's effective duration on June 30, 2006, was 5.07 years, compared to 4.72 years six months earlier. The Portfolio also had an above-usual foreign currency exposure, at 11.4% of assets on June 30, which helped results as the U.S. dollar lost relative value. The euro, Norwegian krone and Swedish krona all gained more than 5% against the dollar, while the Canadian dollar and the Japanese yen also were strong. Q. What individual investments had the greatest impact on results? A. Several high-yield issuers bought back their bonds - or tendered their debt - resulting in profits for the Portfolio. These issues included Stone Energy, an oil and gas exploration company that was acquired; Resolution Performance, a chemical company; J. Ray McDermott, an oil field services firm; and Indo Coal, an Indonesian corporation that was acquired. Among high-yield investments that detracted from results were bonds of two forest product companies, Ainsworth Lumber and Abitibi-Consolidated, a global paper products company. Securities issued by Bowater, a paper company, also held back results, as did our positions in two Kazakh banks. Q. What is your investment outlook? A. By the midpoint of 2006, we have modestly increased duration - or interest-rate sensitivity - to an essentially neutral position relative to the Portfolio's benchmark. We anticipate increasing duration in the second half of the year when we have seen clear signs that the Federal Reserve Board has been successful in slowing the pace of economic growth and moderating inflationary pressures. By late June, we had only seen persuasive evidence of slowing in the housing sector. We anticipate keeping the Portfolio's credit quality relatively high, as we believe the Fed's actions have limited the potential for price appreciation in lower-rated, high-yield bonds. Among investment-grade securities, we prefer mortgage securities to corporate bonds, which offer little yield advantage for their added credit risk. In this environment, we think it makes sense to position the Portfolio conservatively while being well diversified to take advantage of opportunities throughout the fixed-income markets. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value CONVERTIBLE CORPORATE BONDS - 0.3% Semiconductors - 0.3% Semiconductor Equipment - 0.3% 170,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 $ 165,113 ----------- TOTAL CONVERTIBLE CORPORATE BONDS (Cost $158,934) $ 165,113 ----------- ASSET BACKED SECURITIES - 3.4% Diversified Financials - 1.1% Diversified Financial Services - 1.1% 270,805 BB-/Ba2 Caithness Coso Fund Corp., 6.263%, 6/15/14 (144A) $ 265,226 185,190 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) 185,159 247,636 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 246,687 ----------- $ 697,072 ----------- Total Diversified Financials $ 697,072 ----------- Utilities - 1.6% Electric Utilities - 1.6% 169,850 BBB-/Baa3 Empresa Electric, 8.625%, 4/30/13 (144A) $ 183,353 308,880 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 308,494 376,193 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 385,598 83,065 BB-/Ba2 Tenaska Alabama, 7.0%, 6/30/21 (144A) 80,956 ----------- $ 958,401 ----------- Total Utilities $ 958,401 ----------- Government - 0.7% Government - 0.7% COP 413,256 BB+/Ba2 Republic of Columbia, 9.75%, 4/9/11 $ 446,317 ----------- Total Government $ 446,317 ----------- TOTAL ASSET BACKED SECURITIES (Cost $2,115,884) $ 2,101,790 ----------- COLLATERALIZED MORTGAGE OBLIGATIONS - 0.5% Diversified Financials - 0.5% Diversified Financial Services - 0.5% 80,000 NR/Ba1 Global Signal, 7.036%, 2/15/36 (144A) $ 79,890 265,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 260,288 ----------- $ 340,178 ----------- Total Diversified Financials $ 340,178 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $345,000) $ 340,178 ----------- CORPORATE BONDS - 35.3% Energy - 4.6% Coal & Consumable Fuels - 0.4% 250,000 B+/Ba3 Adaro Finance BV, 8.5%, 12/8/10 (144A) $ 248,750 ----------- Oil & Gas Drilling - 0.5% 30,000 B/B2 Copano Energy LLC, 8.125%, 3/1/16 (144A) $ 29,850 300,000 NR/NR DDI Holding AS, 9.3%, 1/19/12 308,250 ----------- $ 338,100 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Oil & Gas Equipment & Services - 0.2% 150,000 NR/B1 Semgroup LP, 8.75%, 11/15/15 (144A) $ 149,250 ----------- Oil & Gas Exploration & Production - 2.9% 70,000 B+/B1 Atlas Pipeline Partners, 8.125%, 12/15/15 (144A) $ 69,738 210,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 216,825 260,000 B-/B3 Clayton Williams Energy, 7.75%, 8/1/13 239,200 245,000 B/B2 Compton Petroleum Corp., 7.625%, 12/1/13 233,975 355,000 BBB/NR Gazprom International SA, 7.201%, 2/1/20 (144A) 359,881 170,000 B-/B3 Harvest Operations Corp., 7.875%, 10/15/11 161,500 ITL 275,000,000 BBB-/Baa1 Petroleos Mexicanos, 7.375%, 8/13/07 187,792 115,000 CCC+/Caa1 Petroquest Energy, Inc., 10.375%, 5/15/12 119,025 200,000 B/B2 Quicksilver Resources, Inc., 7.125%, 4/1/16 187,500 45,000 BB+/Ba3 Southern Star Central Corp., 6.75%, 3/1/16 (144A) 43,200 ----------- $ 1,818,636 ----------- Oil & Gas Storage & Transportation - 0.6% 75,000 B/B1 Inergy LP, 8.25%, 3/1/16 $ 75,750 85,000 B-/B2 Targa Resources, Inc., 8.5%, 11/1/13 (144A) 82,025 176,000 B-/B3 Transmontaigne, Inc., 9.125%, 6/1/10 187,440 ----------- $ 345,215 ----------- Total Energy $ 2,899,951 ----------- Materials - 6.1% Aluminum - 0.8% 370,000 BB/Ba3 Asia Aluminum Holdings, 8.0%, 12/23/11 (144A) $ 346,875 140,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 134,400 ----------- $ 481,275 ----------- Commodity Chemicals - 1.0% 110,000 BB-/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 129,250 65,000 B-/B3 Aventine Renewable Energy, Floating Rate Note, 12/15/11(a) 68,494 130,000 B-/B2 Basell Finance Co., 8.1%, 3/15/27 (144A) 117,650 300,000 B+/Ba3 Invista, 9.25%, 5/1/12 (144A) 315,000 ----------- $ 630,394 ----------- Construction Materials - 0.4% 275,000 B-/B3 U.S. Concrete, Inc., 8.375%, 4/1/14 $ 277,750 ----------- Diversified Chemical - 0.5% 100,000 B-/B2 Ineos Group Holdings Plc, 7.875%, 2/15/16 (144A) $ 119,225 EURO 145,000 B-/B2 Nell AF Sarl, 8.375%, 8/15/15 (144A) 187,244 ----------- $ 306,469 ----------- Diversified Metals & Mining - 1.4% 70,000 B-/B3 American Rock Salt Co., LLC, 9.5%, 3/15/14 $ 70,875 100,000 BBB+/Baa3 Vale Overseas, Ltd., 6.25%, 1/11/16 95,250 400,000 BBB+/Baa3 Vale Overseas, Ltd., 8.25%, 1/17/34 431,500 280,000 BB/Ba1 Vedenta Resources Plc, 6.625%, 2/22/10 (144A) 267,400 ----------- $ 865,025 -----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Forest Products - 0.5% 305,000 B+/B2 Ainsworth Lumber, 6.75%, 3/15/14 $ 231,800 90,000 BB-/Ba2 Sino Forest Corp., 9.125%, 8/17/11 (144A) 92,700 ----------- $ 324,500 ----------- Metal & Glass Containers - 0.2% 130,000 BB-/B1 Greif Brothers Corp., 8.875%, 8/1/12 $ 136,825 ----------- Paper Packaging - 0.2% 110,000 CCC+/Caa2 Graham Packaging Co., 9.875%, 10/15/14 (b) $ 108,900 ----------- Paper Products - 0.4% 100,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 81,000 200,000 B+/B1 Bowater, Inc., 6.5%, 6/15/13 174,000 ----------- $ 255,000 ----------- Specialty Chemicals - 0.7% 350,000 B/Caa2 Crystal US Holdings, Inc., Floating Rate Note, 10/1/14 (a) $ 273,875 150,000 BB+/NA LPG International, Inc., 7.25%, 12/20/15 138,000 ----------- $ 411,875 ----------- Total Materials $ 3,798,013 ----------- Capital Goods - 4.1% Aerospace & Defense - 0.1% 75,000 BB+/Ba3 L-3 Communications Corp., 6.375%, 10/15/15 $ 71,625 ----------- Building Products - 0.9% 325,000 B/B3 Builders Firstsource, Inc., Floating Rate Note, 2/15/12 (a) $ 333,125 250,000 BB-/Ba3 Desarrolladora Homex SA, 7.5%, 9/28/15 235,000 ----------- $ 568,125 ----------- Construction & Engineering - 1.0% 3,450,000 NR/ NR Kvaerner ASA, 0.0%, 10/30/11 $ 611,315 ----------- Construction, Farm Machinery & Heavy Trucks - 0.7% 130,000 B+/Ba3 Commercial Vehicle Group, 8.0%, 7/1/13 $ 124,475 270,000 B+/B1 Greenbrier Co., Inc., 8.375%, 5/15/15 275,738 ----------- $ 400,213 ----------- Industrial Machinery - 0.3% 150,000 B/B2 Gardner Denver, Inc., 8.0%, 5/1/13 (144A) $ 157,500 53,000 B+/B2 JLG Industries, Inc., 8.375%, 6/15/12 54,855 ----------- $ 212,355 ----------- Trading Companies & Distributors - 1.1% 325,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 296,818 475,000 BB+/Ba1 Noble Group, Ltd., 6.625%, 3/17/15 (144A) 411,756 ----------- $ 708,574 ----------- Total Capital Goods $ 2,572,207 ----------- Commercial Services & Supplies - 1.2% Diversified Commercial Services - 0.6% 130,000 B+/Ba2 FTI Consulting, 7.625%, 6/15/13 $ 131,625 240,000 CCC+/Caa1 Park-Ohio Industries, Inc., 8.375%, 11/15/14 211,200 ----------- $ 342,825 -----------
8 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Environmental & Facilities Services - 0.5% 80,000 B+/B1 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 90,000 240,000 CCC+/Caa1 Hydrochem Industrial Service, 9.25%, 2/15/13 (144A) 231,600 ----------- $ 321,600 ----------- Office Services & Supplies - 0.1% 90,000 CCC/B3 Nutro Products, Inc., Floating Rate Note, 10/15/13 (144A)(a) $ 91,688 ----------- Total Commercial Services & Supplies $ 756,113 ----------- Transportation - 1.1% Airlines - 0.1% 85,000 CCC+/Caa2 AMR Corp., 9.8%, 10/1/21 $ 79,263 ----------- Airport Services - 0.1% 55,000 B-/Caa1 K&F Acquisition, Inc., 7.75%, 11/15/14 $ 54,175 ----------- Marine - 0.8% 185,000 BB+/NR CMA CGM SA, 7.25%, 2/1/13 (144A) $ 169,275 315,000 BB-/Ba3 Stena AB, 7.0%, 12/1/16 289,800 40,000 B-/B3 Trailer Bridge, Inc., 9.25%, 11/15/11 41,000 ----------- $ 500,075 ----------- Railroads - 0.1% 70,000 B-/B3 TFM SA De CV, 9.375%, 5/1/12 $ 74,550 ----------- Total Transportation $ 708,063 ----------- Automobiles & Components - 0.4% Tires & Rubber - 0.4% 280,000 B-/B3 Goodyear Tire & Rubber, 9.0%, 7/1/15 (b) $ 267,400 ----------- Total Automobiles & Components $ 267,400 ----------- Consumer Durables & Apparel - 1.2% Footwear - 0.2% 153,000 BB-/B1 Brown Shoe Co., Inc., 8.75%, 5/1/12 $ 157,208 ----------- Homebuilding - 1.0% 148,000 BB-/Ba2 Meritage Homes Corp., 6.25%, 3/15/15 $ 124,690 150,000 BB/Ba3 Urbi Desarrollos Urbanos, 8.5%, 4/19/16 (144A) 150,000 250,000 B+/Ba3 WCI Communities, Inc., 6.625%, 3/15/15 (b) 207,500 150,000 B+/Ba3 WCI Communities, Inc., 7.875%, 10/1/13 131,625 ----------- $ 613,815 ----------- Total Consumer Durables & Apparel $ 771,023 ----------- Consumer Services - 0.8% Casinos & Gaming - 0.8% 200,000 AAA/Aaa Lottomatica S.p.A., Floating Rate Note, 3/31/66 (144A) (a) $ 255,378 245,000 B-/Caa1 Trump Entertainment Resorts, 8.5%, 6/1/15(b) 235,506 ----------- $ 490,884 ----------- Total Consumer Services $ 490,884 ----------- Media - 1.7% Broadcasting & Cable TV - 0.9% 250,000 BB+/Ba2 C&M Finance Ltd., 8.1%, 2/1/16 (144A) $ 238,750 300,000 B-/B2 Kabel Deutschland GMBH, 10.625%, 7/1/14 316,500 ----------- $ 555,250 -----------
The accompanying notes are an integral part of these financial statements. 9 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Movies & Entertainment - 0.5% 335,000 B+/Ba2 Corp Interamer De Entret, 8.875%, 6/14/15 (144A) $ 318,250 ----------- Publishing - 0.3% 200,000 B/B1 Sheridan Acquisition Corp., 10.25%, 8/15/11 $ 203,250 ----------- Total Media $ 1,076,750 ----------- Retailing - 0.6% Automotive Retail - 0.2% 115,000 BB+/Ba2 Autonation, Inc., 7.0%, 4/15/14 (144A) $ 113,275 ----------- Computer & Electronics Retail - 0.2% 95,000 B+/ Ba3 GSC Holdings Corp., 8.0%, 10/1/12(b) $ 95,000 ----------- Distributors - 0.2% EURO 100,000 B-/B2 Central Eur Distribution Corp., 8.0%, 7/25/12 (144A) $ 137,291 ----------- Total Retailing $ 345,566 ----------- Food & Drug Retailing - 0.2% Drug Retail - 0.2% 110,000 CCC/Caa1 Duane Reade, Inc., Floating Rate Note, 12/15/10 (a) $ 106,700 ----------- Total Food & Drug Retailing $ 106,700 ----------- Food, Beverage & Tobacco - 0.8% Brewers - 0.8% 202,000 NR/NR Argentine Beverages, 7.375%, 3/22/12 (144A) $ 193,920 220,000 BBB/Baa3 Cia Brasileira de Bebida, 8.75%, 9/15/13 242,275 80,000 BBB/Baa3 Cia Brasileira de Bebida, 10.5%, 12/15/11 93,000 ----------- $ 529,195 ----------- Total Food, Beverage & Tobacco $ 529,195 ----------- Health Care Equipment & Services - 0.3% Health Care Services - 0.3% 165,000 CCC+/B3 Rural/Metro Corp., 9.875%, 3/15/15 $ 170,569 ----------- Total Health Care Equipment & Services $ 170,569 ----------- Pharmaceuticals & Biotechnology - 0.6% Biotechnology - 0.3% 200,000 B/B2 Angiotech Pharmaceutical, 7.75%, 4/1/14 (144A) $ 191,000 ----------- Pharmaceuticals - 0.3% 180,000 CCC+/Caa1 Warner Chilcott Corp., 8.75%, 2/1/15 $ 182,250 ----------- Total Pharmaceuticals & Biotechnology $ 373,250 ----------- Banks - 1.4% Diversified Banks - 1.4% 185,000 B/Ba1 ATF Bank JSC, 9.25%, 4/12/12 (144A) $ 184,112 170,000 BB+/Baa2 Kazkommerts International BV, 8.0%, 11/3/15 164,900 150,000 B+/Ba2 Russian Stand Bank, 7.5%, 10/7/10 (144A) 139,875 15,000 BBB+/A1 SEB, 8.125%, 9/6/49 (144A) 15,067 200,000 NA/NA Sibacademfinance Plc, 9.0%, 5/12/09 (144A) 196,720 175,000 BB/Baa1 Turanalem Finance BV, 8.5%, 2/10/15 (144A) 171,719 ----------- $ 872,393 ----------- Total Banks $ 872,393 -----------
10 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Diversified Financials - 1.7% Consumer Finance - 0.9% 300,000 B+/Ba2 Ford Motor Credit Co., 5.7%, 1/15/10 $ 262,781 35,000 B+/Ba2 Ford Motor Credit Co., 5.8%, 1/12/09 31,975 320,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 (a) 292,403 ----------- $ 587,159 ----------- Investment Banking & Brokerage - 0.5% 275,000 B+/Ba2 E*Trade Financial Corp., 8.0%, 6/15/11 $ 280,500 ----------- Diversified Financial Services - 0.3% 200,000 BB/NR CCSA Finance, Ltd., 7.875%, 5/17/16 (144A) $ 189,000 ----------- Total Diversified Financials $ 1,056,659 ----------- Insurance - 3.4% Life & Health Insurance - 0.9% 390,000 B-/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 388,050 140,000 BB+/Ba1 Provident Co., Inc., 7.0%, 7/15/18 135,167 ----------- $ 523,217 ----------- Multi-Line Insurance - 0.5% 325,000 BB+/Ba1 Hanover Insurance Group, 7.625%, 10/15/25 $ 325,791 ----------- Property & Casualty Insurance - 1.0% 285,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 282,203 350,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 353,995 ----------- $ 636,198 ----------- Reinsurance - 1.0% 300,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 288,243 365,000 BBB/NA Platinum Underwriters Holdings, 7.5%, 6/1/17 358,062 ----------- $ 646,305 ----------- Total Insurance $ 2,131,511 ----------- Real Estate - 1.4% Real Estate Management & Development - 0.2% 125,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 $ 125,938 ----------- Real Estate Investment Trusts - 1.2% 120,000 BB-/B2 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 121,800 95,000 B/B1 Crescent Real Estate, 9.25%, 4/15/09 98,753 340,000 B+/B1 Trustreet Properties, Inc., 7.5%, 4/1/15 334,900 180,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 180,000 ----------- $ 735,453 ----------- Total Real Estate $ 861,391 ----------- Technology Hardware & Equipment - 0.7% Communications Equipment - 0.1% 50,000 BBB/Baa3 Corning, Inc., 5.9%, 3/15/14 $ 49,436 ----------- Technology Distributors - 0.6% 406,000 BB+/Ba1 Anixter International Corp., 5.95%, 3/1/15 $ 373,520 ----------- Total Technology Hardware & Equipment $ 422,956 -----------
The accompanying notes are an integral part of these financial statements. 11 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Semiconductors - 0.3% Semiconductors - 0.3% 175,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 167,066 ----------- Total Semiconductors $ 167,066 ----------- Telecommunication Services - 1.5% Integrated Telecommunication Services - 0.6% 160,000 B+/Ba3 Dycom Industries, 8.125%, 10/15/15 $ 160,400 140,000 B-/B3 Eschelon Operating Co., 8.375%, 3/15/10 133,000 63,000 NR/Baa3 Tele Norte Leste Participacoes , 8.0%, 12/18/13 65,520 ----------- $ 358,920 ----------- Wireless Telecommunication Services - 0.9% 120,000 BBB-/Baa3 Embarq Corp., 7.082%, 6/1/16 $ 119,341 115,000 BB-/Ba3 Mobile Telesystems Finance, 8.375%, 10/14/10 (144A) 114,856 210,000 B-/B2 Stratos Global Corp., 9.875%, 2/15/13 (144A) 197,400 240,000 B/Caa1 Zeus Special Sub, Ltd., Floating Rate Note, 2/1/15 (144A)(a) 165,600 ----------- $ 597,197 ----------- Total Telecommunication Services $ 956,117 ----------- Utilities - 1.2% Electric Utilities - 1.1% 313,542 NR/Ba1 Juniper Generation, 6.79%, 12/31/14 (144A) $ 298,056 250,000 BBB-/Baa3 Kiowa Power Partners LLC, 5.737%, 3/30/21 (144A) 231,933 190,000 BB-/Ba3 MSW Energy Holdings, 7.375%, 9/1/10 190,000 ----------- $ 719,989 ----------- Multi-Utilities - 0.1% 60,000 B/B2 Reliant Energy, Inc., 6.75%, 12/15/14 $ 55,200 ----------- Total Utilities $ 775,189 ----------- TOTAL CORPORATE BONDS (Cost $22,157,475) $22,108,966 ----------- U.S. GOVERNMENT & AGENCY OBLIGATIONS - 48.2% 797,953 Federal Home Loan Mortgage Corp., 4.5%, 4/1/20 $ 753,357 462,676 Federal Home Loan Mortgage Corp., 4.5%, 7/1/20 436,817 273,791 Federal Home Loan Mortgage Corp., 4.5%, 4/1/35 249,004 40,690 Federal Home Loan Mortgage Corp., 5.0%, 5/1/34 38,123 138,807 Federal Home Loan Mortgage Corp., 5.0%, 6/1/35 129,733 350,000 Federal Home Loan Mortgage Corp., 5.0%, 6/1/36 326,893 48,238 Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 47,402 773,619 Federal Home Loan Mortgage Corp., 5.5%, 11/1/34 746,255 338,543 Federal Home Loan Mortgage Corp., 5.5%, 1/1/35 326,026 237,538 Federal Home Loan Mortgage Corp., 6.0%, 6/1/17 237,984 13,593 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 13,434 9,464 Federal Home Loan Mortgage Corp., 6.0%, 2/1/33 9,353 235,755 Federal Home Loan Mortgage Corp., 6.0% 11/1/33 232,828 179,827 Federal Home Loan Mortgage Corp., 6.0%, 1/1/34 177,414 218,166 Federal Home Loan Mortgage Corp., 6.0%, 4/1/35 214,937 233,366 Federal Home Loan Mortgage Corp., 6.0%, 6/1/35 229,912 290,416 Federal National Mortgage Association, 4.5%, 5/1/20 274,513 186,859 Federal National Mortgage Association, 4.5%, 9/1/20 176,627 151,432 Federal National Mortgage Association, 4.5%, 3/1/35 137,285
12 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount USD ($) Value U.S. Government & Agency Obligations (Cont.) 598,025 Federal National Mortgage Association, 4.5%, 9/1/35 $ 542,159 172,184 Federal National Mortgage Association, 5.0%, 2/1/20 165,882 821,244 Federal National Mortgage Association, 5.0%, 10/1/20 791,186 346,087 Federal National Mortgage Association, 5.0%, 9/1/35 323,721 31,818 Federal National Mortgage Association, 5.0%, 2/1/36 29,761 567,477 Federal National Mortgage Association, 5.0%, 4/1/36 530,479 36,343 Federal National Mortgage Association, 5.5%, 3/1/18 35,727 79,966 Federal National Mortgage Association, 5.5%, 12/1/18 78,611 88,140 Federal National Mortgage Association, 5.5%, 4/1/19 86,681 186,044 Federal National Mortgage Association, 5.5%, 5/1/34 179,171 774,135 Federal National Mortgage Association, 5.5%, 10/1/35 744,077 150,000 Federal National Mortgage Association, 5.5%, 12/1/35 144,176 484,230 Federal National Mortgage Association, 5.5%, 3/1/36 465,429 149,704 Federal National Mortgage Association, 5.5%, 5/1/36 143,797 72,668 Federal National Mortgage Association, 6.0%, 7/1/17 72,946 4,537 Federal National Mortgage Association, 6.0%, 12/1/31 4,485 9,288 Federal National Mortgage Association, 6.0%, 2/1/32 9,182 5,483 Federal National Mortgage Association, 6.0% 11/1/32 5,417 306,157 Federal National Mortgage Association, 6.0%, 11/1/33 302,272 195,493 Federal National Mortgage Association, 6.0%, 12/1/33 193,013 111,861 Federal National Mortgage Association, 6.0%, 1/1/34 110,320 800,000 Federal National Mortgage Association, 6.375%, 8/15/07 595,939 998 Federal National Mortgage Association, 7.0%, 9/1/29 1,023 1,235 Federal National Mortgage Association, 6.5%, 7/1/31 1,247 4,832 Federal National Mortgage Association, 6.5%, 10/1/31 4,877 8,523 Federal National Mortgage Association, 6.5%, 2/1/32 8,601 207,864 Government National Mortgage Association, 4.5%, 9/15/33 191,218 173,629 Government National Mortgage Association, 4.5%, 5/15/34 159,600 629,492 Government National Mortgage Association, 4.5%, 4/15/35 578,101 300,000 Government National Mortgage Association, 4.5%, 3/15/36 275,366 209,039 Government National Mortgage Association, 5.0%, 12/15/34 198,074 453,463 Government National Mortgage Association, 5.0%, 4/15/35 429,303 349,213 Government National Mortgage Association, 5.5%, 10/15/19 345,159 201,856 Government National Mortgage Association, 5.5%, 1/15/34 195,826 381,254 Government National Mortgage Association, 5.5%, 4/15/34 369,864 133,266 Government National Mortgage Association, 5.5%, 4/20/34 128,744 50,556 Government National Mortgage Association, 5.5%, 7/15/34 49,046 397,913 Government National Mortgage Association, 5.5%, 10/15/34 386,026 395,083 Government National Mortgage Association, 5.5%, 6/15/35 383,125 946,538 Government National Mortgage Association, 5.5%, 11/15/35 917,890 447,202 Government National Mortgage Association, 6.0%, 8/15/16 450,547 22,238 Government National Mortgage Association, 6.0%, 5/15/17 22,410 212,294 Government National Mortgage Association, 6.0%, 6/15/17 213,937 252,056 Government National Mortgage Association, 6.0%, 2/15/18 254,051 148,335 Government National Mortgage Association, 6.0%, 8/15/19 149,468 26,119 Government National Mortgage Association, 6.0%, 2/15/33 25,945 95,208 Government National Mortgage Association, 6.0%, 3/15/33 94,579 46,786 Government National Mortgage Association, 6.0%, 6/15/33 46,474 102,992 Government National Mortgage Association, 6.0%, 7/15/33 102,304 157,456 Government National Mortgage Association, 6.0%, 9/15/33 156,404 61,248 Government National Mortgage Association, 6.0%, 10/15/33 60,839
The accompanying notes are an integral part of these financial statements. 13 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value U.S. Government & Agency Obligations (Cont.) 168,928 Government National Mortgage Association, 6.0%, 8/15/34 $ 167,758 24,700 Government National Mortgage Association, 6.5%, 3/15/29 25,077 7,067 Government National Mortgage Association, 6.5%, 1/15/30 7,168 2,064 Government National Mortgage Association, 6.5%, 6/15/31 2,092 18,749 Government National Mortgage Association, 6.5%, 2/15/32 18,999 21,107 Government National Mortgage Association, 6.5%, 3/15/32 21,388 25,641 Government National Mortgage Association, 6.5%, 11/15/32 25,995 19,181 Government National Mortgage Association, 6.5%, 1/15/33 19,431 30,012 Government National Mortgage Association, 6.5%, 5/15/33 30,403 64,380 Government National Mortgage Association, 6.5%, 1/15/34 65,204 815 Government National Mortgage Association, 7.0%, 3/15/31 841 8,998 Government National Mortgage Association, 7.5%, 5/15/23 9,280 2,463 Government National Mortgage Association, I, 7.0%, 3/15/31 2,541 125,198 Government National Mortgage Association II, 5.5%, 3/20/34 120,949 236,787 Government National Mortgage Association II, 6.0%, 11/20/33 234,613 625,000 U.S. Treasury Bonds, 4.375%, 12/15/10 607,080 2,240,000 U.S. Treasury Bonds, 5.25%, 11/15/28 2,229,499 425,000 U.S. Treasury Bonds, 6.25%, 8/15/23 468,729 80,000 U.S. Treasury Bonds, 7.25%, 5/15/16 92,631 1,237,602 U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 1,174,319 314,631 U.S. Treasury Inflation Protected Security, 2.0%, 1/15/16 300,461 840,278 U.S. Treasury Inflation Protected Security, 3.0%, 7/15/12 865,289 153,155 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 160,430 1,186,356 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 1,240,889 700,000 U.S. Treasury Notes, 4.0%, 2/15/15 645,039 620,000 U.S. Treasury Notes, 4.25%, 1/15/11 598,663 675,000 U.S. Treasury Notes, 4.25%, 11/15/14 634,817 400,000 U.S. Treasury Notes, 4.25%, 8/15/15 374,266 265,000 U.S. Treasury Notes, 4.875%, 2/15/12 262,101 1,200,000 U.S. Treasury Notes, 5.0%, 2/15/11 1,197,047 700,000 U.S. Treasury Notes, 5.5%, 8/15/28 719,195 1,920,000 U.S. Treasury Strip, 0.0%, 11/15/13 1,321,096 ----------- $30,155,666 ----------- TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost $31,033,922) $30,155,666 ----------- FOREIGN GOVERNMENT BONDS - 6.1% ITL 45,000,000 B+/B2 Banco Nac De Desen Econo, 8.0%, 4/28/10 31,933 CAD 399,000 AAA/Aaa Government of Canada, 4.25%, 9/1/09 354,785 SEK 3,445,000 AAA/Aaa Government of Sweden, 5.25%, 3/15/11 507,675 SEK 2,955,000 NR/NR Government of Sweden, 5.5%, 10/8/12 446,015 SEK 2,150,000 NR/NR Government of Sweden, 8.0%, 8/15/07 314,925 NOK 1,500,000 AAA/Aaa Norwegian Government, 5.5%, 5/15/09 250,661 NOK 1,320,000 AAA/Aaa Norwegian Government, 6.0%, 5/16/11 228,832 NOK 3,410,000 AAA/Aaa Norwegian Government, 6.75%, 1/15/07 557,288 AUD 532,000 AAA/Aaa Ontario Province, 5.5%, 4/23/13 379,819 AUD 207,000 AAA/Aaa Queensland Treasury, 6.0%, 8/14/13 154,633 GBP 335,000 AAA/Aaa United Kingdom Treasury, 4.75%, 6/7/10 617,782 ----------- $ 3,844,348 ----------- TOTAL FOREIGN GOVERNMENT BONDS (Cost $3,568,480) $ 3,844,348 ===========
14 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value MUNICIPAL BONDS - 1.2% Muni Airport - 0.5% 50,000 B/CAA2 New Jersey Economic Development Authority, 6.25%, 9/15/29 $ 51,147 175,000 B/CAA2 New Jersey Economic Development Authority Special Facility Revenue, 7.0%, 11/15/30 183,393 100,000 NR/NR Wayne Charter County SPL, 6.75%, 12/1/15 55,663 ----------- $ 290,203 ----------- Muni Medical - 0.1% 80,000 AAA/NR Massachusetts Health & Educational Facilities, 5.0%, 1/15/10 $ 83,570 ----------- Muni Tobacco - 0.5% 90,000 BBB/Baa3 Golden State Tobacco Securitization, 6.75%, 6/1/39 $ 100,731 105,000 BBB/Baa3 Tobacco Settlement Authority Washington, 6.625%, 6/1/32 114,124 60,000 BBB/Baa3 Tobacco Settlement Financing Corp., 7.0%, 6/1/41 68,030 ----------- $ 282,885 ----------- Muni Utilities - 0.1% 60,000 AAA/Aaa San Antonio Texas Electric & Gas, Floating Rate Note, 2/1/19 (144A)(a) $ 77,242 ----------- TOTAL MUNICIPAL BONDS (Cost $647,737) $ 733,900 ----------- Shares RIGHTS/WARRANTS - 0.0% Transportation - 0.0% Railroads - 0.0% 210 Atlantic Express Transportation, Exp. 4/15/08* $ -- ----------- Total Transportation $ -- ----------- TOTAL RIGHTS/WARRANTS (Cost $0) $ -- ----------- TEMPORARY CASH INVESTMENT - 1.5% Security Lending Collateral - 1.5% 941,101 Securities Lending Investment Fund, 5.16% $ 941,101 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $941,101) $ 941,101 ----------- TOTAL INVESTMENT IN SECURITIES - 96.5% (Cost $60,968,533) $60,391,062 ----------- OTHER ASSETS AND LIABILITIES - 3.5% $ 2,225,966 ----------- TOTAL NET ASSETS - 100.0% $62,617,028 ===========
The accompanying notes are an integral part of these financial statements. 15 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- * Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $8,986,634 or 14.4% of total net assets. NR Not Rated by either S&P or Moody's. (a) Debt obligation initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. (b) At June 30, 2006, the following securities were out on loan:
Principal Amount Security Value $ 94,050 GSC Holdings Corp., 8.0%, 10/1/12 $ 94,050 277,200 Goodyear Tire & Rubber, 9.0%, 7/1/15 264,726 108,900 Graham Packaging Co., 9.875%, 10/15/14 108,901 242,550 Trump Entertainment Resorts, 8.5%, 6/1/15 233,151 247,500 WCI Communities, Inc., 6.625%, 3/15/15 205,425 -------- Total $ 906,253 =========
NOTE: Principal amounts are denominated in U.S. dollars unless otherwise noted. ITL Italian Lira EURO Euro CAD Canadian Dollar SEK Swedish Krona NOK Norwegian Kroner AUD Australian Dollar GBP British Pound COP Colombian Peso 16 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 Year Ended Class II (unaudited) 12/31/05 Net asset value, beginning of period $ 10.76 $ 11.26 -------- -------- Increase (decrease) from investment operations: Net investment income $ 0.26 $ 0.55 Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.15) (0.28) -------- -------- Net increase from investment operations $ 0.11 $ 0.27 Distributions to shareowners: Net investment income (0.30) (0.61) Net realized gain (0.05) (0.16) ---------- -------- Net increase (decrease) in net asset value $ (0.24) $ (0.50) ---------- -------- Net asset value, end of period $ 10.52 $ 10.76 ========== ======== Total return* 1.04% 2.49% Ratio of net expenses to average net assets+ 1.11%** 1.14% Ratio of net investment income to average net assets+ 4.98%** 5.30% Portfolio turnover rate 52%** 46% Net assets, end of period (in thousands) $ 43,148 $ 40,045 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.11%** 1.14% Net investment income 4.98%** 5.30% 5/1/03 (a) Year Ended to Class II 12/31/04 12/31/03 Net asset value, beginning of period $ 11.01 $ 10.41 -------- -------- Increase (decrease) from investment operations: Net investment income $ 0.55 $ 0.41 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.49 0.62 -------- -------- Net increase from investment operations $ 1.04 $ 1.03 Distributions to shareowners: Net investment income (0.63) (0.43) Net realized gain (0.16) -- -------- -------- Net increase (decrease) in net asset value $ 0.25 $ 0.60 -------- -------- Net asset value, end of period $ 11.26 $ 11.01 ======== ========= Total return* 9.95% 10.90%(b) Ratio of net expenses to average net assets+ 1.29% 1.49%** Ratio of net investment income to average net assets+ 5.49% 5.08%** Portfolio turnover rate 53% 68% Net assets, end of period (in thousands) $ 25,027 $ 3,663 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.29% 1.49%** Net investment income 5.49% 5.08%**
(a) Class II shares were first publicly offered on May 1, 2003. (b) Not annualized. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 17 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $906,253) (Cost $60,968,533) $60,391,062 Cash 1,675,991 Foreign currencies, at value (cost $730,020) 753,343 Receivables -- Investment securities sold 4,086 Fund shares sold 50,126 Dividends, interest and foreign taxes withheld 787,740 Other 4,177 ----------- Total assets $63,666,525 ----------- LIABILITIES: Payables -- Fund shares repurchased $ 4,322 Dividends 4,651 Upon return for securities loaned 941,101 Forward foreign currency settlement contracts, net 16,543 Forward foreign currency portfolio hedge contracts, open -- net 23,367 Due to affiliates 9,602 Accrued expenses 49,911 ----------- Total liabilities $ 1,049,497 ----------- NET ASSETS: Paid-in capital $62,510,593 Undistributed net investment income 193,339 Accumulated net realized gain on investments 502,914 Net unrealized loss on: Investments (577,471) Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (12,347) ----------- Total net assets $62,617,028 ----------- NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $19,468,874 Shares outstanding 1,850,367 ----------- Net asset value per share $ 10.52 Class II: (No par value, unlimited number of shares authorized) Net assets $43,148,154 Shares outstanding 4,100,763 ----------- Net asset value per share $ 10.52
18 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Interest $ 1,832,489 Income on securities loaned, net 805 ------------ Total investment income $ 1,833,294 ------------ EXPENSES: Management fees $ 195,783 Transfer agent fees and expenses 5,001 Distribution fees (Class II) 51,007 Administrative reimbursements 9,750 Custodian fees 11,403 Professional fees 24,616 Printing expense 4,163 Fees and expenses of nonaffiliated trustees 1,068 Miscellaneous 8,480 ------------ Total expenses $ 311,271 ------------ Net expenses $ 311,271 ------------ Net investment income $ 1,522,023 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain from: Investments $ 466,958 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 77,651 ------------ $ 544,609 ------------ Change in net unrealized loss from: Investments $ (1,394,462) Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (22,005) ------------ $ (1,416,467) ------------ Net loss on investments and foreign currency transactions $ (871,858) ============ Net increase in net assets resulting from operations $ 650,165 ============
The accompanying notes are an integral part of these financial statements. 19 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 1,522,023 $ 2,985,351 Net realized gain on investments and foreign currency transactions 544,609 511,506 Change in net unrealized loss on investments and foreign currency transactions (1,416,467) (2,035,611) ------------ ------------ Net increase in net assets resulting from operations $ 650,165 $ 1,461,246 ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (568,788) $ (1,227,712) Class II (1,157,399) (1,916,310) Net realized gain Class I (95,758) (308,227) Class II (211,483) (487,951) ------------ ------------ Total distributions to shareowners $ (2,033,428) $ (3,940,200) ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 6,964,425 $ 19,663,891 Reinvestment of distributions 2,011,270 3,902,297 Cost of shares repurchased (5,682,815) (6,220,715) ------------ ------------ Net increase in net assets resulting from Fund share transactions $ 3,292,880 $ 17,345,473 ------------ ------------ Net increase in net assets $ 1,909,617 $ 14,866,519 ------------ ------------ NET ASSETS: Beginning of period $ 60,707,411 $ 45,840,892 ------------ ------------ End of period $ 62,617,028 $ 60,707,411 ------------ ------------ Undistributed net investment income, end of period $ 193,339 $ 397,503 ------------ ------------
20 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Strategic Income VCT Portfolio (The Portfolio) is a portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio)(Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio)(Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio)(Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio)(Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The portfolio commenced operations on May 1, 2003. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Strategic Income Portfolio is to produce a high level of current income. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the NYSE. The value of such securities used in computing the net asset value of the Portfolio's shares is based on the last sale price on the 21 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- principal exchange where they traded. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the exchange. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Discounts and premiums on fixed income securities are accreted and amortized, respectively, on a yield-to-maturity basis and are included in interest income. Dividend and interest income from foreign securities are reported net of unrecoverable foreign taxes withheld at the applicable country rates. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. When interest rates rise, the prices of fixed income securities in the Portfolio will generally fall. Conversely, when interest rates fall, the prices of fixed income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. D. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the year ended December 31, 2005, no such taxes were paid. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax 22 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The Portfolio elected to defer $40,713 in capital losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ending December 31, 2006. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis. - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $3,166,871 Long-Term capital gain 773,329 ---------- $3,940,200 Return of Capital -- ---------- Total distributions $3,940,200 ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 573,117 Undistributed long-term gain/(capital loss carryforward) 148,610 Post-October Loss Deferral (40,713) Unrealized appreciation (depreciation) 808,684 ---------- Total $1,489,698 ========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales, the mark to market of foreign currency contracts and accrued interest on defaulted bonds. E. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted net assets at the beginning of the day. The Portfolio declares as daily dividends substantially all of its respective net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. F. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to 23 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. G. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $1,614 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,696 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $292 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ----------------------------------------------------------------------------------------------------------- Strategic Income Portfolio $60,972,673 $1,120,768 $ (1,702,379) $ (581,611) =========== ========== ============ ========== - -----------------------------------------------------------------------------------------------------------
24 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $5,133,308 and $9,346,181, respectively. The cost of purchases and the proceeds from sales of U.S. Government obligations were $12,786,100 and $5,695,303, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ----------------------------------------------------------------------------------------------------------- '06 Shares '06 Amount '05 Shares '05 Amount Strategic Income Portfolio (unaudited) (unaudited) - ----------------------------------------------------------------------------------------------------------- CLASS I: Shares sold 139,804 $ 1,499,060 299,475 $ 3,285,765 Reinvestment of distributions 60,283 642,387 136,735 1,498,145 Shares repurchased (270,006) (2,903,452) (364,351) (3,995,330) ------------------------------------------------------- Net increase (decrease) (69,919) $ (762,005) 71,859 $ 788,580 ======================================================= CLASS II: Shares sold 509,569 $ 5,465,365 1,483,721 $ 16,378,126 Reinvestment of distributions 128,525 1,368,883 219,709 2,404,152 Shares repurchased (258,667) (2,779,363) (204,670) (2,225,385) ------------------------------------------------------- Net increase 379,427 $ 4,054,885 1,498,760 $ 16,556,893 ======================================================= - -----------------------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts During the six months ended June 30, 2006, certain Portfolios had entered into various contracts that obligate the Portfolios to deliver currencies at specified future dates. At the maturity of a contract, the Portfolios must make delivery of the foreign currency. Alternatively, prior to the settlement date of a portfolio hedge, the Portfolio may close out such contracts by entering into an offsetting hedge contract. As of June 30, 2006, outstanding forward portfolio hedge contracts were as follows:
- -------------------------------------------------------------------------------------------------------------- Net Contracts to In Exchange Settlement Unrealized Portfolio Deliver For Date Value Gain (Loss) - -------------------------------------------------------------------------------------------------------------- Strategic Income Portfolio AUD (925,000) $ (677,757) 7/31/06 $ (687,440) $ (9,683) Strategic Income Portfolio CAD (278,225) (250,427) 7/14/06 (249,112) 1,315 Strategic Income Portfolio EUR 487,705 617,509 7/5/06 623,583 6,074 Strategic Income Portfolio EUR (486,000) (623,465) 7/5/06 (621,597) 1,868 Strategic Income Portfolio GBP (335,000) (619,336) 8/7/06 (620,114) (778) Strategic Income Portfolio GBP (335,000) (617,509) 7/5/06 (619,025) (1,516) Strategic Income Portfolio JPY 195,000,000 1,733,617 7/5/06 1,709,257 (24,360) Strategic Income Portfolio JPY 195,000,000 1,714,536 8/7/06 1,718,249 3,713 - --------------------------------------------------------------------------------------------------------------
Outstanding forward currency settlement contracts as of June 30, 2006 were as follows:
- -------------------------------------------------------------------------------------------------------------- Settlement Net Portfolio Gross Receivable Date Gross Payable Receivable/(Payable) - -------------------------------------------------------------------------------------------------------------- Strategic Income Portfolio $1,687,794 7/1/06 $ (1,704,337) $ (16,543) - --------------------------------------------------------------------------------------------------------------
25 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 26 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 27 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 28 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 29 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19636-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer America Income VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer America Income VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 11 Notes to Financial Statements 15 Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] U.S. Government Agency Obligations 97.7% Collateralized Mortgage Obligations 1.7% U.S. Corporate Bonds 0.6%
Maturity Distribution (As a percentage of total investment portfolio) [THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] 0-1 year 2.6% 1-3 years 10.7% 3-4 years 33.5% 4-6 years 30.0% 6-8 years 13.8% 8+ years 9.4%
Five Largest Holdings (As a percentage of long-term holdings) 1. U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 7.91% - ------------------------------------------------- 2. U.S. Treasury Notes, 6.25%, 8/15/23 5.68 - ------------------------------------------------- 3. U.S. Treasury Bond, 5.125%, 5/15/16 4.64 - ------------------------------------------------- 4. U.S. Treasury Notes, 6.5%, 2/15/10 3.54 - ------------------------------------------------- 5. U.S. Treasury Notes, 6.375%, 8/15/27 3.28 - -------------------------------------------------
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $9.52 $9.85
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.2169 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer America Income VCT Portfolio at net asset value, compared to that of the Lehman Brothers Fixed-Rate Mortgage-Backed Securities Index and of Lehman Brothers Government Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer America Lehman Brothers Lehman Brothers Income VCT Government Bond Fixed Rate Mtge-Backed Portfolio Index Index 6/96 $10,000 $10,000 $10,000 6/97 10,581 10,740 10,910 6/98 11,540 11,948 11,884 6/99 11,751 12,312 12,360 6/00 12,209 12,929 12,982 6/01 13,403 14,264 14,447 6/02 14,479 15,521 15,744 6/03 15,582 17,281 16,645 6/04 15,541 17,047 17,016 6/05 16,331 18,180 18,060 6/06 16,120 17,968 18,131
The Lehman Brothers Government Bond Index measures the performance of the U.S. government bond market. The Lehman Brothers Fixed-Rate Mortgage-Backed Index measures the performance of the government and mortgage securities markets. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- 10 Years 4.89% 5 Years 3.76% 1 Year -1.29%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer America Income VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II ---------------------------------------------------------- Beginning Account Value on 1/1/06 $1,000.00 Ending Account Value on 6/30/06 $ 988.40 Expenses Paid During Period* $ 4.98
* Expenses are equal to the Portfolio's annualized expense ratio of 1.01% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer America Income VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II ---------------------------------------------------------- Beginning Account Value on 1/1/06 $1,000.00 Ending Account Value on 6/30/06 $1,019.79 Expenses Paid During Period* $ 5.06
* Expenses are equal to the Portfolio's annualized expense ratio of 1.01% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- During a period of solid economic growth and steadily rising interest rates, yields on Treasury securities rose, and shareholders in Pioneer America Income Trust VCT Portfolio earned a relatively high level of income during the first half of 2006. In the interview below, Richard Schlanger, a member of Pioneer's fixed-income team, discusses the factors that affected the fixed-income market and the Trust over the semiannual period. Q. How did the Trust perform during the period? A. For the six months ended June 30, 2006, Class II shares of Pioneer America Income Trust VCT Portfolio produced a total return of -1.16% at net asset value. For the same period, the Trust underperformed its benchmark, the Lehman Brothers Government Bond Index, which returned -0.89%, and the Lehman Brothers Fixed-Rate Mortgage-Backed Index which returned -0.06%. The Trust surpassed the average -1.25% return generated by the U.S. Government Underlying Funds category of Lipper Inc., an independent monitor of mutual fund performance. At the end of the period, the Trust's 30-day SEC yield was 4.38%. The Trust had 227 issues, and the average credit quality of the Portfolio was AAA. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What was the investment environment like during the six months? A. In a period of relatively strong economic growth and higher prices for commodities, concerns about the prospect of accelerating inflation dominated the fixed-income markets. At the Federal Reserve, Ben Bernanke became chairman in early February. When Mr. Bernanke took office, the Federal funds target rate was 4.50%. In the first five months of his chairmanship, the Federal funds rate rose to 5.25%, with the latest increase occurring on June 29. (The Federal funds rate is the rate banks charge for overnight loans. Since June 2004, the Federal Reserve has raised interest rates 17 times, taking the Federal funds rate from a 40-year low of 1% to the current 5.25%.) In the most recent six-month period, yields across the maturity spectrum moved higher in a parallel fashion. Q. How did you manage the Trust in this environment? A. As higher interest rates boosted mortgage rates, we became concerned about the duration (sensitivity to interest-rate changes), of our mortgage holdings because as interest rates go up, mortgage duration tends to lengthen when refinancing and prepayment activity slows. To limit this drift in duration, we trimmed our mortgage position from 55% to about 52% of net assets. Instead, we chose to concentrate on longer-term Treasury securities. We thought that if the Federal Reserve went too far in raising rates, economic growth would slow, and the central bank would have to reverse course and begin lowering rates. If this were to occur, we believed the Treasury market would rally, and longer-term Treasuries would outperform their short-term counterparts. As conditions warranted, we opportunistically added to or sold holdings in Treasury Inflation Protected Securities (TIPS). TIPS are securities whose principal is tied to the consumer price index. When inflation accelerates, the principal on TIPS increases in value. At the end of the six-month period, 52.1% of the Portfolio was in mortgage pass-through securities issued by the Government National Mortgage Association (Ginnie Mae); 46.4% was in Treasury Issues, TIPS and agency securities issued by the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal Home Loan Bank, and the Federal Farm Credit Bank. A Word About Risk: When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed-income securities in the Portfolio will generally rise. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed--income securities. Mortgage-backed securities are also subject to pre-payments. Government guarantees apply to the underlying securities only and not to the prices and yields of the Portfolio. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q. What contributed to performance? A. The shorter-duration assets aided returns as interest rates went up. Returns on longer-term, fixed-rate Treasuries were negative; however, our positions in TIPS and agency securities contributed to performance. Our mortgage holdings also did well, with mortgages issued by Fannie Mae and Freddie Mac outperforming those issued by Ginnie Mae. Q. What detracted from performance? A. Because the Federal Reserve was determined to fight inflation by raising interest rates, long-duration assets vastly underperformed short-duration assets. As a result, the Portfolio's longer-duration assets were the biggest detractor from performance. For the six months under review, five-year and 10-year Treasuries returned -1.35% and -3.90%, respectively. We view the underperformance of longer-duration assets as a relatively short-term event, because we believe that once the Federal Reserve stops raising interest rates, securities with longer durations have the potential to outperform. Q. What is your outlook? A. We believe that rising interest rates and oil prices have begun to affect the mortgage market and consumer spending. We have seen a shift away from adjustable-rate mortgages to fixed-rate mortgages and a decline in refinance activity as mortgage rates have risen. If these trends continue, economic growth is likely to slow, and the Federal Reserve may take a breather from raising interest rates. The Portfolio is positioned to take advantage of this type of environment. Should rates stabilize or decline, we believe the Portfolio's intermediate-term and longer-term holdings could outperform. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Principal Amount Value COLLATERALIZED MORTGAGE OBLIGATIONS - 1.6% Government - 1.6% $ 213,395 Federal Home Loan Bank, 4.75%, 10/25/10 $ 207,107 116,164 Federal Home Loan Bank, 5.0%, 1/15/16 114,569 350,000 Freddie Mac, 5.5%, 7/15/28 345,437 ----------- $ 667,113 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $690,757) $ 667,113 ----------- CORPORATE BONDS - 0.6% Diversified Financials - 0.6% Specialized Finance - 0.6% 250,000 Private Export Funding, 3.375%, 2/15/09 $ 237,761 ----------- TOTAL CORPORATE BONDS (Cost $250,000) $ 237,761 ----------- U.S. GOVERNMENT AGENCY OBLIGATIONS - 95.8% 200,960 Fannie Mae, 5.5%, 6/1/23 $ 195,653 250,000 Federal Farm Credit Bank, 3.25%, 6/15/2007 244,778 400,000 Federal Farm Credit Bank, 4.9%, 3/17/14 380,366 100,000 Federal Farm Credit Bank, 5.3%, 9/28/15 95,931 100,000 Federal Farm Credit Bank, 5.88%, 9/8/08 100,855 250,000 Federal Farm Credit Bank, 4.45%, 6/1/15 231,219 200,000 Federal Farm Credit Bank, Medium Term Note, 6.38%, 11/27/06 200,717 250,000 Federal Home Loan Bank 4.25%, 10/10/08 243,879 300,000 Federal Home Loan Bank 4.43%, 4/7/08 294,739 250,000 Federal Home Loan Bank, 4.0%, 2/12/10 237,927 250,000 Federal Home Loan Bank, 4.25%, 2/16/10 240,360 200,000 Federal Home Loan Bank, 4.5%, 11/15/12 189,328 500,000 Federal Home Loan Bank, 4.75%, 12/10/10 485,227 100,000 Federal Home Loan Bank, 5.375%, 5/18/16 98,694 34,841 Federal Home Loan Corp., 6.5%, 2/1/32 35,180 28,642 Federal Home Loan Corp., 7.0%, 3/1/32 29,418 29,809 Federal Home Loan Corp., 7.0%, 4/1/32 30,548 300,000 Federal Home Loan Mortgage Corp., 5.0%, 1/1/36 280,388 210,000 Federal Home Loan Mortgage Corp., 5.0%, 3/1/36 196,135 209,461 Federal Home Loan Mortgage Corp., 5.5%, 12/1/34 201,717 223,200 Federal Home Loan Mortgage Corp., 5.5%, 9/1/34 214,947 64,095 Federal Home Loan Mortgage Corp., 6.0% 10/1/32 63,344 467,787 Federal Home Loan Mortgage Corp., 6.0%, 5/1/34 461,509 123,519 Federal Home Loan Mortgage Corp., 6.0%, 11/1/32 122,072 319,864 Federal Home Loan Mortgage Corp., 6.0%, 11/1/32 316,115 25,814 Federal Home Loan Mortgage Corp., 6.0%, 12/1/32 25,512 125,480 Federal Home Loan Mortgage Corp., 6.0%, 12/1/32 124,010 174,701 Federal Home Loan Mortgage Corp., 6.0%, 2/1/33 172,654 836,287 Federal Home Loan Mortgage Corp., 6.0%, 3/1/33 825,906 184,028 Federal Home Loan Mortgage Corp., 6.5% 4/1/32 185,758 48,346 Federal Home Loan Mortgage Corp., 6.5%, 1/1/29 48,869 84,665 Federal Home Loan Mortgage Corp., 6.5%, 10/1/31 85,490 60,129 Federal Home Loan Mortgage Corp., 6.5%, 3/1/11 60,769 30,461 Federal Home Loan Mortgage Corp., 6.5%, 3/1/29 30,794
6 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount Value U.S. Government Agency Obligations (Cont.) $ 11,360 Federal Home Loan Mortgage Corp., 6.5%, 3/1/32 $ 11,467 27,373 Federal Home Loan Mortgage Corp., 6.5%, 4/1/31 27,640 62,428 Federal Home Loan Mortgage Corp., 6.5%, 7/1/32 63,014 16,412 Federal Home Loan Mortgage Corp., 7.0%, 2/1/31 16,819 2,653 Federal Home Loan Mortgage Corp., 7.0%, 4/1/30 2,718 1,361 Federal Home Loan Mortgage Corp., 7.0%, 7/1/31 1,395 5,090 Federal Home Loan Mortgage Corp., 7.0%, 9/1/31 5,217 29,942 Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 30,989 216,990 Federal National Mortgage Association, 4.5%, 4/1/19 205,362 104,783 Federal National Mortgage Association, 5.0%, 12/1/35 98,012 65,954 Federal National Mortgage Association, 5.0%, 3/1/09 64,565 197,643 Federal National Mortgage Association, 5.0%, 7/1/19 190,645 294,265 Federal National Mortgage Association, 5.5%, 11/1/23 286,494 329,863 Federal National Mortgage Association, 5.5%, 11/1/33 318,219 173,512 Federal National Mortgage Association, 5.5%, 12/1/34 167,101 65,839 Federal National Mortgage Association, 5.5%, 2/1/33 62,995 262,024 Federal National Mortgage Association, 5.5%, 3/1/18 257,687 195,772 Federal National Mortgage Association, 5.5%, 3/1/24 190,299 211,130 Federal National Mortgage Association, 5.5%, 3/1/34 203,329 313,429 Federal National Mortgage Association, 5.5%, 4/1/18 308,322 147,137 Federal National Mortgage Association, 5.5%, 6/1/33 145,270 289,416 Federal National Mortgage Association, 5.5%, 9/1/33 279,200 63,565 Federal National Mortgage Association, 6.0%, 6/1/33 62,759 38,601 Federal National Mortgage Association, 6.0%, 10/1/32 38,136 61,631 Federal National Mortgage Association, 6.0%, 11/1/32 60,888 79,506 Federal National Mortgage Association, 6.0%, 11/1/32 78,548 211,205 Federal National Mortgage Association, 6.0%, 11/1/32 208,660 152,421 Federal National Mortgage Association, 6.0%, 12/1/11 152,516 30,245 Federal National Mortgage Association, 6.0%, 12/1/31 29,898 407,887 Federal National Mortgage Association, 6.0%, 3/1/33 402,972 99,030 Federal National Mortgage Association, 6.0%, 4/1/33 97,837 135,064 Federal National Mortgage Association, 6.0%, 7/1/34 133,204 275,000 Federal National Mortgage Association, 6.0%, 7/1/36 270,617 124,525 Federal National Mortgage Association, 6.0%, 9/1/34 122,810 250,000 Federal National Mortgage Association, 6.07%, 5/12/16 249,423 39,140 Federal National Mortgage Association, 6.5%, 1/1/29 39,539 65,385 Federal National Mortgage Association, 6.5%, 1/1/32 65,981 9,074 Federal National Mortgage Association, 6.5%, 10/1/31 9,157 47,294 Federal National Mortgage Association, 6.5%, 10/1/31 47,725 46,875 Federal National Mortgage Association, 6.5%, 11/1/28 47,356 26,935 Federal National Mortgage Association, 6.5%, 2/1/32 27,181 33,047 Federal National Mortgage Association, 6.5%, 3/1/32 33,369 82,029 Federal National Mortgage Association, 6.5%, 3/1/32 82,753 26,710 Federal National Mortgage Association, 6.5%, 3/1/32 26,953 75,431 Federal National Mortgage Association, 6.5%, 4/1/32 76,097 34,591 Federal National Mortgage Association, 6.5%, 7/1/21 35,008 63,181 Federal National Mortgage Association, 6.5%, 7/1/32 63,739 287,626 Federal National Mortgage Association, 6.5%, 7/1/34 289,312 57,583 Federal National Mortgage Association, 6.5%, 8/1/32 58,108
The accompanying notes are an integral part of these financial statements. 7 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount Value U.S. Government Agency Obligations (Cont.) $ 146,524 Federal National Mortgage Association, 6.5%, 8/1/32 $ 147,817 45,697 Federal National Mortgage Association, 6.5%, 8/1/32 46,101 30,953 Federal National Mortgage Association, 6.5%, 9/1/32 31,226 7,573 Federal National Mortgage Association, 7.0%, 1/1/29 7,764 20,784 Federal National Mortgage Association, 7.0%, 1/1/32 21,296 3,875 Federal National Mortgage Association, 7.0%, 5/1/31 3,973 16,847 Federal National Mortgage Association, 7.0%, 7/1/31 17,262 24,162 Federal National Mortgage Association, 7.0%, 8/1/19 24,843 37,753 Federal National Mortgage Association, 7.0%, 9/1/18 38,818 106,191 Federal National Mortgage Association, 7.0%, 9/1/30 108,869 14,336 Federal National Mortgage Association, 7.5%, 2/1/31 14,852 35,665 Federal National Mortgage Association, 9.0%, 4/1/33 37,669 300,000 Freddie Mac, 5.25%, 11/15/12 290,859 256,046 Government National Mortgage Association, 4.5%, 4/15/20 243,935 299,529 Government National Mortgage Association, 4.5%, 5/20/36 271,846 424,354 Government National Mortgage Association, 4.5%, 6/15/34 390,068 201,139 Government National Mortgage Association, 4.5%, 6/15/34 184,888 340,210 Government National Mortgage Association, 4.5%, 8/15/33 312,966 143,772 Government National Mortgage Association, 5.0%, 1/20/20 139,097 90,908 Government National Mortgage Association, 5.0%, 10/15/20 88,228 190,865 Government National Mortgage Association, 5.0%, 11/20/19 184,717 173,359 Government National Mortgage Association, 5.0%, 2/15/20 168,249 203,737 Government National Mortgage Association, 5.0%, 3/15/34 193,050 163,418 Government National Mortgage Association, 5.0%, 4/15/35 154,711 254,149 Government National Mortgage Association, 5.0%, 7/15/17 246,812 165,037 Government National Mortgage Association, 5.0%, 9/15/33 156,351 179,688 Government National Mortgage Association, 5.5%, 10/15/34 174,320 139,051 Government National Mortgage Association, 5.5%, 2/15/19 137,473 168,847 Government National Mortgage Association, 5.5%, 3/15/33 163,866 262,232 Government National Mortgage Association, 5.5%, 4/15/33 254,496 255,176 Government National Mortgage Association, 5.5%, 6/15/17 252,346 145,187 Government National Mortgage Association, 5.5%, 7/15/19 140,969 182,235 Government National Mortgage Association, 5.5%, 7/15/19 180,119 201,048 Government National Mortgage Association, 5.5%, 7/15/33 195,117 77,576 Government National Mortgage Association, 6.0%, 1/15/33 77,069 84,486 Government National Mortgage Association, 6.0%, 10/15/32 83,933 91,849 Government National Mortgage Association, 6.0%, 10/15/32 91,248 26,647 Government National Mortgage Association, 6.0%, 10/15/32 26,473 70,596 Government National Mortgage Association, 6.0%, 10/15/32 70,134 199,652 Government National Mortgage Association, 6.0%, 11/15/32 198,603 128,104 Government National Mortgage Association, 6.0%, 11/15/32 127,266 225,725 Government National Mortgage Association, 6.0%, 12/15/32 224,470 220,415 Government National Mortgage Association, 6.0%, 12/15/33 218,943 186,118 Government National Mortgage Association, 6.0%, 2/15/18 187,590 219,705 Government National Mortgage Association, 6.0%, 3/15/34 218,184 225,000 Government National Mortgage Association, 6.0%, 30 YR TBA 223,249 147,802 Government National Mortgage Association, 6.0%, 4/15/28 147,177 98,382 Government National Mortgage Association, 6.0%, 5/15/17 99,143 112,920 Government National Mortgage Association, 6.0%, 6/20/16 113,412 337,290 Government National Mortgage Association, 6.0%, 7/15/23 335,912
8 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount Value U.S. Government Agency Obligations (Cont.) $ 130,440 Government National Mortgage Association, 6.0%, 8/15/19 $ 131,437 127,058 Government National Mortgage Association, 6.0%, 8/15/34 126,299 157,972 Government National Mortgage Association, 6.0%, 8/15/34 156,878 105,080 Government National Mortgage Association, 6.0%, 9/15/32 104,392 104,677 Government National Mortgage Association, 6.0%, 9/15/34 103,952 238,068 Government National Mortgage Association, 6.0% 1/15/33 236,478 96,570 Government National Mortgage Association, 6.5%, 1/15/34 97,806 88,726 Government National Mortgage Association, 6.5%, 10/15/31 89,956 48,731 Government National Mortgage Association, 6.5%, 12/15/31 49,406 19,928 Government National Mortgage Association, 6.5%, 12/15/31 20,205 33,278 Government National Mortgage Association, 6.5%, 12/20/28 33,668 22,100 Government National Mortgage Association, 6.5%, 2/15/29 22,437 8,964 Government National Mortgage Association, 6.5%, 2/15/32 9,247 11,566 Government National Mortgage Association, 6.5%, 3/15/26 11,740 101,880 Government National Mortgage Association, 6.5%, 4/15/17 103,684 26,874 Government National Mortgage Association, 6.5%, 4/15/17 27,350 24,564 Government National Mortgage Association, 6.5%, 4/15/32 24,891 26,938 Government National Mortgage Association, 6.5%, 4/15/32 27,297 124,834 Government National Mortgage Association, 6.5%, 5/15/29 126,739 123,940 Government National Mortgage Association, 6.5%, 5/15/29 125,848 49,660 Government National Mortgage Association, 6.5%, 5/15/29 50,426 41,604 Government National Mortgage Association, 6.5%, 5/15/31 42,181 17,153 Government National Mortgage Association, 6.5%, 6/15/17 17,456 41,982 Government National Mortgage Association, 6.5%, 6/15/28 42,628 35,989 Government National Mortgage Association, 6.5%, 6/15/28 36,546 8,845 Government National Mortgage Association, 6.5%, 6/15/29 8,980 53,899 Government National Mortgage Association, 6.5%, 6/15/31 54,646 23,962 Government National Mortgage Association, 6.5%, 6/15/32 24,282 27,099 Government National Mortgage Association, 6.5%, 6/15/32 27,461 20,732 Government National Mortgage Association, 6.5%, 6/15/32 21,009 69,674 Government National Mortgage Association, 6.5%, 7/15/31 70,639 57,788 Government National Mortgage Association, 6.5%, 7/15/32 58,559 62,380 Government National Mortgage Association, 6.5%, 9/15/31 63,244 24,351 Government National Mortgage Association, 6.5%, 9/20/31 24,597 12,508 Government National Mortgage Association, 7.0%, 1/15/26 12,916 21,530 Government National Mortgage Association, 7.0%, 1/15/29 22,218 39,463 Government National Mortgage Association, 7.0%, 11/15/28 40,714 37,347 Government National Mortgage Association, 7.0%, 11/15/30 38,541 4,798 Government National Mortgage Association, 7.0%, 12/15/30 4,952 47,578 Government National Mortgage Association, 7.0%, 2/15/28 49,087 17,947 Government National Mortgage Association, 7.0%, 2/15/31 18,516 5,160 Government National Mortgage Association, 7.0%, 3/15/28 5,324 17,904 Government National Mortgage Association, 7.0%, 4/15/28 18,472 16,276 Government National Mortgage Association, 7.0%, 5/15/31 16,793 106,445 Government National Mortgage Association, 7.0%, 5/15/32 109,807 26,551 Government National Mortgage Association, 7.0%, 6/15/29 27,400 37,494 Government National Mortgage Association, 7.0%, 7/15/26 38,718 26,802 Government National Mortgage Association, 7.0%, 7/15/29 27,658 7,909 Government National Mortgage Association, 7.0%, 7/15/29 8,162 19,480 Government National Mortgage Association, 7.0%, 8/15/31 20,098
The accompanying notes are an integral part of these financial statements. 9 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount Value U.S. Government Agency Obligations (Cont.) $ 13,546 Government National Mortgage Association, 7.0%, 9/15/27 $ 13,993 13,083 Government National Mortgage Association, 7.5%, 1/15/31 13,674 2,325 Government National Mortgage Association, 7.5%, 1/15/32 2,430 6,888 Government National Mortgage Association, 7.5%, 10/15/22 7,197 22,982 Government National Mortgage Association, 7.5%, 10/15/29 24,036 30,875 Government National Mortgage Association, 7.5%, 11/15/29 32,291 1,771 Government National Mortgage Association, 7.5%, 6/15/23 1,852 1,316 Government National Mortgage Association, 7.5%, 8/15/23 1,376 2 Government National Mortgage Association, 7.5%, 8/15/29 2 1,751 Government National Mortgage Association, 7.5%, 8/15/29 1,832 5,523 Government National Mortgage Association, 7.5%, 8/20/27 5,748 2,025 Government National Mortgage Association, 8.0%, 8/20/25 2,139 96,307 Government National Mortgage Association I, 6.0%, 2/15/29 95,771 293,283 Government National Mortgage Association II, 5.0%, 12/20/18 283,951 157,335 Government National Mortgage Association II, 5.5%, 11/20/34 151,996 322,566 Government National Mortgage Association II, 5.5%, 2/20/34 311,621 334,588 Government National Mortgage Association II, 5.5%, 7/20/19 329,660 170,917 Government National Mortgage Association II, 6.0%, 11/20/33 169,348 46,057 Government National Mortgage Association II, 6.0%, 12/20/18 46,278 118,218 Government National Mortgage Association II, 6.0%, 7/20/19 118,752 25,413 Government National Mortgage Association II, 6.5%, 8/20/28 25,708 12,071 Government National Mortgage Association II, 7.0%, 1/20/31 12,371 65,348 Government National Mortgage Association II, 7.0%, 2/20/29 66,987 34,120 Government National Mortgage Association II, 7.0%, 5/20/26 34,999 12,000 Tennessee Valley Authority, Floating Rate Note, 6/1/28 267,720 1,850,000 U.S. Treasury Bonds, 5.125%, 5/15/16 1,847,832 850,000 U.S. Treasury Bonds, 4.0%, 2/15/14 789,636 2,050,000 U.S. Treasury Bonds, 6.25%, 8/15/23 2,260,927 400,000 U.S. Treasury Bonds, 7.25%, 5/15/16 463,156 825,000 U.S. Treasury Notes, 4.0%, 11/15/12 775,436 870,000 U.S. Treasury Notes, 4.25%, 11/15/14 818,208 300,000 U.S. Treasury Notes, 4.25%, 8/15/15 280,699 100,000 U.S. Treasury Notes, 4.5%, 2/15/16 95,141 250,000 U.S. Treasury Notes, 4.5%, 11/15/15 238,125 475,000 U.S. Treasury Notes, 4.75%, 5/15/14 463,366 200,000 U.S. Treasury Notes, 5.0%, 2/15/11 199,506 1,150,000 U.S. Treasury Notes, 6.375%, 8/15/27 1,305,340 1,350,000 U.S. Treasury Notes, 6.5%, 2/15/10 1,410,487 207,130 U.S. Treasury Inflation Notes, 1.875%, 7/15/15 196,539 3,006,372 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 3,149,175 ----------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $40,065,748) $38,912,937 ----------- TOTAL INVESTMENT IN SECURITIES - 98.0% (Cost $41,006,505) $39,817,811 ----------- OTHER ASSETS AND LIABILITIES - 2.0% $ 813,169 ----------- TOTAL NET ASSETS - 100.0% $40,630,980 ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 5/1/03(a) 6/30/06 Ended Ended to Class II (unaudited) 12/31/05 12/31/04 12/31/03 Net asset value, beginning of period $ 9.85 $ 10.12 $ 10.37 $10.57 ------- ------- ------- ------ Increase (decrease) from investment operations: Net investment income $ 0.18 $ 0.39 $ 0.41 $ 0.21 Net realized and unrealized loss on investments (0.29) (0.21) (0.11) (0.15) ------- ------- ------- ------ Net increase (decrease) from investment operations $ (0.11) $ 0.18 $ 0.30 $ 0.06 Distributions to shareowners: Net investment income (0.22) (0.45) (0.55) (0.26) ------- ------- ------- ------ Net decrease in net asset value $ (0.33) $ (0.27) $ (0.25) $(0.20) ------- ------- ------- ------ Net asset value, end of period $ 9.52 $ 9.85 $ 10.12 $10.37 ======= ======= ======= ====== Total return* (1.16)% 1.76% 3.04% 2.60%(b) Ratio of net expenses to average net assets 1.01%** 1.08% 1.06% 1.01%** Ratio of net investment income to average net assets 3.84%** 3.57% 3.29% 2.42%** Portfolio turnover rate 49%** 23% 37% 34%** Net assets, end of period (in thousands) $18,041 $21,351 $13,791 $2,637 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.01%** 1.08% 1.06% 1.01%** Net investment income 3.84%** 3.57% 3.29% 2.42%**
(a) The Portfolio began offering Class II shares to the public on May 1, 2003 (b) Not annualized * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 11 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (Cost $41,006,505) $ 39,817,811 Cash 643,506 Receivables -- Investment securities sold 454,790 Fund shares sold 1,476 Dividends, interest and foreign taxes withheld 349,458 Other 1,511 ------------ Total assets $ 41,268,552 ------------ LIABILITIES: Payables -- Investment securities purchased $ 493,391 Fund shares repurchased 76,733 Due to affiliates 8,605 Accrued expenses 58,843 ------------ Total liabilities $ 637,572 ------------ NET ASSETS: Paid-in capital $ 43,749,823 Distributions in excess of net investment income (458,405) Accumulated net realized loss (1,471,744) Net unrealized loss on investments (1,188,694) ------------ Total net assets $ 40,630,980 ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 22,589,980 Shares outstanding 2,375,632 ------------ Net asset value per share $ 9.51 Class II: (No par value, unlimited number of shares authorized) Net assets $ 18,041,000 Shares outstanding 1,894,401 ------------ Net asset value per share $ 9.52
12 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Interest $ 1,009,616 ----------- Total investment income $ 1,009,616 ----------- EXPENSES: Management fees $ 103,904 Transfer agent fees and expenses 4,996 Distribution fees (Class II) 22,339 Administrative reimbursements 9,474 Custodian fees 8,511 Professional fees 18,517 Printing expense 2,954 Fees and expenses of nonaffiliated trustees 2,215 Miscellaneous 6,405 ----------- Total expenses $ 179,315 ----------- Net expenses $ 179,315 ----------- Net investment income $ 830,301 ----------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS: Net realized loss from investments $ (127,147) ----------- Change in net unrealized loss from investments $(1,136,024) =========== Net loss on investments $(1,263,171) =========== Net decrease in net assets resulting from operations $ (432,870) -----------
The accompanying notes are an integral part of these financial statements. 13 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 830,301 $ 1,818,811 Net realized loss on investments (127,147) (8,670) Change in net unrealized loss on investments (1,136,024) (945,559) ----------- ----------- Net increase (decrease) in net assets resulting from operations $ (432,870) $ 864,582 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (563,165) $(1,378,835) Class II (403,021) (792,466) ----------- ----------- Total distributions to shareowners $ (966,186) $(2,171,301) ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 2,842,982 $11,779,535 Reinvestment of distributions 963,281 2,174,179 Cost of shares repurchased (8,894,397) 11,661,922) ----------- ----------- Net increase (decrease) in net assets resulting from Fund share transactions $(5,088,134) $ 2,291,792 ----------- ----------- Net increase (decrease) in net assets $(6,487,190) $ 985,073 ----------- ----------- NET ASSETS: Beginning of period $47,118,170 $46,133,097 ----------- ----------- End of period $40,630,980 $47,118,170 =========== =========== Distributions in excess of net investment income, end of period $ (458,405) $ (322,520) =========== ===========
14 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer America Income VCT Portfolio (The Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The Portfolio commenced operations on May 1, 2003. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The investment objective of America Income Portfolio is to produce a high level of current income as consistent with preservation of capital. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-backed securities are also subject to pre-payments. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange (NYSE) is 15 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the NYSE. The value of such securities used in computing the net asset value of the Portfolio's shares is based on the last sale price on the principal exchange where they traded. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the exchange. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, America Income Trust Portfolio had a net capital loss carryforward of $1,230,915, of which the following amounts will expire between 2008 and 2013 if not utilized: $382,424 in 2008, $435,523 in 2011, $171,643 in 2012 and $241,325 in 2013. The Portfolio elected to defer $109,707 in capital losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ending December 31, 2006. The tax character of current year distributions paid will be determined at the end of the fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 2,171,301 Long-Term capital gain/capital loss carryforward -- ----------- $ 2,171,301 Return of Capital -- ----------- Total distributions $ 2,171,301 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 5,442 Undistributed long-term gain/(capital loss carryforward) (1,230,915) Post-October Loss Deferred (109,707) Unrealized appreciation (depreciation) (384,607) ----------- Total $(1,719,787) =========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, and the tax treatment of amortization on securities purchased at premium. 16 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- C. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted-net assets at the beginning of the day. The Portfolio declares as daily dividends substantially all of its respective net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Portfolio's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the portfolios. Management fees are calculated daily at the annual rate of 0.55% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $790 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,692 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $123 payable to PFD at June 30, 2006. 17 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - -------------------------------------------------------------------------------------------------- America Income Portfolio $41,338,442 $78,166 $(1,598,797) $(1,520,631) - --------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of U.S. Government obligations for the six months ended June 30, 2006, were $5,484,201 and $10,673,855, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -------------------------------------------------------------------------------------------------- '06 Shares '06 Shares America Income Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - -------------------------------------------------------------------------------------------------- CLASS I: Shares sold 78,094 $ 751,072 116,997 $ 1,169,565 Reinvestment of distributions 58,136 560,266 138,561 1,381,733 Shares repurchased (379,934) (3,682,011) (836,177) (8,331,104) ----------------------------------------------------- Net decrease (243,704) $(2,370,673) (580,619) $(5,779,806) ===================================================== CLASS II: Shares sold 216,051 $ 2,091,910 1,061,522 $10,609,970 Reinvestment of distributions 41,773 403,015 79,492 792,446 Shares repurchased (530,616) (5,212,386) (336,194) (3,330,818) ----------------------------------------------------- Net increase (decrease) (272,792) $(2,717,461) 804,820 $ 8,071,598 ===================================================== - --------------------------------------------------------------------------------------------------
18 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 19 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 21 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19632-00-0806 [LOGO]PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Balanced VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 14 Notes to Financial Statements 18 Trustees, Officers and Service Providers 22
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] U.S. Common Stocks 60.7% U.S. Government Agency Obligations 23.6% U.S. Corporate Bonds 10.1% Temporary Cash Investment 2.6% Depositary Receipts for International Stocks 1.2% Collateralized Mortgage Obligations 1.0% Asset Backed Securities 0.8%
Sector Distribution (As a percentage of long-term holdings) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] GovernmentObligations 24.5% Financials 14.5% Information Technology 12.0% Consumer Staples 11.2% Health Care 9.1% Consumer Discretionary 8.6% Industrials 7.7% Energy 5.8% Materials 5.0% Telecommunications Services 1.1% Utilities 0.5%
Five Largest Holdings (As a percentage of long-term holdings) 1. Berkshire Hathaway, Inc. (Class B) 3.60% 2. PepsiCo, Inc. 3.34 3. CVS Corp. 3.30 4. First Data Corp. 3.29 5. Microsoft Corp. 3.10
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 14.55 $ 14.67
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.1200 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Balanced VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index and the Lehman Brothers Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Lehman Bros. Pioneer Balanced Aggregate VCT Portfolio Bond Index S&P 500 6/96 10000 10000 10000 6/97 11936 10815 13468 6/98 13537 11955 17532 6/99 13407 12331 21520 6/00 13691 12894 23081 6/01 14120 14342 19660 6/02 12730 15579 16126 6/03 13352 17200 16165 6/04 14523 17255 19253 6/05 14913 18428 20469 6/06 15478 18280 22234
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure of the broad U.S. stock market. The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- 10 Years 4.47% 5 Years 1.85% 1 Year 3.79%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Balanced VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,000.00 Expenses Paid During Period* $ 5.75
* Expenses are equal to the Portfolio's annualized expense ratio of 1.16% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Balanced VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,019.04 Expenses Paid During Period* $ 5.81
* Expenses are equal to the Portfolio's annualized expense ratio of 1.16% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- The economy grew at a healthy pace during the first six months of 2006, although some early signs emerged to indicate the rate of economic growth might be slowing. Stocks generally delivered modest returns over the six months, despite slumping in May and June on worries that the Federal Reserve might raise interest rates further than had been anticipated and hold back economic growth. Small- and mid-cap stocks continued to outperform large-caps, and benchmarks for value stocks recorded higher gains than growth stock indexes. In the fixed income market, interest rates across the yield curve - among securities of all maturities - rose, and bond prices generally declined. Shorter duration strategies tended to produce better returns than long-duration strategies, especially in high-grade securities. High-yield, below-investment grade bonds outperformed higher- quality securities early in the year, but slumped along with stocks in the final two months. In the following interview, Timothy Mulrenan, who is responsible for the equity portfolio of Pioneer Balanced VCT Portfolio, and Richard Schlanger, who is responsible for the Portfolio's fixed-income management, discuss the factors that influenced the Portfolio's performance over the six months ending June 30, 2006. Q. How did the Portfolio perform during the first half of 2006? A. Class II shares of Pioneer Balanced VCT Portfolio had a flat return of 0.00% at net asset value, during the six months ending June 30, 2006. Over the same time period, the S&P 500 Index and the Lehman Brothers Aggregate Bond Index returned 2.71% and -0.72%, respectively. During the same six months, the average return of the 114 funds in Lipper's Mixed-Asset Target Allocation Growth Variable Annuity category was 2.14%. Call 1-800-688-9915 or visit www.pioneerinvestmentscom for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What were the Portolio's principal investment strategies during the six months? A. We maintained a slight overweighting in equities, which comprised about 63% of assets on June 30, 2006, compared to a typical allocation of 60%. Within the equity portfolio, we maintained our focus on large-cap, consistent growth companies. This emphasis, however, did not help performance as value stocks and small-company stocks outperformed the stable growth companies that we believed offered the most attractive relative values. We made no major sector changes among our equity investments, although we modestly reduced our overweight in energy companies. While we still are impressed by the long-term prospects for the energy sector, we thought near-term growth may begin to slow. We were overweighted in consumer staples and, to a lesser extent, in information technology and health care. We were underweighted in financials, especially banks, because of the vulnerability of their earnings margins as the difference between interest rates of short-term and long-term securities flattens. Moreover, we believe some banks may need to add to their reserves against loan losses. We added to our information technology positions when we invested in Corning, a leader in producing flat-screen panels for televisions and computer monitors. In media, we sold shares of CBS because of concerns that growth in traditional media would slow. At the same time, we invested in cable company Comcast. We also reduced our position in the U.K.-based Vodafone, a major telecommunications service provider, because of our concerns about competitive pressure in Europe. We made no significant changes in our fixed income strategy during the six months, although duration - or sensitivity to interest rate changes - increased somewhat, partly because of the natural lengthening of duration in mortgage securities as mortgage prepayment rates declined. The portfolio's duration was 4.88 years on June 30, 2006. We invested opportunistically, buying bonds of Sevan Marine, a Norwegian oil field services company, partly because we favored the prospects of the Norwegian currency, the Krone. We also invested in collateralized mortgage obligations. As we did this, we sold bonds of Bausch & Lomb, the eye products company, and of Sunsage, a Korean auto parts company. We also slightly upgraded the overall credit quality of the portfolio. On June 30, average credit quality was AA-, with 69.6% of fixed income assets invested in AAA or the equivalent, while just 9.7% of fixed income assets were invested in high-yield corporates. A Word About Risk: When interest rates rise, the prices of fixed income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-Backed securities are also subject to pre-payments. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q. What types of equity investments most influenced performance? A. Among our stock positions, pharmacy chain CVS was a particularly strong performer. The company's sales and profit growth exceeded expectations as the company continued to execute its strategy of buying underperforming assets and increasing their profitability. Cable company Comcast, in which we invested when its stock price was low, succeeded in taking more market share of household expenditures by offering television, Internet and telephone service. Several information technology investments also helped, including Cisco, Hewlett-Packard and First Data, all of which gained while other tech stocks were declining. The Portfolio's performance was helped because we had very limited exposure to the poor-performing semiconductor industry. Several health-care investments held back results, including biotechnology leader Amgen and generic pharmaceutical manufacturer Teva. Investors were concerned about a patent dispute over rights to an anemia drug in which Amgen is involved, while Teva declined after reporting disappointing earnings. We have retained both positions. Also detracting from performance was Wrigley, which lowered its earnings forecasts because of investments in new marketing initiatives. We also continue to hold the position in Wrigley, which has a very attractive franchise. Q. What types of fixed income investments most influenced performance? A. Our relatively short maturity helped in a rising interest rate environment, as did the quality emphasis. In addition, our overweights in mortgage securities helped support results during the period. Holding back results were our positions in some long duration assets, which were vulnerable to price losses as long-term interest rates rose. We had no major credit problems. Q. What is your investment outlook? A. We anticipate that economic growth will slow in the coming months. The U.S. Federal Reserve Board probably is near the end of its cycle of interest-rate hikes, but other major central banks may continue to raise rates. One consequence could be a further weakening of the U.S. dollar versus other currencies. One positive for fixed income markets is that there still is a lot of liquidity in world markets, which should guard against any dramatic increase in long-term interest rates. Returns of between 5% and 51/2% are still very attractive to foreign investors. We expect continued volatility in the domestic equity market over the next several months against a backdrop of a slowing economy, high energy prices, high interest rates and the current slowdown in residential real estate. As a consequence, we believe investors' expectations for corporate profit growth probably needs to be softened. Offsetting these negative influences, however, is the widespread expectation that the Federal Reserve will stop raising interest rates soon. In addition, stock price increases over the past two years have not kept pace with increases in profits. As a consequence, current stock prices, as reflected in price/earnings ratios, are reasonable and may provide some downside protection in a volatile environment. The stock market over the past two years has not distinguished between cyclical profits and consistent profits. As a result, we believe that higher-quality growth stocks of companies with good earnings, high returns on equity and high reinvestment rates should perform well. These companies, which we have been emphasizing, are trading at valuations that we do not believe reflect their potential. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 63.1% Energy - 4.9% Integrated Oil & Gas - 1.1% 6,700 Exxon Mobil Corp. $ 411,045 ----------- Oil & Gas Drilling - 1.4% 12,300 ENSCO International, Inc. $ 566,046 ----------- Oil & Gas Equipment & Services - 2.0% 12,598 National-Oilwell Varco, Inc.* $ 797,705 ----------- Oil & Gas Exploration & Production - 0.4% 2,700 Encana Corp.(a) $ 142,128 ----------- Total Energy $ 1,916,924 ----------- Materials - 3.8% Gold - 1.4% 10,000 Newmont Mining Corp. $ 529,300 ----------- Industrial Gases - 2.4% 17,400 Praxair, Inc. $ 939,600 ----------- Total Materials $ 1,468,900 ----------- Capital Goods - 4.4% Aerospace & Defense - 2.6% 16,000 Northrop Grumman Corp. $ 1,024,960 ----------- Industrial Conglomerates - 1.8% 8,500 3M Co. $ 686,545 ----------- Total Capital Goods $ 1,711,505 ----------- Commercial Services & Supplies - 0.4% Diversified Commercial Services - 0.4% 3,600 Cintas Corp.*(a) $ 143,136 ----------- Total Commercial Services & Supplies $ 143,136 ----------- Transportation - 2.4% Air Freight & Couriers - 2.4% 11,200 United Parcel Service $ 922,096 ----------- Total Transportation $ 922,096 ----------- Consumer Durables & Apparel - 1.4% Apparel, Accessories & Luxury Goods - 1.4% 14,600 Liz Claiborne, Inc. $ 541,076 ----------- Total Consumer Durables & Apparel $ 541,076 ----------- Media - 3.5% Broadcasting & Cable Television - 2.1% 25,100 Comcast Corp.* $ 822,778 ----------- Movies & Entertainment - 1.4% 14,659 Viacom, Inc. (Class B) $ 525,379 ----------- Total Media $ 1,348,157 -----------
Shares Value Retailing - 1.5% Apparel Retail - 1.5% 20,500 Ross Stores, Inc. $ 575,025 ----------- Total Retailing $ 575,025 ----------- Food & Drug Retailing - 3.5% Drug Retail - 3.3% 42,100 CVS Corp. $ 1,292,470 ----------- Hypermarkets & Supercenters - 0.2% 1,600 Wal-Mart Stores, Inc. $ 77,072 ----------- Total Food & Drug Retailing $ 1,369,542 ----------- Food, Beverage & Tobacco - 6.6% Brewers - 0.6% 5,100 Anheuser-Busch Companies, Inc.(a) $ 232,509 ----------- Packaged Foods & Meats - 1.5% 13,375 William Wrigley Jr. Co. $ 606,690 ----------- Soft Drinks - 4.5% 10,000 Coca-Cola Co. $ 430,200 21,700 PepsiCo, Inc. 1,302,868 ----------- $ 1,733,068 ----------- Total Food, Beverage & Tobacco $ 2,572,267 ----------- Household & Personal Products - 0.9% Personal Products - 0.9% 9,300 Estee Lauder Co.* $ 359,631 ----------- Total Household & Personal Products $ 359,631 ----------- Health Care Equipment & Services - 2.0% Health Care Distributors - 1.1% 6,400 Cardinal Health, Inc. $ 411,712 ----------- Health Care Equipment - 0.9% 11,100 Biomet, Inc. $ 347,319 ----------- Total Health Care Equipment & Services $ 759,031 ----------- Pharmaceuticals & Biotechnology - 6.5% Biotechnology - 1.9% 11,616 Amgen, Inc.* $ 757,712 ----------- Pharmaceuticals - 4.6% 4,000 Eli Lilly & Co. $ 221,080 20,788 Pfizer, Inc. 487,894 10,069 Teva Pharmaceutical Industries, Ltd.(a) 318,080 16,900 Wyeth 750,529 ----------- $ 1,777,583 ----------- Total Pharmaceuticals & Biotechnology $ 2,535,295 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Diversified Financials - 5.1% Asset Management & Custody Banks - 1.3% 15,900 The Bank of New York Co., Inc. $ 511,980 ----------- Consumer Finance - 1.7% 13,100 American Express Co. $ 697,182 ----------- Investment Banking & Brokerage - 0.5% 2,900 Merrill Lynch & Co., Inc. $ 201,724 ----------- Other Diversified Finance Services - 1.4% 11,900 Bank of America Corp. $ 572,390 ----------- Total Diversified Financials $ 1,983,276 ----------- Insurance - 4.6% Property & Casualty Insurance - 4.6% 465 Berkshire Hathaway, Inc. (Class B)* $ 1,414,995 14,800 Progressive Corp. 380,508 ----------- $ 1,795,503 ----------- Total Insurance $ 1,795,503 ----------- Software & Services - 6.4% Data Processing & Outsourced Services - 3.3% 28,600 First Data Corp. $ 1,288,144 ----------- Systems Software - 3.1% 52,000 Microsoft Corp. $ 1,211,600 ----------- Total Software & Services $ 2,499,744 -----------
Shares Value Technology Hardware & Equipment - 4.2% Communications Equipment - 2.8% 21,900 Cisco Systems, Inc.* $ 427,707 9,500 Corning, Inc.* 229,805 10,900 Qualcomm, Inc. 436,763 ----------- $ 1,094,275 ----------- Computer Hardware - 1.4% 16,922 Hewlett-Packard Co. $ 536,089 ----------- Total Technology Hardware & Equipment $ 1,630,364 ----------- Semiconductors - 0.3% Semiconductors - 0.3% 7,800 Intel Corp. $ 147,810 ----------- Total Semiconductors $ 147,810 ----------- Telecommunication Services - 0.4% Wireless Telecommunication Services - 0.4% 7,800 Vodafone Group Plc (A.D.R.) $ 166,140 ----------- Total Telecommunication Services $ 166,140 ----------- TOTAL COMMON STOCKS (Cost $20,621,774) $24,445,422 -----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD($) (unaudited) Value ASSET BACKED SECURITIES - 0.8% Diversified Financials - 0.4% Other Diversified Finance Services - 0.4% 72,624 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 72,612 81,192 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 80,881 ---------- $ 153,493 ---------- Total Diversified Financials $ 153,493 ---------- Utilities - 0.4% Electric Utilities - 0.4% 82,600 BBB-/Baa3 FPL Energy America Wind LLC, 6.639%, 6/20/23 (144A) $ 84,431 59,400 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 59,326 ---------- $ 143,757 ---------- Total Utilities $ 143,757 ---------- TOTAL ASSET BACKED SECURITIES (Cost $300,274) $ 297,250 ---------- COLLATERALIZED MORTGAGE OBLIGATIONS - 1.1% Diversified Financials - 0.2% Diversified Financial Services - 0.2% 25,000 NR/Ba1 Global Signal, 7.036%, 2/15/36 (144A) $ 24,966 50,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 49,111 ---------- $ 74,077 ---------- Total Diversified Financials $ 74,077 ---------- Government - 0.9% Government - 0.9% 250,000 AAA/Aaa Fannie Mae Benchmark Remic, 6.0%, 6/25/16 $ 249,141 98,503 AAA/Aaa Federal Home Loan Mortgage Corp., 5.875%, 5/15/16 98,172 ---------- Total Government $ 347,313 ---------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $422,379) $ 421,390 ---------- CORPORATE BONDS - 10.2% Energy - 0.8% Integrated Oil & Gas - 0.1% 40,000 A-/A3 Occidental Petroleum, 6.75%, 1/15/12 $ 42,087 ---------- Oil & Gas Equipment And Services - 0.2% 500,000 NR/NR Sevan Marine, 9.0%, 3/31/08 $ 82,888 ---------- Oil & Gas Exploration & Production - 0.3% 100,000 BBB/NR Gazprom International SA., 7.201%, 2/1/20 (144A) $ 101,375 ---------- Oil & Gas Refining & Marketing - 0.2% 25,000 BBB/Baa2 Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ 23,583 50,000 BB-/Ba2 Semco Energy, Inc., 7.125%, 5/15/08 49,643 ---------- $ 73,226 ---------- Total Energy $ 299,576 ---------- Materials - 1.2% Aluminum - 0.1% 50,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 48,000 ----------
8 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD($) (unaudited) Value Commodity Chemicals - 0.3% 100,000 BB-/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ 92,000 ---------- Diversified Metals & Mining - 0.3% 125,000 BBB-/Baa3 Inco, Ltd., 7.2%, 9/15/32 $ 127,964 ---------- Metal & Glass Containers - 0.1% 40,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 44,151 ---------- Paper Products - 0.4% 50,000 B+/B1 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 48,438 100,000 B-/B3 MDP Acquisitions, 9.625%, 10/1/12 103,000 ---------- $ 151,438 ---------- Total Materials $ 463,553 ---------- Capital Goods - 0.5% Electrical Component & Equipment - 0.1% 25,000 NR/WD Orcal Geothermal, 6.21%, 12/30/20 (144A) $ 24,338 ---------- Industrial Conglomerates - 0.2% 55,000 AAA/Aaa General Electric Capital Corp., 6.125%, 2/22/11 $ 56,034 30,000 AAA/Aaa General Electric Capital Corp., 6.75%, 3/15/32 32,023 ---------- $ 88,057 ---------- Trading Companies & Distributors - 0.2% 100,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 91,329 ---------- Total Capital Goods $ 203,724 ---------- Automobiles & Components - 0.5% Automobile Manufacturers - 0.5% 200,000 B-/Caa1 General Motors, 7.2%, 1/15/11(a) $ 177,000 ---------- Total Automobiles & Components $ 177,000 ---------- Consumer Durables & Apparel - 0.1% Home Furnishings - 0.1% 30,000 BBB-/Baa3 Mohawk Industries, Inc., 6.125%, 1/15/16 $ 28,921 ---------- Total Consumer Durables & Apparel $ 28,921 ---------- Consumer Services - 0.1% Hotels, Resorts & Cruise Lines - 0.1% 50,000 BBB-/Ba1 Royal Caribbean Cruises, 7.25%, 6/15/16 $ 49,513 ---------- Total Consumer Services $ 49,513 ---------- Media - 1.4% Broadcasting & Cable Television - 0.9% 250,000 BBB+/Baa2 Comcast Cable Corp., 7.125%, 6/15/13 $ 261,883 100,000 BBB-/Baa3 Cox Communications, 7.125%, 10/1/12 103,432 ---------- $ 365,315 ---------- Publishing - 0.5% 170,000 BBB/Baa2 News America, Inc., 7.3%, 4/30/28 $ 172,389 ---------- Total Media $ 537,704 ----------
The accompanying notes are an integral part of these financial statements. 9 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD($) (unaudited) Value Retailing - 0.1% Specialty Stores - 0.1% 50,000 BBB-/Baa3 Tanger Factory Outlet Centers, Inc., 6.15%, 11/15/15 $ 48,578 ---------- Total Retailing $ 48,578 ---------- Health Care Equipment & Services - 0.5% Health Care Facilities - 0.5% 2 00,000 BB+/Ba2 HCA, Inc., 6.3%, 10/1/12 $ 188,104 ---------- Total Health Care Equipment & Services $ 188,104 ---------- Banks - 0.3% Diversified Banks - 0.3% 50,000 AAA/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 $ 48,841 75,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 79,415 ---------- $ 128,256 ---------- Total Banks $ 128,256 ---------- Diversified Financials - 0.6% Consumer Finance - 0.2% 1 00,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 $ 91,376 ---------- Investment Banking & Brokerage - 0.2% 75,000 B+/Ba2 E*Trade Financial Corp., 8.0%, 6/15/11 $ 76,500 ---------- Diversified Financial Services - 0.2% 1 00,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 99,375 ---------- Total Diversified Financials $ 267,251 ---------- Insurance - 1.4% Life & Health Insurance - 0.3% 1 00,000 BB+/Ba1 Provident Co., Inc., 7.0%, 7/15/18 $ 96,548 ---------- Multi-Line Insurance - 0.1% 50,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 46,264 ---------- Property & Casualty Insurance - 0.6% 85,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 84,166 1 50,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 151,712 ---------- $ 235,878 ---------- Reinsurance - 0.4% 1 00,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 96,081 50,000 BBB/NA Platinum Underwriters HD, 7.50%, 6/1/17 49,050 ---------- $ 145,131 ---------- Total Insurance $ 523,821 ---------- Real Estate - 1.1% Real Estate Investment Trusts - 1.1% 1 00,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 $ 98,537 1 00,000 BBB-/Baa3 Health Care Real Estate Investment Trust, Inc., 6.2%, 6/1/16 97,145 1 07,000 BB/Ba2 Host Marriott LP, 6.375%, 3/15/15 100,580 75,000 B+/B1 Trustreet Properties Inc., 7.5%, 4/1/15 73,875 50,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 50,000 ---------- $ 420,137 ---------- Total Real Estate $ 420,137 ----------
10 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD($) (unaudited) Value Technology Hardware & Equipment - 0.7% Computer Hardware - 0.7% 250,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 255,207 ---------- Total Technology Hardware & Equipment $ 255,207 ---------- Semiconductors - 0.2% Semiconductors - 0.2% 85,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 81,146 ---------- Total Semiconductors $ 81,146 ---------- Telecommunication Services - 0.7% Integrated Telecom Services - 0.6% 140,000 BBB+/Baa2 Telecom Italia Capital, 4.875%, 10/1/10 $ 133,870 100,000 BBB+/Baa2 Telecom Italia Capital, 5.25%, 11/15/13 92,447 ---------- $ 226,317 ---------- Wireless Telecommunication Services - 0.1% 30,000 BBB-/Baa3 Embarq Corp., 7.082%, 6/1/16 $ 29,835 ---------- Total Telecommunication Services $ 256,152 ---------- Utilities - 0.1% Electric Utilities - 0.1% 50,000 BBB+/Baa3 Entergy Gulf States, 5.7%, 6/1/15 $ 47,043 ---------- Total Utilities $ 47,043 ---------- TOTAL CORPORATE BONDS (Cost $3,982,853) $3,975,686 ---------- U.S. GOVERNMENT AGENCY OBLIGATIONS - 24.1% 92,562 Federal Home Loan Bank, 5.27%, 12/28/12 $ 91,266 144,812 Federal Home Loan Mortgage Corp., 4.5%, 12/1/20 136,718 201,589 Federal Home Loan Mortgage Corp., 5.0%, 5/1/34 188,869 317,123 Federal Home Loan Mortgage Corp., 5.5%, 1/1/34 305,398 96,475 Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 94,803 159,426 Federal Home Loan Mortgage Corp., 5.5%, 12/1/35 153,227 129,125 Federal Home Loan Mortgage Corp., 5.5%, 9/01/17 126,915 71,766 Federal Home Loan Mortgage Corp., 6.0% , 1/1/32 70,968 849,489 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 839,534 216,070 Federal Home Loan Mortgage Corp., 6.0%, 11/1/33 213,388 31,360 Federal Home Loan Mortgage Corp., 6.0%, 6/1/34 30,939 6,962 Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 7,050 16,478 Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 16,571 117,407 Federal National Mortgage Association, 5.0%, 6/1/34 110,099 237,021 Federal National Mortgage Association, 5.5%, 10/1/34 228,263 172,091 Federal National Mortgage Association, 5.5%, 11/1/33 166,016 86,756 Federal National Mortgage Association, 5.5%, 12/1/34 83,550 146,258 Federal National Mortgage Association, 5.5%, 2/1/17 143,813 65,758 Federal National Mortgage Association, 5.5%, 3/1/34 63,329 171,466 Federal National Mortgage Association, 5.5%, 4/1/34 165,130 201,282 Federal National Mortgage Association, 5.5%, 9/1/34 193,845 90,212 Federal National Mortgage Association, 6.0%, 12/1/33 89,067 350,000 Federal National Mortgage Association, 6.0%, 7/1/36 344,422 110,000 Federal National Mortgage Association, 6.125%, 3/15/12 113,330
The accompanying notes are an integral part of these financial statements. 11 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount USD($) Value U.S. Government Agency Obligations (Cont.) 28,439 Federal National Mortgage Association, 6.5%, 10/1/32 $ 28,691 13,285 Federal National Mortgage Association, 6.5%, 10/1/32 13,402 42,462 Federal National Mortgage Association, 6.5%, 4/1/29 43,110 84,705 Federal National Mortgage Association, 6.5%, 7/1/32 85,453 55,336 Federal National Mortgage Association, 6.5%, 7/1/32 55,840 12,587 Federal National Mortgage Association, 6.5%, 8/1/13 12,760 10,913 Federal National Mortgage Association, 6.5%, 8/1/14 11,065 44,967 Federal National Mortgage Association, 6.5%, 9/1/32 45,572 42,967 Federal National Mortgage Association, 6.50%, 12/1/21 43,485 10,000 Federal National Mortgage Association, 7.125%, 6/15/10 10,581 17,635 Federal National Mortgage Association, 9.0%, 4/1/33 18,626 250,000 Freddie Mac, 4.9%, 11/3/08 246,095 150,000 Freddie Mac 5.75% 01/15/12 151,765 129,026 Government National Mortgage Association II, 5.5%, 2/20/34 124,648 44,611 Government National Mortgage Association II, 6.0%, 10/20/33 44,355 41,094 Government National Mortgage Association, 4.5%, 1/15/35 37,739 88,365 Government National Mortgage Association, 4.5%, 4/15/35 81,151 290,389 Government National Mortgage Association, 5.0%, 10/15/34 274,887 85,022 Government National Mortgage Association, 5.0%, 4/15/34 80,562 39,914 Government National Mortgage Association, 5.5%, 4/15/2033 38,737 120,563 Government National Mortgage Association, 5.5%, 7/15/33 117,006 189,470 Government National Mortgage Association, 5.5%, 8/15/19 187,270 135,536 Government National Mortgage Association, 5.5%, 8/15/33 131,538 35,108 Government National Mortgage Association, 5.5%, 9/15/33 34,093 152,395 Government National Mortgage Association, 5.50%, 06/15/33 147,899 223,293 Government National Mortgage Association, 6.0%, 8/15/32 221,918 112,619 Government National Mortgage Association, 6.0%, 8/15/34 111,839 54,618 Government National Mortgage Association, 6.0%, 9/15/32 54,261 249,666 Government National Mortgage Association, 6.0%, 9/15/33 247,998 33,889 Government National Mortgage Association, 6.5%, 10/15/28 34,413 48,876 Government National Mortgage Association, 6.5%, 5/15/33 49,513 13,434 Government National Mortgage Association, 7.5%, 9/20/29 13,958 50,000 U.S. Treasury Bonds, 4.0%, 2/15/14 46,449 325,000 U.S. Treasury Bonds, 5.25%, 11/15/28 323,476 100,000 U.S. Treasury Bonds, 6.25%, 8/15/23 110,289 28,936 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 30,266 470,000 U.S. Treasury Notes, 4.0%, 11/15/12 441,763 175,000 U.S. Treasury Notes, 4.125%, 5/15/15 162,497 500,000 U.S. Treasury Notes, 4.25%, 11/15/14 470,235 100,000 U.S. Treasury Notes, 4.25%, 8/15/15 93,566 300,000 U.S. Treasury Notes, 4.75%, 11/15/08 297,317 200,000 U.S. Treasury Notes, 4.75%, 5/15/14 195,102 130,000 U.S. Treasury Notes, 5.375%, 2/15/31 132,245 5,000 U.S. Treasury Notes, 5.5%, 8/15/28 5,137 250,000 U.S. Treasury Notes, 5.625%, 5/15/08 251,973 ---------- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS Cost $ 9,722,285) $9,337,055 ----------
12 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value TEMPORARY CASH INVESTMENT - 2.6% Security Lending Collateral - 2.6% 1,028,510 Securities Lending Investment Fund, 5.16% $ 1,028,510 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,028,510) $ 1,028,510 ----------- TOTAL INVESTMENT IN SECURITIES - 101.9% (Cost $36,078,075) $39,505,313 ----------- OTHER ASSETS AND LIABILITIES - (1.9%) $ (739,854) ----------- TOTAL NET ASSETS - 100.0% $38,765,459 ===========
* Non-income producing security. (A.D.R) American Depositary Receipt 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $589,258 or 1.5% of total net assets. NR Not Rated by either S&P or Moody's. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 5,049 Anheuser-Busch Companies, Inc. $ 230,184 3,554 Cintas Corp.* 141,307 2,673 Encana Corp. 140,707 9,968 Teva Pharmaceutical Industries, Ltd. 314,889 Principal Amount $ 198,000 General Motors, 7.2%, 1/15/11 175,230 ---------- Total $1,002,317 ==========
The accompanying notes are an integral part of these financial statements. 13 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 5/1/03(a) 6/30/06 Ended Ended to Class II (unaudited) 12/31/05 12/31/04 12/31/03 Net asset value, beginning of period $ 14.67 $ 14.38 $ 14.02 $12.67 ------- ------- ------- ------ Increase from investment operations: Net investment income $ 0.11 $ 0.19 $ 0.22 $ 0.14 Net realized and unrealized gain (loss) on investments (0.11) 0.34 0.42 1.40 ------- ------- ------- ------ Net increase (decrease) from investment operations $ -- $ 0.53 $ 0.64 $ 1.54 Distributions to shareholders: Net investment income (0.12) (0.24) (0.28) (0.19) ------- ------- ------- ------ Net increase (decrease) in net asset value $ (0.12) $ 0.29 $ 0.36 $ 1.35 ------- ------- ------- ------ Net asset value, end of period $ 14.55 $ 14.67 $ 14.38 $14.02 ======= ======= ======= ====== Total return* 0.00% 3.73% 4.59% 12.17%(b) Ratio of net expenses to average net assets+ 1.16%** 1.19% 1.19% 1.11%** Ratio of net investment income to average net assets+ 1.53%** 1.37% 1.81% 1.12%** Portfolio turnover rate 16%** 25% 30% 37%** Net assets, end of period (in thousands) $13,243 $12,660 $10,452 $3,390 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.16%** 1.19% 1.19% 1.11%** Net investment income 1.53%** 1.37% 1.81% 1.12%**
(a) The portfolio began offering Class II shares to the public on May 1, 2003. (b) Not annualized * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios assuming no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 14 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $1,002,317) (Cost $36,078,075) $ 39,505,313 Receivables -- Investment securities sold 500,963 Fund shares sold 142,062 Dividends, interest and foreign taxes withheld 138,464 Forward foreign currency portfolio hedge contracts, open -- net 2,778 ------------ Other 3,553 ------------ Total assets $ 40,293,133 ------------ LIABILITIES: Payables -- Investment securities purchased $ 343,755 Fund shares repurchased 80,310 Upon return for securities loaned 1,028,510 Due to bank 17,559 Due to affiliates 8,591 Accrued expenses 48,949 ------------ Total liabilities $ 1,527,674 ------------ NET ASSETS: Paid-in capital $ 38,744,584 Undistributed net investment loss (12,371) Accumulated net realized loss (3,396,735) Net unrealized gain on: Investments 3,427,238 Forward foreign currency contracts and other assets and liabilities denominated in 2,743 ------------ foreign currencies Total net assets $ 38,765,459 ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 25,522,157 Shares outstanding 1,749,566 ------------ Net asset value per share $ 14.59 Class II: (No par value, unlimited number of shares authorized) Net assets $ 13,243,302 Shares outstanding 910,098 ------------ Net asset value per share $ 14.55
The accompanying notes are an integral part of these financial statements. 15 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $39) $ 160,982 Interest 388,016 Income on securities loaned, net 1,683 ---------- Total investment income $ 550,681 ---------- EXPENSES: Management fees $ 132,865 Transfer agent fees and expenses 4,863 Distribution fees (Class II) 16,241 Administrative reimbursements 9,490 Custodian fees 8,116 Professional fees 18,953 Printing expense 13 Fees and expenses of nonaffiliated trustees 2,258 Miscellaneous 6,163 ---------- Total expenses $ 198,962 ---------- Net expenses $ 198,962 ---------- Net investment income $ 351,719 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 680,214 Forward foreign currency contracts and other assets and liabilities denominated in (95) ---------- foreign currencies $ 680,119 ---------- Change in net unrealized gain or loss from: Investments $ (944,644) Forward foreign currency contracts and other assets and liabilities denominated in 2,743 ---------- foreign currencies $ (941,901) ---------- Net loss on investments and foreign currency transactions $ (261,782) ========== Net increase decrease in net assets resulting from operations $ 89,937 ==========
16 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/06 - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 351,719 $ 704,175 Net realized gain on investments and foreign currency transactions 680,119 1,339,268 Change in net unrealized loss on investments and foreign currency transactions (941,901) (318,959) ----------- ----------- Net increase in net assets resulting from operations $ 89,937 $ 1,724,484 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (253,793) $ (588,607) Class II (105,572) (208,623) ----------- ----------- Total distributions to shareowners $ (359,365) $ (797,230) ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 1,651,171 $ 4,365,660 Reinvestment of distributions 359,363 797,221 Cost of shares repurchased (5,055,963) (9,774,029) ----------- ----------- Net decrease in net assets resulting from Fund share transactions $(3,345,429) $(4,611,148) ----------- ----------- Net decrease in net assets $(3,314,857) $(3,683,894) ----------- ----------- NET ASSETS: Beginning of period $42,080,316 $45,764,210 ----------- ----------- End of period $38,765,459 $42,080,316 ----------- ----------- Distributions in excess of net investment income, end of period $ (12,371) $ (4,725) ----------- -----------
The accompanying notes are an integral part of these financial statements. 17 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Balanced VCT Portfolio is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The Portfolio commenced operations on May 1, 2003. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objectives of Balanced Portfolio are capital growth and current income. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. 18 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The following is a summary of significant accounting policies consistently followed by the Portfolio, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the NYSE. The value of such securities used in computing the net asset value of the Portfolio's shares is based on the last sale price on the principal exchange where they traded. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/ premiums are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realizes a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2006, the portfolio had no open futures contracts. C. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. 19 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Balanced Portfolio had a net capital loss carryforward of $3,999,891, of which the following amounts will expire between 2010 and 2011, if not utilized: $1,409,746 in 2010 and $2,590,145 in 2011. The tax character of current year distributions paid will be determined at the end of the fiscal year. The following chart shows the distributions paid during the year ended December 31, 2005 and the components of distributable earnings (accumulated losses) as of December 31, 2005.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 797,097 Long-Term capital gain -- ---------- $ 797,097 Return of Capital -- ---------- Total distributions $ 797,097 ---------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/(capital loss carryforward) (3,999,891) Unrealized appreciation (depreciation) 4,290,194 ---------- Total $ (290,303) ========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. D. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the year ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted-net assets at the beginning of the day. The Portfolio declares as daily dividends substantially all of its respective net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. E. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian. 20 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- F. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the portfolios. Management fees are calculated daily at the annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $941 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,560 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $90 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------------- Balanced Portfolio $36,159,763 $4,686,107 $ (1,340,557) $3,345,550 ----------- ---------- ------------ ---------- - ----------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $2,352,309 and $4,858,625, respectively. The cost of purchase and the proceeds from sales in U.S. Government obligations were $745,225 and $1,000,186, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ---------------------------------------------------------------------------------------------- '06 Shares '06 Amount Balanced Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ---------------------------------------------------------------------------------------------- CLASS I: Shares sold 13,004 $ 191,534 30,803 $ 441,468 Reinvestment of distributions 17,277 253,793 40,641 588,607 Shares repurchased (280,761) (4,188,699) (522,797) (7,567,111) ------------------------------------------------------ Net decrease (250,480) $ (3,743,372) (451,353) $ (6,537,036) ====================================================== CLASS II: Shares sold 98,246 $ 1,459,637 272,986 $ 3,924,192 Reinvestment of distributions 7,213 105,570 14,431 208,614 Shares repurchased (58,191) (867,264) (151,515) (2,206,918) ------------------------------------------------------ Net increase 47,268 $ 697,943 135,902 $ 1,925,888 ====================================================== - ----------------------------------------------------------------------------------------------
21 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 22 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 24 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 25 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19631-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Emerging Markets VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Emerging Markets VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 5 Financial Statements 9 Notes to Financial Statements 13 Trustees, Officers and Service Providers 18
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- [THE FOLLOWING DATA WAS REPRESENTED AS PIE CHARTS IN THE PRINTED MATERIAL]
Portfolio Diversification Geographical Distribution Five Largest Holdings (As a percentage of total investment portfolio) (As a percentage of equity holdings) (As a percentage of equity holdings) International Common Stocks 59.5% South Korea 18.1% 1. Petrobras Brasileiro (A.D.R.) 4.43% Depositary Receipts for Brazil 16.9% 2. Gazprom (A.D.R.) 3.31 International Stocks 27.1% South Africa 11.7% 3. Lukoil Holding (A.D.R.) 2.27 U.S. Common Stocks 7.7% Russia 9.6% 4. Kookmin Bank (A.D.R.) 1.88 Temporary Cash Investment 3.2% Taiwan 8.1% 5. Teva Pharmaceutical International Preferred People's Republic of China 7.0% Industries, Ltd. 1.84 Stocks 2.5% India 3.7% The Portfolio is actively managed, and Israel 3.7% current holdings may be different. Mexico 3.4% Turkey 2.6% Hong Kong 1.6% Philippines 1.5% Malaysia 1.5% Thailand 1.5% Indonesia 1.5% Peru 1.2% Argentina 1.1% Other (individually less than 1% 5.3%
- -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 27.29 $ 27.84
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.1077 $ - $ 2.7694
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Emerging Markets VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) Emerging Markets Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer MSCI Emerging Emerging Markets VCT Markets Portfolio Index 10/98 $10,000 $10,000 6/99 $14,097 $14,930 6/00 $17,239 $16,344 6/01 $11,702 $12,124 6/02 $12,083 $12,282 6/03 $12,916 $13,137 6/04 $16,799 $17,539 6/05 $22,100 $23,659 6/06 $31,490 $32,154
The Morgan Stanley Capital International (MSCI) Emerging Markets Index measures the performance of emerging market stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 16.14% (10/30/98) 5 Years 21.89% 1 Year 42.49%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Emerging Markets VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,090.20 Expenses Paid During Period* $ 9.28
* Expenses are equal to the Portfolio's annualized expense ratio of 1.79% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Emerging Markets VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,015.92 Expenses Paid During Period* $ 8.95
* Expenses are equal to the Portfolio's annualized expense ratio of 1.79% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- In the following interview, Christopher Smart, Pioneer Emerging Market VCT Portfolio's portfolio manager, discusses the factors that influenced performance during the six months ended June 30, 2006. Q. How did emerging markets equities perform during the Portfolio's semiannual reporting period? A. The performance of the emerging markets was essentially flat over the full six months, masking a high level of volatility in the asset class. Returns were very strong in the first four months of the period, during which emerging markets stocks remained supported by improving fundamentals and investors' robust appetite for risk. In May and June, however, the investment backdrop shifted rapidly once it became apparent that rising inflation might force the U.S. Federal Reserve to increase interest rates more than had been expected. The possibility of reduced liquidity and a slower U.S. economy prompted many investors to take profits in the emerging markets, leading to a sharp downturn. While this drop may have been unexpected for many investors, a pullback was inevitable given the strong recent performance of the asset class. Q. How did the Portfolio perform? A. For the six months ended June 30, 2006, Class II shares rose 9.02% at net asset value. We are pleased to report that the Portfolio outpaced both the 7.33% return of the Morgan Stanley Capital International (MSCI) Emerging Markets Index and the 7.09% average return of the 32 portfolios in Lipper's Emerging Markets Funds category. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What factors helped and hurt performance? A. From a broader standpoint, we believe a key factor behind the Portfolio's strong relative performance is our disciplined approach to investing. We combine top-down country analysis - which is designed to identify the most attractive markets within the asset class - with bottom-up fundamental research that seeks to find companies that are undervalued relative to their growth prospects. In terms of specific contributors to performance during the past six months, the Portfolio's return was helped by its above-benchmark weighting in Brazil, where we benefited from rising consumer spending through holdings in companies such as the supermarket chain Lojas Renner. Also helping performance was the Portfolio's higher weighting in South Africa, relative to the benchmark. We have sought to take advantage of two important trends in the country: the growing middle class and rising government spending on infrastructure projects. With respect to the former, we benefited from holdings in Ellerines, a furniture company, and Standard Bank, which has benefited from rapid growth in the demand for loans and savings vehicles. The Portfolio's positions in South Korea and Russia also boosted performance. Two Korean stocks were among the Portfolio's leading contributors during the period: the shipbuilding companies Samsung Heavy Industries and Hyundai Heavy Industries. In Russia, rising energy prices boosted shares of the gas giant Gazprom, which has become one of the largest listed companies in the world. The Portfolio's holdings in Turkey, which underperformed the broader market by a wide margin, weighed on performance. We remain cautiously optimistic on Turkey, however, since we believe valuations remain reasonable and the country's growth story is intact. The Portfolio also was hurt by below-benchmark weighting in Taiwan, which performed well behind a surprisingly strong rebound in the domestic economy. We did not foresee this recovery taking place as soon as it did and were therefore not fully positioned to take advantage of the rally in Taiwanese equities. Q. What is your broad view regarding the emerging markets? A. We believe the long-term investment story remains very positive despite the recent downturn. Government finances continue to improve, and corporations are adopting increasingly shareholder-friendly management practices. Additionally, the rate of economic growth in the emerging markets is stronger than that of the industrialized nations - at about 6.5% versus 2.5% - yet valuations are less expensive. It should also be noted that the emerging markets asset class makes up just 7% of the total global stock market capitalization despite having 40% of its gross domestic product and 60% of its population. With these factors forming the investment backdrop, we believe the foundation is in place for continued long-term performance of emerging markets equities. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCKS - 3.2% Materials - 0.6% Steel - 0.6% 15,990 Cia Vale Do Rio Doce* $ 325,724 ----------- Total Materials $ 325,724 ----------- Media - 0.9% Broadcasting & Cable TV - 0.9% 893,700 Net Servicos de Comunicacao SA* $ 482,992 ----------- Total Media $ 482,992 ----------- Banks - 1.1% Diversified Banks - 1.1% 21,330 Banco Itau Holding Financeira $ 621,702 ----------- Total Banks $ 621,702 ----------- Telecommunication Services - 0.6% Integrated Telecommunication Services - 0.6% 27,701 Tele Norte Leste Participacoes (A.D.R.)(a) $ 353,188 ----------- Total Telecommunication Services $ 353,188 ----------- TOTAL PREFERRED STOCKS (Cost $1,119,971) $ 1,783,606 ----------- COMMON STOCKS - 96.3% Energy - 20.7% Integrated Oil & Gas - 16.6% 755,600 China Petroleum & Chemical $ 432,779 44,100 Gazprom (A.D.R.)* 1,859,918 15,300 Lukoil Holding (A.D.R.) 1,278,315 2,900 Mol Magyar Olaj* 298,519 31,200 Petrobras Brasileiro (A.D.R.) 2,491,008 710,400 PetroChina Co., Ltd. 766,170 45,000 PTT Public Co., Ltd.* 266,789 14,600 Repsol SA (A.D.R.) 409,676 23,600 Sasol, Ltd. (A.D.R.)* 911,904 9,100 Surgutneftegaz (A.D.R.)*(a) 664,300 ----------- $ 9,379,378 ----------- Oil & Gas Equipment & Services - 1.1% 15,200 TelecomAsia Corp. Public Co., Ltd.* $ 615,448 ----------- Oil & Gas Exploration & Production - 1.2% 852,700 Cnooc, Ltd.* $ 684,496 26,600 Reliance Natural Resources, Ltd.* 11,499 ----------- $ 695,995 ----------- Oil & Gas Refining & Marketing - 1.8% 26,000 Polski Koncern Naftowy Orlen SA $ 432,319 12,300 Reliance Industries, Ltd. (144A)* 570,720 ----------- $ 1,003,039 ----------- Total Energy $11,693,860 -----------
Shares Value Materials - 11.4% Construction Materials - 1.9% 2,460 Asia Cement Co., Ltd.* $ 96,071 884,900 PT Indocement Tunggal Prakarsa Tbk* 400,662 91,400 Siam Cement Co., Ltd. 553,775 ----------- $ 1,050,508 ----------- Diversified Metals & Mining - 2.7% 833,900 Aneka Tambang Tbk* $ 417,730 8,400 Freeport-McMoRan Copper & Gold, Inc. (Class B)(a) 465,444 5,100 Norilsk Nickel* 663,000 ----------- $ 1,546,174 ----------- Gold - 2.9% 13,500 Anglogold Ashanti, Ltd. (A.D.R.) (a) $ 649,620 50,200 IAMGOLD Corp.* 446,780 1,123,100 Zijin Mining Group Co., Ltd.* 566,467 ----------- $ 1,662,867 ----------- Precious Metals & Minerals - 2.3% 5,700 Anglo American Platinum Corp., Ltd. $ 598,361 25,200 Compania de Minas Buenaventura SA* 687,456 ----------- $ 1,285,817 ----------- Steel - 1.6% 42,700 Companhia Vale do Rio Doce (A.D.R.) $ 878,766 ----------- Total Materials $ 6,424,132 ----------- Capital Goods - 12.8% Aerospace & Defense - 0.9% 18,200 Elbit Systems, Ltd. $ 486,581 ----------- Construction & Engineering - 4.0% 124,500 Aveng, Ltd. $ 377,552 865,320 Continental Engineering Corp. 500,152 162,117 Empressa ICA Sociedad Controladora SA de CV* 457,917 7,700 GS Engineering & Construction Corp.* 496,998 13,240 Kyeryong Construction Industrial Co., Ltd.* 419,982 ----------- $ 2,252,601 ----------- Construction, Farm Machinery & Heavy Trucks - 4.8% 27,000 Daewoo Heavy Industries & Machinery, Ltd.* $ 791,883 8,930 Hyundai Heavy Industries* 1,003,200 41,200 Samsung Heavy Industries Co., Ltd.* 948,063 ----------- $ 2,743,146 ----------- Industrial Conglomerates - 2.1% 24,200 Barloworld* $ 406,267 55,000 Keppel Corp.* 510,738 92,153 KOC Holding AS* 273,999 ----------- $ 1,191,004 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Industrial Machinery - 1.0% 32,500 Doosan Heavy Industries & Construction Co.* $ 538,325 ----------- Total Capital Goods $ 7,211,657 ----------- Transportation - 2.5% Airlines - 0.8% 13,400 Gol-Linhas Aereas Inteligentes SA* $ 476,604 ----------- Marine - 1.7% 807,300 China Shipping Development Co., Ltd.* $ 586,221 165,800 Malaysia International Shipping Bhd. 347,145 ----------- $ 933,366 ----------- Total Transportation $ 1,409,970 ----------- Automobiles & Components - 1.7% Automobile Manufacturers - 1.7% 11,100 Hyundai Motor Co., Ltd.* $ 946,678 ----------- Total Automobiles & Components $ 946,678 ----------- Consumer Durables & Apparel - 2.0% Homebuilding - 0.8% 28,720 Cyrela Brazil Realty SA $ 475,593 ----------- Household Appliances - 0.5% 49,340 Arcelik AS* $ 282,178 ----------- Housewares & Specialties - 0.7% 17,000 Woongjin Coway Co., Ltd.* $ 371,578 ----------- Total Consumer Durables & Apparel $ 1,129,349 ----------- Consumer Services - 0.9% Hotels, Resorts & Cruise Lines - 0.9% 19,400 Indian Hotels Co. Ltd.* $ 484,941 ----------- Total Consumer Services $ 484,941 ----------- Media - 2.6% Broadcasting & Cable TV - 2.1% 29,088 Grupo Televisa SA (A.D.R.)* $ 561,689 102,800 Television Broadcasts, Ltd. 636,204 ----------- $ 1,197,893 ----------- Publishing - 0.5% 133,716 Hurriyet Gazetecilik ve Matbaacilik AS* $ 272,680 ----------- Total Media $ 1,470,573 ----------- Retailing - 3.3% Apparel Retail - 1.0% 61,800 Edgars Consolidated Stores, Ltd.* $ 250,044 112,400 Truworths International, Ltd. 337,624 ----------- $ 587,668 ----------- Department Stores - 1.7% 5,800 Hyundai Department Store Co., Ltd.* $ 449,747 10,000 Lojas Renner SA* 537,900 ----------- $ 987,647 -----------
Shares Value Homefurnishing Retail - 0.6% 35,400 Ellerine Holdings, Ltd. $ 318,348 ----------- Total Retailing $ 1,893,663 ----------- Food & Drug Retailing - 2.0% Food Retail - 0.7% 185,000 President Chain Store Corp. $ 406,444 ----------- Hypermarkets & Supercenters - 1.3% 12,200 Brasil Distr Pao Acu (A.D.R.)* $ 379,908 48,500 Massmart Holdings, Ltd. 318,666 ----------- $ 698,574 ----------- Total Food & Drug Retailing $ 1,105,018 ----------- Food, Beverage & Tobacco - 3.4% Packaged Foods & Meats - 1.9% 5,080 CJ Corp.* $ 558,126 25,200 Tiger Brands, Ltd.* 506,839 ----------- $ 1,064,965 ----------- Soft Drinks - 1.5% 10,400 Fomento Economico Mexicano SA de CV* $ 870,688 ----------- Total Food, Beverage & Tobacco $ 1,935,653 ----------- Household & Personal Products - 1.6% Personal Products - 1.6% 44,650 Natura Cosmeticos SA* $ 462,401 14,200 Oriflame Cosmetics SA* 471,439 ----------- $ 933,840 ----------- Total Household & Personal Products $ 933,840 ----------- Pharmaceuticals & Biotechnology - 1.8% Pharmaceuticals - 1.8% 32,700 Teva Pharmaceutical Industries, Ltd. $ 1,032,993 ----------- Total Pharmaceuticals & Biotechnology $ 1,032,993 ----------- Banks - 10.7% Diversified Banks - 10.3% 20,332 Banco Bradesco SA(a) $ 632,122 23,200 Banco do Brasil SA 535,607 124,200 Bank Hapoalim, Ltd. 535,476 295,400 Bumiputra-Commerce Holdings Bhd.* 477,277 13,110 Hana Financial Holdings* 618,450 12,700 Kookmin Bank (A.D.R.)* 1,054,862 13,100 Shinhan Financial Group Co., Ltd.* 617,610 44,549 Standard Bank Group, Ltd. 477,765 13,600 State Bank of India 216,104 44,325 Turkiye Is Bankasi (Isbank)* 217,241 6,262 Uniao de Bancos Brasileiros SA (Unibanco) (G.D.R.) (144A) 415,734 ----------- $ 5,798,248 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Thrifts & Mortgage Finance - 0.4% 21,900 Banco De Oro (G.D.R.) (144A)* $ 256,033 ----------- Total Banks $ 6,054,281 ----------- Diversified Financials - 2.4% Investment Banking & Brokerage - 0.9% 9,600 Samsung Securities Co., Ltd.* $ 515,121 ----------- Diversified Financial Services - 1.5% 213,406 FirstRand, Ltd.* $ 512,248 388,000 Fubon Group 335,351 26,600 Reliance Capital Ventures* 14,383 ----------- $ 861,982 ----------- Total Diversified Financials $ 1,377,103 ----------- Insurance - 5.1% Life & Health Insurance - 3.6% 32,600 Cathay Financial Holding Co., Ltd., (144A) (G.D.R.) $ 702,204 309,800 China Life Insurance Co., Ltd.* 490,098 134,500 Ping An Insurance Company of China, Ltd.* 410,010 226,590 Sanlam, Ltd.* 458,499 ----------- $ 2,060,811 ----------- Property & Casualty Insurance - 1.5% 141,734 Aksigorta AS* $ 390,754 3,200 Samsung Fire & Marine Insurance* 428,267 ----------- $ 819,021 ----------- Total Insurance $ 2,879,832 ----------- Real Estate - 0.6% Real Estate Management & Development - 0.6% 1,456,600 Ayala Land, Inc.* $ 315,109 ----------- Total Real Estate $ 315,109 ----------- Software & Services - 1.1% IT Consulting & Other Services - 1.1% 9,532 Infosys Technologies, Ltd. $ 643,003 ----------- Total Software & Services $ 643,003 ----------- Technology Hardware & Equipment - 3.2% Computer Hardware - 1.0% 125,240 ACER Sertek, Inc. $ 219,858 212,900 Quanta Computer, Inc. 341,434 ----------- $ 561,292 ----------- Computer Storage & Peripherals - 1.0% 84,000 Asustek Computer, Inc. $ 205,918 297,800 LITE-ON IT Corp. 348,674 ----------- $ 554,592 -----------
Shares Value Electronic Manufacturing Services - 1.2% 109,358 Hon Hai Precision Industry $ 673,453 ----------- Total Technology Hardware & Equipment $ 1,789,337 ----------- Semiconductors - 0.7% Semiconductors - 0.7% 229,383 Taiwan Semiconductor Manufacturing Co. $ 413,003 ----------- Total Semiconductors $ 413,003 ----------- Telecommunication Services - 4.7% Integrated Telecommunication Services - 1.2% 13,000 Brasil Telecom Participacoes SA* $ 423,410 7,700 Philippine Long Distance Telephone Co. 266,290 ----------- $ 689,700 ----------- Wireless Telecommunication Services - 3.5% 14,600 Mobile Telesystems (A.D.R.) $ 429,824 64,600 MTN Group, Ltd.* 477,448 26,600 Reliance Communication Ventures, Ltd.* 145,122 416,000 Taiwan Mobile Co., Ltd 414,093 10,800 Vimpel-Communications (A.D.R.)* 494,856 ----------- $ 1,961,343 ----------- Total Telecommunication Services $ 2,651,043 ----------- Utilities - 1.1% Electric Utilities - 0.0% 26,600 Reliance Energy Ventures, Ltd.* $ 19,609 ----------- Gas Utilities - 1.1% 627,100 Panva Gas Holdings, Ltd.* $ 286,975 3,300 Samchully Co., Ltd.* 338,177 ----------- $ 625,152 ----------- Total Utilities $ 644,761 ----------- TOTAL COMMON STOCKS (Cost $38,430,727) $54,439,799 ----------- TEMPORARY CASH INVESTMENT - 3.2% Security Lending Collateral - 3.2% 1,829,705 Securities Lending Investment Fund, 5.16% $ 1,829,705 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,829,705) $ 1,829,705 ----------- TOTAL INVESTMENT IN SECURITIES - 102.7% (Cost $41,380,403)(b) $58,053,110 ----------- OTHER ASSETS AND LIABILITIES - (2.7)% $(1,512,067) ----------- TOTAL NET ASSETS - 100.0% $56,541,043 ===========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- (A.D.R.) American Depositary Receipt. (G.D.R.) Global Depositary Receipt. * Non-income producing security. (144A) Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $1,944,691 or 3.4% of total net assets. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 13,350 Anglogold Ashanti, Ltd. (A.D.R.) $ 642,402 2,829 Banco Bradesco SA 87,954 8,316 Freeport-McMoRan Copper & Gold, Inc. (Class B) 460,790 8,639 Surgutneftegaz (A.D.R.) * 630,647 1,543 Tele Norte Leste Participacoes (A.D.R.) 19,673 ---------- Total $1,841,466 ==========
(b) Distributions of investments by country of issue, as a percentage of total equity holdings (excluding temporary cash investments) is as follows: South Korea 18.1% Brazil 16.9 South Africa 11.7 Russia 9.6 Taiwan 8.1 People's Republic of China 7.0 India 3.7 Israel 3.7 Mexico 3.4 Turkey 2.6 Hong Kong 1.6 Philippines 1.5 Malaysia 1.5 Thailand 1.5 Indonesia 1.5 Peru 1.2 Argentina 1.1 Other (individually less than 1%) 5.3 ----- 100.0% =====
8 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 27.84 $ 20.33 $ 17.26 $ 10.98 $ 11.19 $ 12.08 -------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income $ 0.14 $ 0.15 $ 0.16 $ 0.12 $ 0.02 $ 0.09 Net realized and unrealized gain (loss) on investments and foreign currency transactions 2.19 7.46 3.04 6.21 (0.17) (0.98) -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ 2.33 $ 7.61 $ 3.20 $ 6.33 $ (0.15) $ (0.89) Distributions to shareowners: Net investment income (0.11) (0.10) (0.13) (0.05) (0.06) - Net realized gain (2.77) - - - - - -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ (0.55) $ 7.51 $ 3.07 $ 6.28 $ (0.21) $ (0.89) -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 27.29 $ 27.84 $ 20.33 $ 17.26 $ 10.98 $ 11.19 ======== ======== ======== ======== ======== ======== Total return* 9.02% 37.60% 18.73% 57.87% (1.42)% (7.37)% Ratio of net expenses to average net assets+ 1.79%** 1.97% 1.99% 1.99% 1.99% 1.90% Ratio of net investment income to average net assets+ 0.88%** 0.70% 0.88% 1.04% 0.28% 1.05% Portfolio turnover rate 49%** 74% 66% 79% 124% 175% Net assets, end of period (in thousands) $ 45,304 $ 44,026 $ 30,347 $ 26,537 $ 8,852 $ 7,861 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.79%** 1.99% 2.11% 2.65% 3.11% 4.12% Net investment income (loss) 0.88%** 0.68% 0.76% 0.38% (0.84)% (1.17)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.79%** 1.97% 1.99% 1.99% 1.99% 1.90% Net investment income 0.88%** 0.70% 0.88% 1.04% 0.28% 1.05%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 9 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $1,841,466) (Cost $41,380,403) $ 58,053,110 Cash 60,692 Foreign currencies, at value (Cost $86,276) 86,806 Receivables -- Investment securities sold 845,683 Fund shares sold 61,490 Dividends, interest and foreign taxes withheld 122,730 Other 7,266 ------------ Total assets $ 59,237,777 ------------ LIABILITIES: Payables -- Investment securities purchased $ 603,268 Fund shares repurchased 137,647 Upon return of securities loaned 1,829,705 Forward foreign currency settlement contracts, net 3,372 Reserve for repatriation taxes 36,643 Due to affiliates 9,976 Accrued expenses 76,123 ------------ Total liabilities $ 2,696,734 ------------ NET ASSETS: Paid-in capital $ 34,171,390 Undistributed net investment income 83,178 Accumulated net realized gain on investments 5,647,909 Net unrealized gain on: Investments 16,636,064 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 2,502 ------------ Total net assets $ 56,541,043 ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 11,237,015 Shares outstanding 408,029 ------------ Net asset value per share $ 27.54 Class II: (No par value, unlimited number of shares authorized) Net assets $ 45,304,028 Shares outstanding 1,659,941 ------------ Net asset value per share $ 27.29
10 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $72,558) $ 785,027 Interest 13,259 Income on securities loaned, net 6,449 ----------- Total investment income $ 804,735 ----------- EXPENSES: Management fees $ 346,428 Transfer agent fees and expenses 4,996 Distribution fees (Class II) 59,681 Administrative reimbursements 9,470 Custodian fees 57,614 Professional fees 36,185 Printing expense 2,818 Fees and expenses of nonaffiliated trustees 2,542 Miscellaneous 5,641 ----------- Total expenses $ 525,375 ----------- Net expenses $ 525,375 ----------- Net investment income $ 279,360 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain from: Investments (net of foreign capital gain taxes of $30,901) $ 5,740,092 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (12,762) ----------- $ 5,727,330 ----------- Change in net unrealized gain or loss from: Investments (net of the change in reserve for repatriation taxes of $15,716) $(1,415,958) Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (967) ----------- $(1,416,925) ----------- Net gain on investments and foreign currency transactions $ 4,310,405 =========== Net increase in net assets resulting from operations $ 4,589,765 ===========
The accompanying notes are an integral part of these financial statements. 11 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 279,360 $ 332,259 Net realized gain on investments and foreign currency transactions 5,727,330 7,305,703 Change in net unrealized gain or loss on investments and foreign currency transactions (1,416,925) 7,390,352 ------------- ------------- Net increase in net assets resulting from operations $ 4,589,765 $ 15,028,314 ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (59,203) $ (50,778) Class II (161,771) (161,235) Net realized gain Class I (1,033,768) -- Class II (4,159,777) -- ------------- ------------- Total distributions to shareowners $ (5,414,519) $ (212,013) ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 10,487,956 $ 13,210,315 Reinvestment of distributions 5,414,519 210,764 Cost of shares repurchased (13,768,240) (11,986,023) ------------- ------------- Net increase in net assets resulting from Fund share transactions $ 2,134,235 $ 1,435,056 ------------- ------------- Net increase in net assets $ 1,309,481 $ 16,251,357 ------------- ------------- NET ASSETS: Beginning of period $ 55,231,562 $ 38,980,205 ------------- ------------- End of period $ 56,541,043 $ 55,231,562 ============= ============= Undistributed net investment income, end of period $ 83,178 $ 24,792 ============= =============
12 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Emerging Markets Portfolio (the Portfolio) is a Portfolio of the Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts, or by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objective of Emerging Markets VCT Portfolio is to seek long-term capital growth. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the NYSE. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where 13 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- they traded. The principal exchanges and markets for such securities have closing times prior to the close of the NYSE. However, the value of these securities may be influenced by changes in global markets occurring after the closing times of the local exchanges and markets up to the time the Portfolios determines their net asset values. Consequently, the Board of Trustees of the Trust has determined that the use of daily fair valuations as provided by a pricing service is appropriate for the Portfolios. The Portfolios may also take into consideration other significant events in determining the fair value of these securities. At June 30, 2006, there were no fair valued securities except as follows. All securities that trade in foreign markets whose closing prices are as of times prior to the close of the New York Stock Exchange (NYSE) and that are held by Emerging Markets Portfolio are fair valued using vendor-supplied pricing updates for each security to the time of the close of the NYSE. Thus, the Portfolio's securities valuations may differ from prices reported by the various local exchanges and markets. Temporary cash investments and securities held by the Portfolio are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. The Portfolio's investments in emerging markets or countries with limited or developing markets may subject the Portfolio to a greater degree of risk than in a developed market. Risks associated with these developing markets include political, social or economic factors and may affect the price of the Portfolio's investments and income generated by these investments, as well as the Portfolio's ability to repatriate such amounts. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus. Please refer to those documents when considering the Portfolio's risks. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. The Portfolio had no outstanding portfolio or settlement hedges as of June 30, 2006. D. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the year ended December 31, 2005, no such taxes were paid. 14 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In determining the daily net asset value, the Portfolio estimates the reserve for such taxes, if any, associated with investments in certain countries. The estimated reserve for taxes on capital gains is based on the net unrealized appreciation on certain portfolio securities, the holding year of such securities and the related tax rates, tax loss carryforward (if applicable) and other such factors. As of June 30, 2006, the Portfolio had $36,643 in reserves related to taxes on the repatriation of foreign capital gains. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the distributions paid during the year ended December 31, 2005 and the components of distributable earnings (accumulated losses) as of December 31, 2005.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 212,013 Long-Term capital gain - ----------- $ 212,013 Return of Capital - ----------- Total distributions $ 212,013 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 220,926 Undistributed long-term gain/(capital loss carryforward) 5,193,430 Unrealized appreciation (depreciation) 17,780,051 ----------- Total $23,194,407 =========== - --------------------------------------------------------------------------------
For the fiscal year ending December 31, 2005, Emerging Markets Portfolio has elected to pass through foreign tax credits of $181,164. The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales and the tax basis adjustments on Passive Foreign Investment Company (PFIC) holdings and the mark to market on forward currency contracts. E. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of the shares based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. F. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that 15 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. G. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 1.15% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $1,980 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,692 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $304 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------------------- Emerging Markets Portfolio $41,655,843 $17,606,129 $(1,208,862) $16,397,267 =========== =========== =========== =========== - ----------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $14,209,019 and $17,047,023, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the year ended December 31, 2005: 16 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------- '06 Shares '06 Amount Emerging Markets Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ------------------------------------------------------------------------------------------------- CLASS I: Shares sold 55,634 $ 1,782,641 57,112 $ 1,329,128 Reinvestment of distributions 42,233 1,092,971 2,300 49,529 Shares repurchased (88,778) (2,738,986) (82,002) (1,885,112) ------------------------------------------------------ Net increase (decrease) 9,089 $ 136,626 (22,590) $ (506,455) ====================================================== CLASS II: Shares sold 275,162 $ 8,705,315 530,098 $ 11,881,187 Reinvestment of distributions 168,481 4,321,548 7,549 161,235 Shares repurchased (364,999) (11,029,254) (449,363) (10,100,911) ------------------------------------------------------ Net increase 78,644 $ 1,997,609 88,284 $ 1,941,511 ====================================================== - -------------------------------------------------------------------------------------------------
17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust
Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop
Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's website at http://www.sec.gov. 18 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 19 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 21 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19623-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Equity Income VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Equity Income VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 9 Notes to Financial Statements 13 Trustees, Officers and Service Providers 17
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THIS DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] U.S. Common Stocks 93.3% Temporary Cash Investment 6.2% Convertible Preferred Stocks 0.5%
Sector Distribution Portfolio (As a percentage of equity holdings) [THIS DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Financials 27.9% Utilities 15.9% Industrials 9.9% Consumer Staples 9.7% Telecommunication Services 9.5% Consumer Discretionary 8.8% Health Care 7.0% Energy 5.9% Materials 4.5% Information Technology 0.9%
Five Largest Holdings (As a percentage of equity holdings) 1. PACCAR, Inc. 3.43% - ---------------------------------------------- 2. Washington Mutual, Inc. 3.09 - ---------------------------------------------- 3. T. Rowe Price Associates, Inc. 2.87 - ---------------------------------------------- 4. Questar Corp. 2.76 - ---------------------------------------------- 5. Merck & Co., Inc. 2.57 - ----------------------------------------------
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $22.54 $21.37
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.2500 $ - $ 0.3749
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Equity Income VCT Portfolio at net asset value, compared to that of the Russell 1000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THIS DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Equity Russell 1000 Income VCT Portfolio Value Index 6/96 $10,000 $10,000 6/97 13,062 13,319 6/98 16,713 17,159 6/99 19,424 19,967 6/00 18,197 18,187 6/01 20,066 20,066 6/02 18,324 18,270 6/03 17,607 18,083 6/04 20,696 21,905 6/05 23,573 24,985 6/06 26,479 28,007
The Russell 1000 Value Index measures the performance of large-cap U.S. value stocks. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- 10 Years 10.23% 5 Years 5.70% 1 Year 12.33%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Equity Income VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II -------------------------------------------------- Beginning Account Value On 1/1/06 $ 1,000.00 Ending Account Value On 6/30/06 $ 1,084.70 Expenses Paid During Period* $ 4.86
* Expenses are equal to the Portfolio's annualized expense ratio of 0.94% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Equity Income VCT Portfolio Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006
Share Class II -------------------------------------------------- Beginning Account Value On 1/1/06 $ 1,000.00 Ending Account Value On 6/30/06 $ 1,020.13 Expenses Paid During Period* $ 4.71
* Expenses are equal to the Portfolio's annualized expense ratio of 0.94% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- In the following discussion, portfolio manager John Carey discusses the performance of Pioneer Equity Income VCT Portfolio, as well as the investment environment over the six-month period ended June 30, 2006. Q. How did the Portfolio perform relative to its benchmark, the Russell 1000 Value Index? A. Class II shares of Pioneer Equity Income VCT Portfolio recorded a total return of 8.47% at net asset value for the six months ended June 30, 2006. By comparison, the Russell 1000 Value Index, an unmanaged index of stocks, rose 6.56%. The average return for the 59 portfolios in the Lipper Equity Income variable-account category was 5.23%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. While the stock market was positive for the first half as a whole, it began showing signs of stress in the second half of May and continues to be shaky as we write this letter. Investor concerns about inflation and interest rates, high oil and other commodity prices, the slowdown in housing, and the unsettled international situation, particularly in the Middle East, have started to weigh heavily on the market. For the moment, corporate earnings remain strong, but investors are apparently worrying about what may lie ahead if the economy stalls. Q. What were the reasons for the outperformance of the Portfolio versus its benchmark? A. The Portfolio benefited from good stock selection in a number of sectors, principally financials, health care, industrials, and consumer staples. Individual stocks that contributed importantly to performance were PACCAR, BellSouth, Campbell Soup, Whitney Holding, H. J. Heinz, Roanoke Electric Steel, and Gorman-Rupp. BellSouth and Roanoke Electric Steel both received premium take-over bids. H. J. Heinz attracted the attention of some aggressive private investors intent on getting more value from the company. Whitney Holding, a bank based in New Orleans, continued its post-Katrina hurricane recovery. PACCAR, Campbell Soup, and Gorman-Rupp all showed strong business results. On the negative side, our underweight in the strong energy sector and weak stock selection in consumer discretionary hurt results. We had scaled back our energy exposure due to our view that oil and natural-gas prices would moderate. That has certainly been the case with natural gas, which has come down considerably in price, but it has not been true of oil, which continues to sell at near record prices. With respect to consumer discretionary, we had three stocks that underperformed. Cedar Fair sold off following its acquisition of another large amusement-park operator and the anticipation of near-term dilution of earnings. We are retaining our position, however, because we think that the acquisition will ultimately work out well for the company. McGraw-Hill was soft because of a legislative push in Washington, D. C., to facilitate more competition in the credit-rating industry, where McGraw-Hill's highly profitable Standard & Poor's is a leader. Finally, Tupperware traded down due to a disappointing first quarter, marked by higher expenses. Q. Did you make changes to the Portfolio during the past six months? If so, please describe. A. We were busy in the first half, adding seven positions and selling fourteen. We are excluding from those totals our receipt of shares in Lincoln National in exchange for our shares of Jefferson Pilot following the merger of those two life insurance companies. The seven new names were: Mine Safety Appliances, expert in industrial safety equipment including respiratory gear; Kellogg, leading breakfast cereal maker; J. M. Smucker, successful producer of jams and jellies, toppings and peanut butter; Regions Financial, Alabama-based retail and commercial bank; Liberty Property Trust, a real-estate investment trust (REIT) specializing in suburban office and industrial properties; and AGL Resources and Duke Energy, utilities operating generally in the southern part of the United States. All of the additions are dividend-paying companies with valuations we found attractive. A Word About Risk: At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Among liquidations from the Portfolio, we sold Keyspan after it accepted a premium-priced take-over bid from an English firm. We also sold Roanoke Electric Steel in the wake of its acceptance of a take-over bid. Likewise, Albertson's. We took advantage of the strong investor interest in materials and other cyclical stocks to realize substantial percentage gains on Vulcan Materials, Nucor, and Burlington Northern. We took big gains as well on our sales of Becton Dickinson and Johnson & Johnson. Other sales were of companies with which we were fundamentally less confident or which seemed less compelling than other stocks in the Portfolio. Those sales included PPG Industries, MeadWestvaco, Coca Cola, Comerica, Citigroup, and Sara Lee. Q. What is your outlook for the remainder of the year? A. Looking ahead, we anticipate a slower economy and less robust corporate earnings. As always, there are those who say "it's different this time" and that there is no reason why the economy should not continue growing steadily. However, the business cycle takes an inexorable course, and downturns are actually essential in keeping the economy growing in the long term. During downturns, the good businesses are separated from the bad, the sound loans from the unsound, and the strong managements from the weak. Downturns also renew the investor base by providing opportunities to get solid value at discounted prices. People who had not wanted to step in and buy when prices were high will often buy aggressively when prices fall. We are not, mind you, predicting any particular starting point for the coming downturn, and there could still be some strength in the market before it happens. But we are thinking that it is already time to be positioning oneself appropriately, in stocks of resilient, well managed, and financially solid companies. Of course, those are characteristics we always emphasize in our stock selection, but now we shall be putting double weight on them. Thank you as ever for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value CONVERTIBLE PREFERRED STOCKS - 0.5% Automobiles & Components - 0.4% Automobile Manufacturers - 0.4% 60,747 Ford Cap Trust 6.50% 01/15/32 $ 1,680,869 ------------ Total Automobiles & Components $ 1,680,869 ------------ Pharmaceuticals & Biotechnology - 0.1% Pharmaceuticals - 0.1% 4,255 Schering-Plough Corp. Cnpfd 6.0%, 9/14/07 $ 214,346 ------------ Total Pharmaceuticals & Biotechnology $ 214,346 ------------ TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $3,070,923) $ 1,895,215 ------------ COMMON STOCKS - 97.0% Energy - 5.8% Integrated Oil & Gas - 5.8% 144,649 Chevron Corp. $ 8,976,917 115,922 ConocoPhillips 7,596,369 84,898 Exxon Mobil Corp. 5,208,492 ------------ $ 21,781,778 ------------ Total Energy $ 21,781,778 ------------ Materials - 4.4% Diversified Chemical - 1.1% 73,300 Dow Chemical Co. $ 2,860,899 82,800 Olin Corp. 1,484,604 ------------ $ 4,345,503 ------------ Diversified Metals & Mining - 0.3% 43,156 Compass Minerals International, Inc. $ 1,076,742 ------------ Forest Products - 0.8% 46,000 Weyerhaeuser Co. $ 2,863,500 ------------ Industrial Gases - 1.2% 71,152 Air Products & Chemicals, Inc. $ 4,548,036 ------------ Specialty Chemicals - 1.0% 146,365 Valspar Corp. $ 3,865,500 ------------ Total Materials $ 16,699,281 ------------ Capital Goods - 9.2% Aerospace & Defense - 1.7% 103,955 United Technologies Corp. $ 6,592,826 ------------ Construction & Farm Machinery & Heavy Trucks - 4.2% 38,489 Deere & Co. $ 3,213,447 153,643 PACCAR, Inc. 12,657,110 ------------ $ 15,870,557 ------------
Shares Value Electrical Component & Equipment - 2.0% 91,501 Emerson Electric Co. $ 7,668,699 ------------ Industrial Machinery - 1.3% 30,350 Gorman-Rupp Co. $ 807,310 117,902 The Timken Co. 3,950,896 ------------ $ 4,758,206 ------------ Total Capital Goods $ 34,890,288 ------------ Commercial Services & Supplies - 0.4% Office Services & Supplies - 0.4% 37,000 Mine Safety Appliances Co.*(a) $ 1,487,400 ------------ Total Commercial Services & Supplies $ 1,487,400 ------------ Automobiles & Components - 2.7% Auto Parts & Equipment - 2.0% 93,560 Johnson Controls, Inc. $ 7,692,503 ------------ Automobile Manufacturers - 0.7% 378,522 Ford Motor Corp.(a) $ 2,623,157 ------------ Total Automobiles & Components $ 10,315,660 ------------ Consumer Durables & Apparel - 0.6% Housewares & Specialties - 0.6% 123,380 Tupperware Brands Corp. $ 2,429,352 ------------ Total Consumer Durables & Apparel $ 2,429,352 ------------ Consumer Services - 1.8% Leisure Facilities - 1.4% 200,827 Cedar Fair, L.P. $ 5,329,949 ------------ Specialized Consumer Services - 0.4% 134,841 Servicemaster Co. $ 1,392,908 ------------ Total Consumer Services $ 6,722,857 ------------ Media - 1.5% Publishing - 1.5% 113,625 McGraw-Hill Co., Inc. $ 5,707,384 ------------ Total Media $ 5,707,384 ------------ Retailing - 1.5% Department Stores - 0.6% 55,242 Federated Department Stores, Inc.* $ 2,021,857 ------------ Distributors - 0.9% 84,730 Genuine Parts Co. $ 3,529,852 ------------ Total Retailing $ 5,551,709 ------------
6 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Food, Beverage & Tobacco - 7.1% Packaged Foods & Meats - 6.5% 188,614 Campbell Soup Co. $ 6,999,466 60,831 General Mills, Inc. 3,142,529 187,543 H.J. Heinz Co., Inc. 7,730,522 66,100 Kellogg Co. 3,201,223 81,300 The J.M. Smucker Co. 3,634,110 ------------ $ 24,707,850 ------------ Soft Drinks - 0.6% 38,972 PepsiCo, Inc. $ 2,339,879 ------------ Total Food, Beverage & Tobacco $ 27,047,729 ------------ Household & Personal Products - 2.3% Household Products - 2.3% 70,315 Clorox Co. $ 4,287,106 76,594 Colgate-Palmolive Co. 4,587,981 ------------ $ 8,875,087 ------------ Total Household & Personal Products $ 8,875,087 ------------ Pharmaceuticals & Biotechnology - 6.7% Pharmaceuticals - 6.7% 111,066 Abbott Laboratories $ 4,843,588 238,807 Bristol-Myers Squibb Co. 6,175,549 74,039 Eli Lilly & Co. 4,092,136 260,932 Merck & Co., Inc. 9,505,753 36,900 Pfizer, Inc. 866,043 ------------ $ 25,483,069 ------------ Total Pharmaceuticals & Biotechnology $ 25,483,069 ------------ Banks - 14.3% Diversified Banks - 4.1% 153,101 U.S. Bancorp $ 4,727,759 103,024 Wachovia Corp. 5,571,538 74,937 Wells Fargo & Co. 5,026,774 ------------ $ 15,326,071 ------------ Regional Banks - 7.2% 88,467 First Horizon National Corp. $ 3,556,373 123,911 National City Corp. 4,484,339 54,800 PNC Bank Corp. 3,845,316 73,800 Regions Financial Corp. 2,444,256 102,478 SunTrust Banks, Inc. 7,814,972 144,505 Whitney Holding Corp. 5,111,142 ------------ $ 27,256,398 ------------ Thrifts & Mortgage Finance - 3.0% 250,458 Washington Mutual, Inc. $ 11,415,876 ------------ Total Banks $ 53,998,345 ------------
Shares Value Diversified Financials - 5.6% Asset Management & Custody Banks - 4.3% 152,899 Eaton Vance Corp. (a) $ 3,816,359 34,424 State Street Corp. 1,999,690 279,886 T. Rowe Price Associates, Inc. 10,582,490 ------------ $ 16,398,539 ------------ Investment Banking & Brokerage - 0.8% 55,113 A.G. Edwards, Inc. $ 3,048,851 ------------ Diversified Financial Services - 0.5% 35,852 Bank of America Corp. $ 1,724,481 ------------ Total Diversified Financials $ 21,171,871 ------------ Insurance - 4.6% Life & Health Insurance - 1.4% 91,791 Lincoln National Corp.* $ 5,180,684 ------------ Property & Casualty Insurance - 3.2% 142,492 Chubb Corp. $ 7,110,351 92,994 Safeco Corp. 5,240,212 ------------ $ 12,350,563 ------------ Total Insurance $ 17,531,247 ------------ Real Estate - 2.7% Diversified Real Estate Investment Trusts - 0.9% 73,500 Liberty Property Trust (a) $ 3,248,700 ------------ Residential Real Estate Investment Trusts - 0.8% 56,454 Archstone Communities Trust (a) $ 2,871,815 ------------ Retail Real Estate Investment Trusts - 1.0% 109,500 Kimco Realty Corp. $ 3,995,655 ------------ Total Real Estate $ 10,116,170 ------------ Software & Services - 0.6% Data Processing & Outsourced Services - 0.6% 50,297 Automatic Data Processing, Inc. $ 2,280,969 ------------ Total Software & Services $ 2,280,969 ------------ Technology Hardware & Equipment - 0.3% Computer Hardware - 0.3% 36,500 Hewlett-Packard Co. $ 1,156,320 ------------ Total Technology Hardware & Equipment $ 1,156,320 ------------ Telecommunication Services - 9.3% Integrated Telecommunication Services - 8.2% 305,096 AT&T Corp. $ 8,509,127 251,696 BellSouth Corp. 9,111,395 364,179 Citizens Utilities Co. (Class B) 4,752,536 254,800 Verizon Communications, Inc. 8,533,252 ------------ $ 30,906,310 ------------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Wireless Telecommunication Services - 1.1% 66,304 Alltel Corp. $ 4,232,184 ------------ Total Telecommunication Services $ 35,138,494 ------------ Utilities - 15.6% Electric Utilities - 2.3% 127,711 Great Plains Energy, Inc. (a) $ 3,558,028 157,858 Southern Co. 5,059,349 ------------ $ 8,617,377 ------------ Gas Utilities - 6.4% 120,100 AGL Resources Inc. $ 4,578,212 129,470 Atmos Energy Corp. 3,613,508 170,238 Equitable Resources, Inc. 5,702,973 126,481 Questar Corp. 10,180,456 ------------ $ 24,075,149 ------------ Multi-Utilities - 6.9% 98,272 Ameren Corp. $ 4,962,736 94,780 Consolidated Edison, Inc. 4,212,023 180,200 Duke Energy Corp. 5,292,474 143,415 NSTAR 4,101,668 193,900 PG&E Corp. 7,616,392 ------------ $ 26,185,293 ------------ Total Utilities $ 58,877,819 ------------ TOTAL COMMON STOCKS (Cost $297,591,022) $367,262,829 ------------ Principal Amount TEMPORARY CASH INVESTMENTS - 6.5% Repurchase Agreement - 2.7% $10,100,000 UBS Warburg, Inc., 4.4% dated 6/30/06, repurchase price of $10,100,000 plus accrued interest on 7/3/06 collateralized by $10,302,000 U.S. Treasury Bill, 4.625%, 3/31/08 $ 10,100,000 ------------ Shares Security Lending Collateral - 3.8% 14,278,681 Securities Lending Investment Fund, 5.16% $ 14,278,681 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $24,378,681) $ 24,378,681 ------------ TOTAL INVESTMENT IN SECURITIES - 104.0% (Cost $325,040,626) $393,536,725 ------------ OTHER ASSETS AND LIABILITIES - (4.0)% $(14,959,301) ------------ TOTAL NET ASSETS - 100.0% $378,577,424 ============
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 54,026 Archstone Communities Trust $ 2,748,303 142,328 Eaton Vance Corp. 3,552,507 374,737 Ford Motor Corp. 2,596,927 69,296 Great Plains Energy, Inc. 1,930,587 38,112 Liberty Property Trust 1,684,550 36,630 Mine Safety Appliances Co.* 1,472,526 ----------- Total $13,985,400 ===========
8 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 21.37 $ 20.68 $ 18.19 $ 15.18 $ 18.49 $ 21.37 -------- -------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income $ 0.26 $ 0.45 $ 0.36 $ 0.32 $ 0.31 $ 0.34 Net realized and unrealized gain (loss) on investments 1.53 0.68 2.53 3.02 (3.25) (1.84) -------- -------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 1.79 $ 1.13 $ 2.89 $ 3.34 $ (2.94) $ (1.50) Distributions to shareholders: Net investment income (0.25) (0.44) (0.40) (0.33) (0.37) (0.32) Net realized gain (0.37) -- -- -- -- (1.06) -------- -------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 1.17 $ 0.69 $ 2.49 $ 3.01 $ (3.31) $ (2.88) -------- -------- ------- ------- ------- ------- Net asset value, end of period $ 22.54 $ 21.37 $ 20.68 $ 18.19 $ 15.18 $ 18.49 ======== ======== ======= ======= ======= ======= Total return* 8.47% 5.52% 16.04% 22.27% (16.05)% (7.15)% Ratio of net expenses to average net assets+ 0.94%** 0.96% 0.98% 1.02% 1.07% 1.02% Ratio of net investment income to average net assets+ 2.31%** 2.32% 2.16% 2.29% 2.25% 1.77% Portfolio turnover rate 28%** 22% 19% 12% 12% 13% Net assets, end of period (in thousands) $132,069 $127,459 $93,691 $60,355 $27,084 $17,948 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.94%** 0.96% 0.98% 1.02% 1.07% 1.02% Net investment income 2.31%** 2.32% 2.16% 2.29% 2.25% 1.77% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.94%** 0.95% 0.98% 1.02% 1.07% 1.02% Net investment income 2.31%** 2.33% 2.16% 2.29% 2.25% 1.77%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized + Ratios with no reduction for fees paid indirectly. Note: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 9 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $13,985,400) (Cost $325,040,626) $ 393,536,725 Receivables -- Investment securities sold 37,746 Fund shares sold 217,641 Dividends, interest and foreign taxes withheld 736,988 Other 12,514 ------------- Total assets $ 394,541,614 ------------- LIABILITIES: Payables -- Fund shares repurchased $ 1,448,052 Upon return for securities loaned 14,278,681 Due to bank 152,838 Due to affiliates 16,432 Accrued expenses 68,187 ------------- Total liabilities $ 15,964,190 ------------- NET ASSETS: Paid-in capital $ 294,876,155 Undistributed net investment income 1,866,096 Accumulated net realized gain 13,339,074 Net unrealized gain on investments 68,496,099 ------------- Total net assets $ 378,577,424 ------------- NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 246,508,491 Shares outstanding 10,998,771 ------------- Net asset value per share $ 22.41 Class II: (No par value, unlimited number of shares authorized) Net assets $ 132,068,933 Shares outstanding 5,859,143 ------------- Net asset value per share $ 22.54
10 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends $ 5,786,629 Interest 178,990 Income on securities loaned, net 2,659 ----------- Total investment income $ 5,968,278 ----------- EXPENSES: Management fees $ 1,191,418 Transfer agent fees and expenses 5,052 Distribution fees (Class II) 161,034 Administrative reimbursements 34,556 Custodian fees 21,619 Professional fees 13,706 Printing expense 51 Fees and expenses of nonaffiliated trustees 2,810 Miscellaneous 393 ----------- Total expenses $ 1,430,639 Less fees paid indirectly (796) ----------- Net expenses $ 1,429,843 ----------- Net investment income $ 4,538,435 ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain from investments $13,469,756 ----------- Change in net unrealized gain from investments $12,301,600 ----------- Net gain on investments $25,771,356 =========== Net increase in net assets resulting from operations $30,309,791 ===========
The accompanying notes are an integral part of these financial statements. 11 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 4,538,435 $ 8,063,117 Net realized gain on investments 13,469,756 19,415,048 Change in net unrealized gain or loss on investments 12,301,600 (9,053,445) ------------- ------------- Net increase in net assets resulting from operations $ 30,309,791 $ 18,424,720 ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (3,001,872) $ (5,101,572) Class II (1,421,557) (2,458,044) Net realized gain Class I (4,037,203) -- Class II (2,136,789) -- ------------- ------------- Total distributions to shareowners $ (10,597,421) $ (7,559,616) ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 23,815,875 $ 96,224,481 Reinvestment of distributions 10,597,420 7,559,617 Cost of shares repurchased (35,255,571) (36,867,650) ------------- ------------- Net increase (decrease) in net assets resulting from Fund share transactions $ (842,276) $ 66,916,448 ------------- ------------- Net increase in net assets $ 18,870,094 $ 77,781,552 ------------- ------------- NET ASSETS: Beginning of period $ 359,707,330 $ 281,925,778 ------------- ------------- End of period $ 378,577,424 $ 359,707,330 ============= ============= Undistributed net investment income, end of period $ 1,866,096 $ 1,751,090 ============= =============
12 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Equity Income VCT Portfolio is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objective of Equity Income Portfolio is to seek capital appreciation. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In 13 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the NYSE. The value of such securities used in computing the net asset value of the Portfolio's shares is based on the last sale price on the principal exchange where they traded. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realizes a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2006, the portfolio had no open futures contracts. C. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. 14 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The tax character of current year distributions paid will be determined at the end of the fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 7,559,616 Long-Term capital gain -- ----------- $ 7,559,616 Return of Capital -- ----------- Total distributions $ 7,559,616 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 203,918 Undistributed long-term gain/(capital loss carryforward) 6,168,262 Post-October loss deferred -- Unrealized appreciation (depreciation) 57,618,364 ----------- Total $63,990,544 =========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. D. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the year ended December 31, 2005. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted-net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. E. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian. F. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. 15 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the portfolios. Management fees are calculated daily at the annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $7,786 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,747 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $899 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - -------------------------------------------------------------------------------------------------- Equity Income Portfolio $323,616,761 $75,806,765 $ (5,886,801) $69,919,964 ============ =========== ============ =========== - --------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $49,579,685 and $56,519,684, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -------------------------------------------------------------------------------------------------- '06 Shares '06 Amount Equity Income Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - -------------------------------------------------------------------------------------------------- CLASS I: Shares sold 561,352 $ 12,533,920 2,853,636 $ 59,389,539 Reinvestment of distributions 320,294 7,039,074 242,794 5,101,573 Shares repurchased (810,119) (17,986,672) (1,317,139) (27,494,268) -------- ------------- ---------- ------------- Net increase 71,527 $ 1,586,322 1,779,291 $ 36,996,844 ======== ============= ========== ============= CLASS II: Shares sold 503,869 $ 11,281,955 1,763,038 $ 36,834,942 Reinvestment of distributions 161,060 3,558,346 116,340 2,458,044 Shares repurchased (770,080) (17,268,899) (444,619) (9,373,382) -------- ------------- ---------- ------------- Net increase (decrease) (105,151) $ (2,428,598) 1,434,759 $ 29,919,604 ======== ============= ========== ============= - --------------------------------------------------------------------------------------------------
16 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19625-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Europe VCT Portfolio -- Class II Shares SEMIANNUAL REPORT JUNE 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Europe VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 5 Financial Statements 7 Notes to Financial Statements 11 Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Fund files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] International Common Stocks 94.7% International Preferred Stocks 2.9% U.S. Common Stocks 2.4%
Geographical Distribution (As a percentage of equity holdings) [THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] United Kingdom 34.2% France 18.5% Switzerland 11.6% Germany 11.4% Ireland 5.6% Netherlands 4.1% Sweden 4.0% Spain 3.1% Italy 3.0% Panama 2.4% Norway 2.1%
Five Largest Holdings (As a percentage of equity holdings) 1. BP Amoco Plc 5.43% - ------------------------------------------------ 2. Royal Bank of Scotland Group Plc 5.18 - ------------------------------------------------ 3. BNP Paribas SA 4.89 - ------------------------------------------------ 4. CS Group 4.29 - ------------------------------------------------ 5. TNT NV 4.14 - ------------------------------------------------
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $12.52 $11.20
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.0539 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Europe VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) Europe Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Europe MSCI Europe VCT Portfolio Index 10/98 $10,000 $10,000 6/99 10,409 10,748 6/00 13,285 12,405 6/01 8,815 9,750 6/02 7,983 9,028 6/03 7,429 8,594 6/04 9,157 11,120 6/05 10,531 13,056 6/06 12,946 16,364
The Morgan Stanley Capital International (MSCI) Europe Index measures the performance of stocks in European developed markets. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 3.43% (10/30/98) 5 Years 7.99% 1 Year 22.93%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Europe VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II -------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,122.90 Expenses Paid During Period* $ 9.37
* Expenses are equal to the Portfolio's annualized expense ratio of 1.78% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Europe VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II -------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,015.97 Expenses Paid During Period* $ 8.90
* Expenses are equal to the Portfolio's annualized expense ratio of 1.78% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Despite a volatile second quarter as investors reacted to increased concerns over inflation and interest rates, European stocks posted strong positive returns over the first half of 2006, supported by solid company earnings growth, ongoing merger and acquisition activity and an improving economic backdrop. In the discussion below, Andrew Arbuthnott, who is responsible for the day-to-day management of the Europe VCT Portfolio, discusses the factors that influenced the Portfolio's performance over the period. Q. How did the Portfolio perform? A. For the six months ended June 30, 2006, Class II shares returned 12.29% at net asset value. In comparison, the Portfolio benchmark, the Morgan Stanley Capital International (MSCI) Europe Index, posted a return of 13.58% while the 137 International Core funds in the Lipper peer group generated an average return of 8.55%. European equity returns for the period were strong relative to U.S. domestic equity indices. In addition, with Portfolio holdings denominated in euros, returns for the Portfolio and the Index reflect the positive impact for U.S. investors of the U.S. dollar's decline over the period versus the euro. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. Would you review the Portfolio's overall approach? A. The Portfolio takes a focused approach to investing, holding around 30 stocks that reflect our strongest investment ideas. We believe this focus helps to maximize the benefits of our bottom-up stock selection process while at the same time giving us the ability to construct a diversified, multi-cap portfolio. Despite the Portfolio's relatively high degree of focus, we expect its overall level of volatility to remain broadly comparable to that of its benchmark, due to the consistent application of our rigorous investment process. The goal is to invest in those securities with strong upside potential and - critically - limited downside risk. Q. What positions most influenced the Portfolio's relative performance? A. Among positive contributors, position in French supermarket group Carrefour strongly outperformed during the period amid improving sales volumes at its stores. We decided to take profits in this holding late in the second quarter of 2006, reinvesting in other stocks where we believed more upside potential remained. Holdings in the materials sector contributed positively to performance, in particular Lafarge, a French building materials company. Lafarge advanced on the strength of better-than-expected full year results and its management team's restructuring and cost control plans. Other key holdings in the materials sector such as St.Gobain and Rio Tinto also outperformed, with the latter benefiting from exceptional increases in commodity metal prices during the first half of 2006. We saw a strong contribution from our holdings in the automotive sector where positions in Porsche and Continental rose sharply. On the negative side of the ledger, Portfolio returns were held back by weakness in the share price of Carnival, a cruise ship operator, as renewed strength in the price of oil and slower bookings on Caribbean routes eroded the company's profits. We continue to believe that, as the global market leader in the cruise industry, Carnival is well positioned to be a key beneficiary from this area's attractive long-term growth potential, and we used this period of weakness to add to the Portfolio's position. Investments in Repsol YPF, a Spanish oil company, held back performance, as the company unexpectedly lowered its oil reserves in the first quarter. In addition, the Bolivian government's nationalization of oil assets dented investor sentiment toward Repsol YPF in the second quarter, although the financial impact of this move on the company was minimal. Q. What is your outlook? A. In our view, European equity market weakness in the second quarter was driven by technical factors, such as investors adjusting their portfolios ahead of potential interest rate rises, rather than deteriorating underlying fundamentals. We believe European equities continue to trade at attractive levels in absolute terms and also look well supported relative to bonds. In general, company fundamentals remain healthy and management teams continue to look to enhance shareholder value through acquisitions, restructuring, and returning excess cash through dividends or share buybacks. While investor sentiment has been improving, we do expect volatility to remain a significant factor in equity markets over the coming months, as uncertainties linger over future inflation and interest rates. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest a substantial amount of its assets in issuers located in a limited number of countries and therefore is susceptible to adverse economic, political or regulatory developments affecting those countries. The Portfolio invests in a limited number of securities and, as a result, the Portfolio's performance may be more volatile than the performance of other portfolios holding more securities. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCK - 2.9% Automobiles & Components - 2.9% Automobile Manufacturers - 2.9% 601 Porsche AG* $ 579,712 ----------- TOTAL PREFERRED STOCK (Cost $384,137) $ 579,712 ----------- COMMON STOCKS - 95.7% Energy - 11.4% Integrated Oil & Gas - 11.4% 92,816 BP Amoco Plc $ 1,074,177 20,168 Eni SpA* 592,511 21,728 Repsol SA 613,977 ----------- $ 2,280,665 ----------- Total Energy $ 2,280,665 ----------- Materials - 7.6% Construction Materials - 5.4% 21,189 CRH Plc $ 687,712 3,081 Lafarge Br* 386,161 ----------- $ 1,073,873 ----------- Diversified Metals & Mining - 2.2% 8,503 Rio Tinto Plc $ 445,835 ----------- Total Materials $ 1,519,708 ----------- Capital Goods - 7.7% Building Products - 2.9% 8,064 Compagnie de Saint Gobain* $ 575,280 ----------- Industrial Conglomerates - 2.6% 6,139 Siemens $ 533,937 ----------- Trading Companies & Distributors - 2.2% 20,233 Wolseley* $ 444,485 ----------- Total Capital Goods $ 1,553,702 ----------- Transportation - 4.1% Air Freight & Couriers - 4.1% 22,922 TNT NV $ 820,291 ----------- Total Transportation $ 820,291 ----------- Automobiles & Components - 7.4% Automobile Manufacturers - 2.1% 6,723 PSA Peugeot* $ 417,529 ----------- Tires & Rubber - 5.3% 8,850 Compagnie Generale des Etablissements Michelin* $ 530,758 5,301 Continental AG* 540,526 ----------- $ 1,071,284 ----------- Total Automobiles & Components $ 1,488,813 -----------
Shares Value Consumer Durables & Apparel - 7.1% Apparel, Accessories & Luxury Goods - 3.0% 12,484 Adidas-Salomon AG* $ 599,897 ----------- Homebuilding - 4.1% 21,596 Persimmon Plc. $ 491,915 38,793 Wimpey (George) Plc* 325,662 ----------- $ 817,577 ----------- Total Consumer Durables & Apparel $ 1,417,474 ----------- Consumer Services - 2.4% Hotels, Resorts & Cruise Lines - 2.4% 11,547 Carnival Corp. $ 481,972 ----------- Total Consumer Services $ 481,972 ----------- Media - 3.3% Advertising - 3.3% 54,988 WPP Group Plc $ 662,778 ----------- Total Media $ 662,778 ----------- Retailing - 1.7% Department Stores - 1.7% 11,321 Next Plc $ 342,379 ----------- Total Retailing $ 342,379 ----------- Food & Drug Retailing - 2.7% Drug Retail - 1.5% 21,694 Boots Group Plc $ 307,580 ----------- Hypermarkets & Supercenters - 1.2% 4,016 Carrefour Supermarch* $ 235,045 ----------- Total Food & Drug Retailing $ 542,625 ----------- Pharmaceuticals & Biotechnology - 8.5% Pharmaceuticals - 8.5% 10,691 Astrazeneca Plc $ 639,900 4,787 Roche Holdings AG 790,000 19,449 Shire Plc* 285,583 ----------- $ 1,715,483 ----------- Total Pharmaceuticals & Biotechnology $ 1,715,483 ----------- Banks - 21.1% Diversified Banks - 21.1% 17,413 Allied Irish Banks Plc $ 418,736 63,745 Barclays Plc 724,904 10,136 BNP Paribas SA* 968,348 32,910 Dnb Nor Asa* 407,774 31,220 Royal Bank of Scotland Group Plc 1,026,484 11,376 Skand Enkilda Banken* 270,459 2,893 Societe Generale* 424,482 ----------- $ 4,241,187 ----------- Total Banks $ 4,241,187 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Diversified Financials - 7.5% Diversified Capital Markets - 7.5% 15,233 CS Group* $ 850,279 6,087 UBS AG* 665,248 ----------- $ 1,515,527 ----------- Total Diversified Financials $ 1,515,527 ----------- Technology Hardware & Equipment - 2.6% Communications Equipment - 2.6% 157,002 Ericsson LM* $ 518,677 ----------- Total Technology Hardware & Equipment $ 518,677 ----------- Telecommunication Services - 0.6% Integrated Telecommunication Services - 0.6% 5,536 France Telecom SA* $ 118,802 ----------- Total Telecommunication Services $ 118,802 ----------- TOTAL COMMON STOCKS (Cost $15,714,456) $19,220,083 ----------- TOTAL INVESTMENT IN SECURITIES - 98.6% (Cost $16,098,593)(a) $19,799,795 ----------- OTHER ASSETS AND LIABILITIES - 1.4% $ 275,050 ----------- TOTAL NET ASSETS - 100.0% $20,074,845 ===========
* Non-income producing security. (a) Distributions of investments by country of issue (excluding temporary cash investments), as a percentage of total investment in equity securities, is as follows: United Kingdom 34.2% France 18.5 Switzerland 11.6 Germany 11.4 Ireland 5.6 Netherlands 4.1 Sweden 4.0 Spain 3.1 Italy 3.0 Panama 2.4 Norway 2.1 ----- 100.0% =====
6 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year 1/2/01 (a) 6/30/06 Ended Ended Ended Ended to Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 11.20 $10.44 $ 8.89 $ 6.71 $ 8.29 $ 11.07 ------- ------ ------ ------ ------- ------- Increase (decrease) from investment operations: Net investment income $ 0.21 $ 0.06 $ 0.04 $ 0.03 $ 0.01 $ 0.08 Net realized and unrealized gain (loss) on investments and foreign currency transactions 1.16 0.75 1.57 2.17 (1.59) (2.71) ------- ------ ------ ------ ------- ------- Net increase (decrease) from investment operations $ 1.37 $ 0.81 $ 1.61 $ 2.20 $ (1.58) $ (2.63) Distributions to shareowners: Net investment income (0.05) (0.05) (0.06) (0.02) -- (0.15) ------- ------ ------ ------ ------- ------- Net increase (decrease) in net asset value $ 1.32 $ 0.76 $ 1.55 $ 2.18 $ (1.58) $ (2.78) ------- ------ ------ ------ ------- ------- Net asset value, end of period $ 12.52 $11.20 $10.44 $ 8.89 $ 6.71 $ 8.29 ======= ====== ====== ====== ======= ======= Total return* 12.29% 7.81% 18.20% 32.92% (19.06)% (23.44)% Ratio of net expenses to average net assets+ 1.78%** 1.75% 1.75% 1.79% 1.86% 3.22% Ratio of net investment income (loss) to average net assets+ 3.43%** 0.66% 0.61% 0.56% 0.25% (2.56)% Portfolio turnover rate 41%** 95% 55% 52% 95% 73% Net assets, end of period (in thousands) $11,105 $9,958 $8,252 $5,005 $ 1,829 $ 398 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.83%** 2.01% 2.20% 2.75% 2.66% 4.57% Net investment income (loss) 3.38%** 0.40% 0.17% (0.40)% (0.54)% (3.90)%
(a) Class II shares were first publicly offered on January 2, 2001. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized + Ratios assuming no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 7 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (Cost $16,098,593) $ 19,799,795 Cash 252,966 Foreign currencies, at value (Cost $36) 36 Receivables -- Investment securities sold 268,416 Fund shares sold 102,579 Dividends, interest and foreign taxes withheld 40,635 Forward foreign currency settlement contracts, net 1,884 Other 1,947 ------------ Total assets $ 20,468,258 ------------ LIABILITIES: Payables -- Investment securities purchased $ 335,790 Fund shares repurchased 2,991 Due to affiliates 8,364 Accrued expenses 46,268 ------------ Total liabilities $ 393,413 ------------ NET ASSETS: Paid-in capital $ 19,926,514 Undistributed net investment income 353,175 Accumulated net realized loss (3,907,755) Net unrealized gain on: Investments 3,701,202 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 1,709 ------------ Total net assets $ 20,074,845 ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 8,970,304 Shares outstanding 703,576 ------------ Net asset value per share $ 12.75 Class II: (No par value, unlimited number of shares authorized) Net assets $ 11,104,541 Shares outstanding 887,007 ------------ Net asset value per share $ 12.52
8 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $68,353) $ 516,174 Interest 3,352 ---------- Total investment income $ 519,526 ---------- EXPENSES: Management fees $ 84,927 Transfer agent fees and expenses 4,920 Distribution fees (Class II) 13,598 Administrative reimbursements 9,698 Custodian fees 17,120 Professional fees 28,376 Printing expense 6,598 Fees and expenses of nonaffiliated trustees 923 Miscellaneous 5,381 ---------- Total expenses $ 171,541 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (5,304) ---------- Net expenses $ 166,237 ---------- Net investment income $ 353,289 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 787,847 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (1,296) ---------- $ 786,551 ---------- Change in net unrealized gain from: Investments $1,142,972 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 1,865 ---------- $1,144,837 ---------- Net gain on investments and foreign currency transactions $1,931,388 ========== Net increase in net assets resulting from operations $2,284,677 ==========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 353,289 $ 148,281 Net realized gain on investments and foreign currency transactions 786,551 3,108,967 Change in net unrealized gain or loss on investments and foreign currency transactions 1,144,837 (1,857,317) ----------- ----------- Net increase in net assets resulting from operations $ 2,284,677 $ 1,399,931 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (58,839) $ (58,420) Class II (47,365) (44,828) ----------- ----------- Total distributions to shareowners $ (106,204) $ (103,248) ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 2,077,577 $ 3,090,347 Reinvestment of distributions 106,204 103,248 Cost of shares repurchased (2,959,113) (3,544,212) ----------- ----------- Net decrease in net assets resulting from Fund share transactions $ (775,332) $ (350,617) ----------- ----------- Net increase in net assets $ 1,403,141 $ 946,066 ----------- ----------- NET ASSETS: Beginning of period $18,671,704 $17,725,638 ----------- ----------- End of period $20,074,845 $18,671,704 =========== =========== Undistributed net investment income, end of period $ 353,175 $ 106,090 =========== ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Europe Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objective of Europe VCT Portfolio is to seek long-term capital growth. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The following is a summary of significant accounting policies consistently followed by the Portfolio in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio is computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they 11 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the NYSE. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded. The principal exchanges and markets for such securities have closing times prior to the close of the NYSE. However, the value of these securities may be influenced by changes in global markets occurring after the closing times of the local exchanges and markets up to the time the Portfolio determines its net asset value. Consequently, the Board of Trustees of the Portfolio has determined that the use of daily fair valuations as provided by a pricing service is appropriate for the Portfolio. The Portfolio may also take into consideration other significant events in determining the fair value of these securities. Thus, the Portfolio's securities valuations may differ from prices reported by the various local exchanges and markets. At June 30, 2006, there were no fair valued securities. All securities that trade in foreign markets whose closing prices are as of times prior to the close of the NYSE and that are held by Europe Portfolio are fair valued using vendor-supplied pricing updates for each security to the time of the close of the NYSE. Temporary cash investments and securities held by the Portfolio are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. As of June 30, 2006, the Portfolio had no outstanding portfolio or settlement hedges. D. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the portfolio may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the six month ended June 30, 2006, no such taxes were paid. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, 12 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Europe VCT Portfolio had a capital loss carryforward of $4,600,975 of which the following amounts will expire between 2009 and 2011 if not utilized: $1,921,644 in 2009, $1,896,288 in 2010 and $783,043 in 2011. The Portfolio elected to defer $17,485 in capital losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ending December 31, 2006. The tax character of current year distributions paid will be determined at the end of the fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 103,248 Long-Term capital gain -- ----------- $ 103,248 Return of Capital -- ----------- Total distributions $ 103,248 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 106,090 Undistributed long-term gain/(capital loss carryforward) (4,600,975) Post-October loss deferred (17,485) Unrealized appreciation (depreciation) 2,482,228 ----------- Total $(2,030,142) =========== - --------------------------------------------------------------------------------
For the fiscal year ending December 31, 2005, Europe Portfolio has elected to pass through foreign tax credits of $46,274. The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales. E. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted-net assets at the beginning of the day. The Portfolio declares as daily dividends substantially all of its respective net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. F. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The 13 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian. G. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the portfolio. Management fees are calculated daily at the annual rate of 1.00% of the Portfolio's average daily net assets. Through May 1, 2006, PIM has agreed not to impose a portion of its management fees and to limit other operating expenses to the extent required to limit expenses of Class I shares to 1.50% of the average daily net assets attributable to Class I shares; the portion of portfolio expenses attributable to Class II shares will be reduced only to the extent such expenses are reduced for Class I shares. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $920 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,369 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $75 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------- Europe Portfolio $16,174,439 $4,031,428 $(406,072) $3,625,356 =========== ========== ========= ========== - ----------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $4,015,468 and $4,480,689, respectively. 14 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ------------------------------------------------------------------------------------------ '06 Shares '06 Amount Europe Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ------------------------------------------------------------------------------------------ CLASS I: Shares sold 19,182 $ 242,185 21,878 $ 233,953 Reinvestment of distributions 4,791 58,839 5,591 58,420 Shares repurchased (83,616) (1,042,402) (155,613) (1,693,646) ----------------------------------------------------- Net decrease (59,643) $ (741,378) (128,144) $(1,401,273) ===================================================== CLASS II Shares sold 148,729 $ 1,835,392 268,948 $ 2,856,394 Reinvestment of distributions 3,927 47,365 4,369 44,828 Shares repurchased (154,937) (1,916,711) (174,429) (1,850,566) ----------------------------------------------------- Net increase (decrease) (2,281) $ (33,954) 98,888 $ 1,050,656 ===================================================== - ------------------------------------------------------------------------------------------
15 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19626-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Fund VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 10 Notes to Financial Statements 14 Trustees, Officers and Service Providers 20
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- [The following data was represented as pie charts in the printed material]
Portfolio Diversification (As a percentage of total investment portfolio) U.S. Common Stocks 92.7% Depositary Receipts for International Stocks 3.7% Temporary Cash Investment 2.2% International Common Stocks 1.4% Sector Distribution (As a percentage of equity holdings) Financials 18.4% Industrials 14.1% Consumer Discretionary 13.0% Information Technology 12.8% Health Care 12.5% Consumer Staples 10.7% Energy 7.9% Materials 5.2% Telecommunication Services 4.4% Utilities 1.0%
Five Largest Holdings (As a percentage of equity holdings) 1. Norfolk Southern Corp. 2.41% 2. Chevron Corp. 2.27 3. McGraw-Hill Co., Inc. 1.93 4. Wells Fargo & Co. 1.92 5. T. Rowe Price Associates, Inc. 1.92
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 22.45 $ 21.49
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.1200 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Fund VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [The following data was represented as a line chart in the printed material]
Pioneer Fund VCT S&P Portfolio 500 10/97 $10,000 $10,000 6/98 $11,945 $12,528 6/99 $14,667 $15,378 6/00 $15,912 $16,493 6/01 $14,633 $14,049 6/02 $12,541 $11,523 6/03 $11,896 $11,552 6/04 $13,984 $13,758 6/05 $15,099 $14,627 6/06 $16,931 $15,889
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure of the broad U.S. stock market. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
Net Asset Value Life-of-Class 6.27% (10/31/97) 5 Years 2.96% 1 Year 12.14%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Fund VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,050.30 Expenses Paid During Period* $ 4.83
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Fund VCT Portfolio Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,020.08 Expenses Paid During Period* $ 4.76
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for Class II shares multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- In the following discussion, portfolio manager John Carey discusses the performance of Pioneer Fund VCT Portfolio, as well as the investment environment over the six-month period ended June 30, 2006. Q. Please discuss the stock market of the last six months and the investment results of Pioneer Fund VCT Portfolio. A. Stocks showed modest gains in the first half of 2006. For the six months ended June 30, 2006, Class II shares of Pioneer Fund VCT Portfolio achieved a total return of 5.03% at net asset value, versus 2.71% for the Standard & Poor's 500, our benchmark index. The Portfolio's 222 Lipper Large-Cap Core peers returned 1.25% over the same period. Gains across the board had been significantly greater through the first week of May, but an ensuing correction pared them back. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. As we write, the market remains shaky. In our 2005 annual shareholder letter, we stated that our outlook on 2006 was cautious, and that view has been borne out by events. Despite good earnings reports from companies and strong economic data, investors appear to be focusing on what comes next. A common expectation is that the combination of higher interest rates, record-high oil prices, and a slowing housing market will restrain consumer spending, which in turn will lead, eventually, to reduced industrial production and capital spending. Adding to the worries are the troubling international events in the Middle East, the Far East, Latin America, and Africa. Without enumerating all of the risks in the present world situation, suffice it to say that together they weigh heavily on near-term economic and market forecasts. Only a year ago, investors appeared almost oblivious to risk as they bid up the prices of low-quality debt issues and emerging-markets stocks to levels that seemed not to factor in risk at all. Now the pendulum is swinging the other way, as investors seek safety and stability. It should be noted, however, that there is no altogether "safe haven" in the capital markets. Even U.S. Treasuries fluctuate in market price with changes in interest rates, and even the bluest of the blue chip companies will occasionally have their earnings shortfalls. Q. Which stocks contributed to the outperformance of Pioneer Fund VCT Portfolio during the period? Were there also some weak spots in the Portfolio? A. Our outperformance can be largely explained by our good stock selection in a number of key market sectors: industrials, information technology, materials, financials, consumer staples, telecommunications services, and health care. Detracting from performance were stock selections in consumer discretionary and energy. Our largest positive contributors were: Inco and Rio Tinto in materials; Norfolk Southern, Deere, Caterpillar, and PACCAR in industrials; BellSouth in telecommunications services; and Canon in information technology. Both Inco and BellSouth were recipients of take-over bids. Among detractors, our long-term holding John Wiley & Sons was caught in the general downward move of media stocks; Barr Pharmaceuticals, St. Jude Medical, and Biomet each had some particular ailments, though none that appeared terminal; and Target fell in sympathy with other large retailers at a time of investor concern about consumer spending. As usual, there were also some poor performers in the S&P 500 that we managed to avoid, and some strong performers that we likewise missed. On the whole, however, it was a good period for us with respect to our investment positioning. Q. What changes did you make in the Portfolio over the past two quarters? A. We did a bit of spring cleaning in the portfolio, liquidating twelve holdings and adding only three. We took advantage of the ebullient market for metals and mining stocks to realize gains in BHP Billiton, Newmont Mining, and Allegheny Technologies. We sold Keyspan after the company received a premium take-over bid from an English company. A Word About Risk: At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Our other sales reflected either our disappointment with the progress being made by the company or our judgment that we had more attractive alternatives. Those sales included PPG Industries, MeadWestvaco, Gap, Home Depot, Stryker, Ameriprise Financial, ACE, and Axis Capital Holdings. New entries were Lockheed Martin, Zimmer Holdings, and MetLife. Lockheed Martin is a leading aerospace and defense manufacturer. The company has made impressive progress in improving its profit margins, and it has a good order book looking out into next year and potentially beyond. Zimmer Holdings is a leader in orthopedic implants, namely artificial hips and knees. The implant industry has been under a cloud due to government investigations of sales practices, but we concluded that the price of Zimmer stock took that into account and that growth prospects for the company were otherwise attractive. MetLife, finally, is a large life and group-health insurer. Its recent acquisition of Travelers Life and Annuity greatly expanded its international business, bringing longer-term opportunities to enhance profit growth. Q. What is your outlook for the remainder of the year? A. Looking ahead, we can see a slower economy and less robust corporate earnings. As always, there are those who say "it's different this time" and that there is no reason why the economy should not continue growing steadily. However, the business cycle takes an inexorable course, and downturns are actually essential in keeping the economy growing in the long term. During downturns, the good businesses are separated from the bad, the sound loans from the unsound, and the strong managements from the weak. Downturns also renew the investor base by providing opportunities to get solid value at discounted prices. People who had not wanted to step in and buy when prices were high will often buy aggressively when prices fall. We are not, mind you, predicting any particular starting point for the coming downturn, and there could still be some strength in the market before it happens. But we are thinking that it is already time to be positioning oneself appropriately, in stocks of resilient, well managed, and financially solid companies. Of course, those are characteristics we always emphasize in our stock selection, but now we shall be putting double weight on them. Thank you as ever for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 96.2% Energy - 7.6% Integrated Oil & Gas - 5.8% 179,531 Chevron Corp. $ 11,141,694 88,025 ConocoPhillips 5,768,278 114,668 Exxon Mobil Corp. 7,034,882 53,725 Occidental Petroleum Corp. 5,509,499 ------------ $ 29,454,353 ------------ Oil & Gas Equipment & Services - 0.4% 42,162 Weatherford Intl, Inc.* $ 2,092,078 ------------ Oil & Gas Exploration & Production - 1.4% 61,094 Apache Corp. $ 4,169,666 67,515 Pioneer Natural Resources Co. 3,133,371 ------------ $ 7,303,037 ------------ Total Energy $ 38,849,468 ------------ Materials - 5.0% Aluminum - 0.5% 72,726 Alcoa, Inc. $ 2,353,413 ------------ Diversified Chemical - 0.8% 70,100 Dow Chemical Co. $ 2,736,003 37,427 E.I. du Pont de Nemours and Co. 1,556,963 ------------ $ 4,292,966 ------------ Diversified Metals & Mining - 2.5% 98,510 Inco, Ltd.* $ 6,491,809 122,524 Rio Tinto Plc 6,473,996 ------------ $ 12,965,805 ------------ Industrial Gases - 0.9% 25,334 Air Products & Chemicals, Inc. $ 1,619,349 53,762 Praxair, Inc. 2,903,148 ------------ $ 4,522,497 ------------ Specialty Chemicals - 0.3% 37,481 Ecolab, Inc. $ 1,520,979 ------------ Total Materials $ 25,655,660 ------------ Capital Goods - 9.7% Aerospace & Defense - 2.6% 86,022 General Dynamics Corp. $ 5,631,000 7,100 Lockheed Martin Corp.* 509,354 111,683 United Technologies Corp. 7,082,936 ------------ $ 13,223,290 ------------ Building Products - 0.0% 8,309 Masco Corp. $ 246,279 ------------
Shares Value Construction & Farm Machinery & Heavy Trucks - 4.5% 99,679 Caterpillar, Inc. $ 7,424,092 94,266 Deere & Co. 7,870,268 91,215 PACCAR, Inc.v 7,514,292 ------------ $ 22,808,652 ------------ Electrical Component & Equipment - 1.2% 48,640 Emerson Electric Co. $ 4,076,518 29,606 Rockwell International Corp. 2,131,928 ------------ $ 6,208,446 ------------ Industrial Conglomerates - 1.1% 7,200 3M Co. $ 581,544 154,654 General Electric Co. 5,097,396 ------------ $ 5,678,940 ------------ Industrial Machinery - 0.3% 16,367 Parker Hannifin Corp. $ 1,270,079 ------------ Total Capital Goods $ 49,435,686 ------------ Transportation - 3.9% Airlines - 0.4% 135,293 Southwest Airlines Co. $ 2,214,746 ------------ Railroads - 3.5% 74,802 Burlington Northern, Inc. $ 5,928,059 222,911 Norfolk Southern Corp. 11,863,323 ------------ $ 17,791,382 ------------ Total Transportation $ 20,006,128 ------------ Automobiles & Components - 2.3% Auto Parts & Equipment - 1.5% 91,445 Johnson Controls, Inc. $ 7,518,608 ------------ Automobile Manufacturers - 0.8% 628,984 Ford Motor Corp. $ 4,358,859 ------------ Total Automobiles & Components $ 11,877,467 ------------ Consumer Durables & Apparel - 0.2% Apparel, Accessories & Luxury Goods - 0.2% 23,883 Liz Claiborne, Inc. $ 885,104 ------------ Total Consumer Durables & Apparel $ 885,104 ------------ Consumer Services - 0.1% Restaurants - 0.1% 14,325 Yum! Brands, Inc. $ 720,118 ------------ Total Consumer Services $ 720,118 ------------ Media - 5.2% Advertising - 0.7% 42,090 Omnicom Group $ 3,749,798 ------------ Movies & Entertainment - 1.0% 162,516 The Walt Disney Co. $ 4,875,480 ------------
6 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Publishing - 3.5% 41,058 Elsevier NV $ 617,338 64,140 Gannett Co. 3,587,350 125,263 John Wiley & Sons, Inc. 4,158,732 188,438 McGraw-Hill Co., Inc. 9,465,241 ------------ $ 17,828,661 ------------ Total Media $ 26,453,939 ------------ Retailing - 4.7% Computer & Electronics Retail - 0.1% 9,295 GameStop Corp. (Class B)* $ 318,354 ------------ Department Stores - 1.8% 100,356 Federated Department Stores, Inc.* $ 3,673,030 147,889 Nordstrom, Inc. 5,397,949 ------------ $ 9,070,979 ------------ General Merchandise Stores - 1.5% 150,713 Target Corp. $ 7,365,344 ------------ Home Improvement Retail - 0.8% 70,792 Lowe's Companies, Inc. $ 4,294,951 ------------ Specialty Stores - 0.5% 29,018 Barnes & Noble, Inc. $ 1,059,157 69,072 Staples, Inc.* 1,679,831 ------------ $ 2,738,988 ------------ Total Retailing $ 23,788,616 ------------ Food & Drug Retailing - 3.3% Drug Retail - 2.1% 75,467 CVS Corp. $ 2,316,837 190,303 Walgreen Co. 8,533,187 ------------ $ 10,850,024 ------------ Food Distributors - 1.0% 161,566 Sysco Corp. $ 4,937,457 ------------ Hypermarkets & Supercenters - 0.2% 19,649 Costco Wholesale Corp. $ 1,122,547 ------------ Total Food & Drug Retailing $ 16,910,028 ------------ Food, Beverage & Tobacco - 5.2% Packaged Foods & Meats - 3.9% 118,941 Campbell Soup Co. $ 4,413,901 76,411 General Mills, Inc. 3,947,392 108,055 H.J. Heinz Co., Inc. 4,454,027 82,795 Hershey Foods Corp. 4,559,521 23,685 Kellogg Co. 1,147,065 73,473 Sara Lee Corp. 1,177,037 ------------ $ 19,698,943 ------------ Soft Drinks - 1.3% 113,124 PepsiCo, Inc. $ 6,791,965 ------------ Total Food, Beverage & Tobacco $ 26,490,908 ------------
Shares Value Household & Personal Products - 1.8% Household Products - 1.3% 14,255 Clorox Co. $ 869,127 96,982 Colgate-Palmolive Co. 5,809,222 ------------ $ 6,678,349 ------------ Personal Products - 0.5% 67,208 Estee Lauder Co.* $ 2,598,933 ------------ Total Household & Personal Products $ 9,277,282 ------------ Health Care Equipment & Services - 4.0% Health Care Equipment - 4.0% 71,108 Becton, Dickinson & Co. $ 4,346,832 103,638 Biomet, Inc. 3,242,833 63,800 C. R. Bard, Inc. 4,673,988 50,339 Medtronic, Inc. 2,361,906 104,000 St. Jude Medical, Inc.* 3,371,680 39,300 Zimmer Holdings, Inc.* 2,229,096 ------------ $ 20,226,335 ------------ Total Health Care Equipment & Services $ 20,226,335 ------------ Pharmaceuticals & Biotechnology - 8.1% Biotechnology - 0.7% 53,778 Amgen, Inc.* $ 3,507,939 ------------ Pharmaceuticals - 7.4% 102,710 Abbott Laboratories $ 4,479,183 53,017 Barr Laboratories, Inc.* 2,528,381 132,985 Bristol-Myers Squibb Co. 3,438,992 80,039 Eli Lilly & Co. 4,423,756 72,158 Johnson & Johnson 4,323,707 95,767 Merck & Co., Inc. 3,488,792 77,980 Novartis AG (A.D.R.)* 4,204,682 134,400 Pfizer, Inc. 3,154,368 36,377 Roche Holdings AG (A.D.R.)* 3,006,486 175,915 Schering-Plough Corp. 3,347,662 44,611 Teva Pharmaceutical Industries, Ltd. 1,409,261 ------------ $ 37,805,270 ------------ Total Pharmaceuticals & Biotechnology $ 41,313,209 ------------ Banks - 8.8% Diversified Banks - 3.7% 235,635 U.S. Bancorp $ 7,276,409 39,577 Wachovia Corp. 2,140,324 140,973 Wells Fargo & Co. 9,456,469 ------------ $ 18,873,202 ------------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Regional Banks - 3.3% 25,377 Compass Bancshares Inc.* $ 1,410,961 83,035 First Horizon National Corp. 3,338,007 170,284 National City Corp. 6,162,578 55,102 SunTrust Banks, Inc. 4,202,079 21,817 Zions Bancorporation 1,700,417 ------------ $ 16,814,042 ------------ Thrifts & Mortgage Finance - 1.8% 34,700 Golden West Financial Corp. $ 2,574,740 146,301 Washington Mutual, Inc. 6,668,400 ------------ $ 9,243,140 ------------ Total Banks $ 44,930,384 ------------ Diversified Financials - 6.5% Asset Management & Custody Banks - 3.3% 43,970 Federated Investors, Inc.* $ 1,385,055 104,482 State Street Corp. 6,069,359 249,606 T. Rowe Price Associates, Inc. 9,437,603 ------------ $ 16,892,017 ------------ Consumer Finance - 1.2% 112,725 American Express Co. $ 5,999,225 ------------ Investment Banking & Brokerage - 0.8% 58,452 Merrill Lynch & Co., Inc. $ 4,065,921 ------------ Diversified Financial Services - 1.2% 86,529 Bank of America Corp. $ 4,162,045 42,750 Citigroup, Inc. 2,062,260 ------------ $ 6,224,305 ------------ Total Diversified Financials $ 33,181,468 ------------ Insurance - 2.4% Life & Health Insurance - 0.5% 49,100 MetLife, Inc. $ 2,514,411 ------------ Multi-Line Insurance - 0.2% 13,522 Hartford Financial Services Group, Inc. $ 1,143,961 ------------ Property & Casualty Insurance - 1.7% 137,506 Chubb Corp. $ 6,861,549 34,082 Safeco Corp. 1,920,521 ------------ $ 8,782,070 ------------ Total Insurance $ 12,440,442 ------------ Software & Services - 3.5% Application Software - 0.5% 86,186 Adobe Systems, Inc.* $ 2,616,607 ------------ Data Processing & Outsourced Services - 2.2% 181,884 Automatic Data Processing, Inc. $ 8,248,439 25,841 DST Systems, Inc.* 1,537,540 28,113 Fiserv, Inc.* 1,275,206 ------------ $ 11,061,185 ------------
Shares Value Systems Software - 0.8% 181,275 Microsoft Corp. $ 4,223,708 ------------ Total Software & Services $ 17,901,500 ------------ Technology Hardware & Equipment - 6.1% Communications Equipment - 2.9% 139,000 Cisco Systems, Inc.* $ 2,714,670 313,651 Motorola, Inc. 6,320,068 274,102 Nokia Corp. (A.D.R.)* 5,553,307 ------------ $ 14,588,045 ------------ Computer Hardware - 2.1% 100,576 Dell, Inc.* $ 2,455,060 176,511 Hewlett-Packard Co. 5,591,868 703,372 Sun Microsystems, Inc.* 2,918,994 ------------ $ 10,965,922 ------------ Computer Storage & Peripherals - 0.3% 134,374 EMC Corp.* $ 1,474,083 ------------ Office Electronics - 0.8% 57,242 Canon, Inc. (A.D.R.) $ 4,194,121 ------------ Total Technology Hardware & Equipment $ 31,222,171 ------------ Semiconductors - 2.6% Semiconductor Equipment - 0.3% 96,070 Applied Materials, Inc. $ 1,564,020 ------------ Semiconductors - 2.3% 20,845 Freescale Semiconductor, Inc. (Class B)* $ 612,843 258,029 Intel Corp. 4,889,650 211,248 Texas Instruments, Inc. 6,398,702 ------------ $ 11,901,195 ------------ Total Semiconductors $ 13,465,215 Telecommunication Services - 4.2% Integrated Telecommunication Services - 3.9% 279,088 AT&T Corp. $ 7,783,764 141,901 BellSouth Corp. 5,136,816 74,411 Century Telephone Enterprises, Inc. 2,764,369 129,130 Verizon Communications, Inc. 4,324,564 ------------ $ 20,009,513 ------------ Wireless Telecommunication Services - 0.3% 23,216 Alltel Corp. $ 1,481,877 ------------ Total Telecommunication Services $ 21,491,390 ------------ Utilities - 0.9% Electric Utilities - 0.5% 15,000 Exelon Corp. $ 852,450 56,177 Southern Co. 1,800,473 ------------ $ 2,652,923 ------------
8 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Multi-Utilities - 0.4% 34,904 Consolidated Edison, Inc. $ 1,551,132 13,700 PG&E Corp. 538,134 ------------ $ 2,089,266 ------------ Total Utilities $ 4,742,189 ------------ TOTAL COMMON STOCKS (Cost $376,681,138) $491,264,707 ============
Principal Amount TEMPORARY CASH INVESTMENT - 2.2% Repurchase Agreement - 2.2% $11,300,000 UBS Warburg, Inc., 4.40% dated 6/30/06, repurchase price of $11,300,000 plus accrued interest on 7/3/06 collateralized by $12,053,000 U.S. Treasury Bill, 3.375%, 9/15/09 $ 11,300,000 ------------ TOTAL TEMPORARY CASH INVESTMENT (Cost $11,300,000) $ 11,300,000 ------------ TOTAL INVESTMENT IN SECURITIES - 98.4% (Cost $387,981,138) $502,564,707 ------------ OTHER ASSETS AND LIABILITIES - 1.6% $ 8,367,499 ------------ TOTAL NET ASSETS - 100.0% $510,932,206 ============
(A.D.R.) American Depositary Receipt * Non-income producing security. The accompanying notes are an integral part of these financial statements. 9 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 21.49 $ 20.51 $ 18.66 $ 15.25 $ 19.05 $ 22.65 -------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income $ 0.12 $ 0.20 $ 0.18 $ 0.14 $ 0.13 $ 0.14 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.96 1.01 1.85 3.42 (3.78) (2.59) -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ 1.08 $ 1.21 $ 2.03 $ 3.56 $ (3.65) $ (2.45) Distributions to shareowners: Net investment income (0.12) (0.23) (0.18) (0.15) (0.15) (0.13) Net realized gain -- -- -- -- -- (1.02) -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ 0.96 $ 0.98 $ 1.85 $ 3.41 $ (3.80) $ (3.60) -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 22.45 $ 21.49 $ 20.51 $ 18.66 $ 15.25 $ 19.05 ======== ======== ======== ======== ======== ======== Total return* 5.03% 5.94% 10.93% 23.44% (19.25)% (11.09)% Ratio of net expenses to average net assets+ 0.95%** 0.95% 0.96% 1.00% 1.06% 1.04% Ratio of net investment income to average net assets+ 1.11%** 1.01% 1.00% 0.87% 0.84% 0.49% Portfolio turnover rate 9%** 23% 17% 11% 11% 7% Net assets, end of period (in thousands) $141,244 $117,720 $133,627 $ 87,488 $ 36,218 $ 12,674 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.95%** 0.95% 0.96% 1.00% 1.06% 1.04% Net investment income 1.11%** 1.01% 1.00% 0.87% 0.84% 0.49%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period.) ** Annualized + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 10 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (Cost $387,981,138) $ 502,564,707 Receivables -- Investment securities sold 271,151 Fund shares sold 9,378,559 Dividends, interest and foreign taxes withheld 598,463 Other 18,273 ------------- Total assets $ 512,831,153 ------------- LIABILITIES: Payables -- Investment securities purchased $ 835,823 Fund shares repurchased 652,335 Due to bank 299,613 Due to affiliates 16,409 Accrued expenses 94,767 ------------- Total liabilities $ 1,898,947 ------------- NET ASSETS: Paid-in capital $ 425,701,652 Undistributed net investment income 117,633 Accumulated net realized gain loss (29,470,697) Net unrealized gain on: Investments 114,583,569 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 49 ------------- Total net assets $ 510,932,206 ------------- NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 369,688,116 Shares outstanding 16,429,291 ------------- Net asset value per share $ 22.50 Class II: (No par value, unlimited number of shares authorized) Net assets $ 141,244,090 Shares outstanding 6,291,688 ------------- Net asset value per share $ 22.45
The accompanying notes are an integral part of these financial statements. 11 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $64,753) $ 5,097,295 Interest 110,772 ------------ Total investment income $ 5,208,067 ------------ EXPENSES: Management fees $ 1,640,540 Transfer agent fees and expenses 2,774 Distribution fees (Class II) 155,592 Administrative reimbursements 49,141 Custodian fees 21,099 Professional fees 17,706 Printing expense 29,920 Fees and expenses of nonaffiliated trustees 3,610 Miscellaneous 1,009 ------------ Total expenses $ 1,921,391 ------------ Net expenses $ 1,921,391 ------------ Net investment income $ 3,286,676 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 10,710,235 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (19,335) ------------ $ 10,690,900 ------------ Change in net unrealized gain from: Investments $ 11,152,705 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 49 ------------ $ 11,152,754 ------------ Net gain on investments, futures contracts and foreign currency transactions $ 21,843,654 ============ Net increase in net assets resulting from operations $ 25,130,330 ============
12 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 3,286,676 $ 6,406,915 Net realized gain on investments and foreign currency transactions 10,690,900 46,679,070 Change in net unrealized gain or loss on investments and foreign currency transactions 11,152,754 (23,029,256) ------------- -------------- Net increase in net assets resulting from operations $ 25,130,330 $ 30,056,729 ------------- -------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (2,525,809) $ (5,374,313) Class II (670,506) (1,440,262) ------------- -------------- Total distributions to shareowners $ (3,196,315) $ (6,814,575) ------------- -------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 43,018,367 $ 42,859,167 Class I shares issued in reorganization -- 53,856,933 Reinvestment of distributions 3,196,315 6,814,325 Cost of shares repurchased (56,846,033) (139,175,447) Redemptions in kind -- (75,731,419) ------------- -------------- Net decrease in net assets resulting from Fund share transactions $ (10,631,351) $ (111,376,441) ------------- -------------- Net increase (decrease) in net assets $ 11,302,664 $ (88,134,287) ------------- -------------- NET ASSETS: Beginning of period $ 499,629,542 $ 587,763,829 ------------- -------------- End of period $ 510,932,206 $ 499,629,542 ============= ============== Undistributed net investment income, end of period $ 117,633 $ 27,272 ============= ==============
The accompanying notes are an integral part of these financial statements. 13 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Fund VCT Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The investment objective of Fund Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus (es). Please refer to those documents when considering the Portfolio's risks. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) 14 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At December 31, 2005, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realizes a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2006, Fund Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. At June 30, 2006, the Portfolio had no open forward contracts. E. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, 15 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Fund VCT Portfolio had a capital loss carryforward of $39,968,844, of which the following amounts will expire between 2010 and 2011 if not utilized: $26,951,317 in 2010 and $13,017,527 in 2011. The tax character of current year distributions paid will be determined at the end of the fiscal year ended December 31, 2005 and the components of distributable earnings (accumulated losses) as of December 31, 2005, on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 6,814,575 Long-Term capital gain -- ----------- $ 6,814,575 Return of Capital -- ----------- Total distributions $ 6,814,575 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 27,272 Undistributed long-term gain/(capital loss carryforward) (39,968,844) Post-October loss deferred -- Unrealized appreciation 103,238,111 ----------- Total $63,296,539 =========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is primarily attributable to the tax deferral of losses on wash sales. F. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Portfolio and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Portfolio shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted net assets at the beginning of the day. Distributions paid by a Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian. 16 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the portfolio. Management fees are calculated daily at the annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $11,776 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $3,729 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $904 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------ Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------ Fund Portfolio $388,173,891 $131,389,694 $(16,998,878) $114,390,816 ============ ============ ============ ============ - ------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the year ended June 30, 2006, were $21,306,387 and $51,565,444, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005: 17 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------ '06 Shares '06 Amount Fund Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ------------------------------------------------------------------------------------------------------------------ CLASS I: Shares sold 540,777 $ 12,165,407 580,758 $ 11,975,172 Class I shares issued in reorganization -- -- -- -- Reinvestment of distributions 112,827 2,525,809 257,653 5,374,312 Shares repurchased (1,995,750) (44,772,169) (5,148,933) (106,238,103) ------------------------------------------------------------------ Net decrease (1,342,146) $ (30,080,953) (4,310,522) $ (88,888,619) ================================================================== CLASS II: Shares sold 1,374,253 $ 30,852,960 1,500,748 $ 30,883,995 Class II shares issued in reorganization -- -- 2,567,061 53,856,933 Reinvestment of distribution 30,016 670,506 69,257 1,440,013 Shares repurchased (540,293) (12,073,864) (1,597,303) (32,937,344) Redemptions in kind -- -- (3,626,019) (75,731,419) ------------------------------------------------------------------ Net increase (decrease) 863,976 $ 19,449,602 (1,086,256) $ (22,487,822) ================================================================== - ------------------------------------------------------------------------------------------------------------------
8. Merger Information On December 8, 2004, beneficial owners of Safeco RST Core Equity Portfolio, Safeco RST Money Market Portfolio and Safeco RST Multi-Cap Core Portfolio, three of the six portfolios that comprised Safeco Resources Series Trust, approved a proposed Agreement and Plan of Reorganization that provided for the mergers listed. These tax-free reorganizations were accomplished on December 10, 2004 ("Closing Date"), by exchanging all of the Safeco's net assets for Class I shares as indicated below, based on Class I share's ending net asset value on the Closing Date. The following charts show the details of the reorganizations as of that Closing Date:
- --------------------------------------------------------------------------------------------------- Pioneer Fund VCT Safeco RST Core Pioneer Fund VCT Portfolio Equity Portfolio Portfolio (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - --------------------------------------------------------------------------------------------------- Net Assets $281,591,969 $298,220,832 $879,147,352 Shares Outstanding 13,990,134 12,804,673 28,812,243 ------------ ------------ ------------ Class I Shares Issued $ 14,822,109 ============ - ---------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------- Unrealized Appreciation Realized Gain/(Loss) on Closing Date on Closing Date - ----------------------------------------------------------------------------------------- Safeco RST Core Equity Portfolio $68,714,366 $20,662,968 =========== =========== - -----------------------------------------------------------------------------------------
18 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In addition, on November 4, 2005, beneficial owners of AmSouth VIF Select Equity Portfolio approved a proposed Agreement and Plan of Reorganization that provided for the merger listed below. This tax-free reorganization was accomplished on November 4, 2005, by exchanging all of the AmSouth Fund's net assets for Class II shares as indicated below, based on Class II share's ending net asset value on the Closing Date. The following charts show the details of the reorganizations as of that closing date ("Closing Date"):
- ---------------------------------------------------------------------------------------------------- Pioneer Fund VCT AmSouth VIF Pioneer Fund VCT Portfolio Select Equity Portfolio (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) Net Assets $444,635,312 $53,856,933 $498,492,245 Shares Outstanding 21,144,152 4,928,631 23,711,213 ------------ ----------- ------------ Class II Shares Issued $ 2,567,061 ============ - ----------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Unrealized Appreciation Realized Gain/(Loss) on Closing Date on Closing Date - -------------------------------------------------------------------------------- AmSouth VIF Select Equity $4,928,126 $ (49,233) ========== ========= - --------------------------------------------------------------------------------
19 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust
Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop
Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 21 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19620-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Shares VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Growth Shares VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 8 Notes to Financial Statements 12 Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] U.S. Common Stocks 89.3% Depositary Receipts for International Stocks 5.9% Temporary Cash Investment 4.8%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL] Information Technology 30.5% Health Care 23.4% Industrials 11.9% Consumer Discretionary 11.8% Consumer Staples 10.5% Financials 5.4% Utilities 2.8% Energy 1.9% Materials 1.8%
Five Largest Holdings (As a percentage of equity holdings) 1. Microsoft Corp. 5.22% 2. Cisco Systems, Inc. 4.16 3. Altria Group, Inc. 4.10 4. Amgen, Inc. 4.00 5. Boston Scientific Corp. 4.00
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 12.82 $ 13.20
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Growth Shares VCT Portfolio at net asset value, compared to that of the Russell 1000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Growth Russell 1000 Shares VCT Portfolio Growth Index 10/97 10000 10000 6/98 12553 12690 6/99 14909 16150 6/00 14579 20294 6/01 12248 12953 6/02 8069 9522 6/03 7959 9802 6/04 8709 11554 6/05 9158 11749 6/06 9393 12467
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class -0.72% (10/31/97) 5 Years -5.17% 1 Year 2.56%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Growth Shares VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II - ----------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 971.20 Expenses Paid During Period* $ 6.35
* Expenses are equal to the Portfolio's annualized expense ratio of 1.30% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Growth Shares VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - ----------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,018.35 Expenses Paid During Period* $ 6.51
* Expenses are equal to the Portfolio's annualized expense ratio of 1.30% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- The domestic stock market produced modest returns over the first half of 2006. The stock market began the year with a strong rally, but the bull market faded in May and June as investors focused more on the possibility that rising interest rates might stall the economy. As they have done in the two previous years, value stocks tended to outperform growth, and highly cyclical companies, including those with exposures to commodities, outperformed traditional growth companies. In the following interview, Christopher M. Galizio and Stephen A. Balter, co-managers of Growth Shares VCT Portfolio, discuss the markets and the factors that influenced performance over the six months. Q. How did the Fund perform during the six months ended June 30, 2006? A. Pioneer Growth Shares VCT Portfolio, Class II, had a total return of -2.88% for the six months, at net asset value. During the same period, the Russell 1000 Growth Index produced a total return of -0.93%, while the average return of the 199 funds in Lipper's Large-Cap Growth variable annuity fund category was -2.44%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What were your principal strategies, and how did they influence performance? A. The Portfolio was positioned to benefit from a growth environment, with an emphasis on those companies, including health care companies and information technology corporations, that were likely beneficiaries of long-term trends. While, we thought - and we continue to believe - that the best investment values can be found in those areas, the emphasis hurt results during the six months, when cyclical companies in sectors such as materials and industrials tended to lead the market. We have favored health care because of the opportunities created as the large baby boomer generation ages and requires more health care services and products, including medical devices as well as pharmaceuticals. These companies have underperformed recently, however, and have begun to offer very attractive prices. We favored information technology corporations because of the growth of the Internet and demand for more complex files, including video, which generates more demand for hardware, such as switches, routers and other devices. Companies such as Cisco Systems and F 5 Networks are potential beneficiaries of this multi-year trend. As we increased the exposure to those areas, we reduced positions in energy and materials, both of which looked very expensive. However, these decisions did not help results for the six months, as energy and materials continued to gain, while health care and information technology continued to underperform. Q. What were some of the individual investments that most affected results for the six months? A. Two of the most significant detractors were health care companies, Boston Scientific and Teva Pharmaceuticals. Each declined for a company-specific reason. Boston Scientific, a leading producer of devices used in cardiac therapies, won a bidding war against Johnson & Johnson and acquired another cardiac device company, Guidant. Investors generally believed Boston Scientific overpaid for Guidant. We tend to agree with that opinion, but we think that the combination of Boston Scientific and Guidant will be a powerful company with excellent prospects over the longer term. Teva is a leading manufacturer of generic pharmaceuticals. However, investors became concerned about future revenues from generic drugs if prices start falling because of the greater emphasis on controlling health care costs. Several holdings had positive impacts on results. One was TXU, the Texas-based utility, which lowered its costs by placing greater emphasis on coal-fired plants at the same time it received favorable regulatory rulings regarding rate structures. Cisco Systems contributed as its routers remained in strong demand from Internet activity, while pharmacy chain CVS successfully integrated two acquisitions into its operations and exceeded earnings expectations. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q. What is your investment outlook? A. At the midpoint of 2006, the financial markets are encountering a number of challenges that are worsened by rising geopolitical tensions. The economy appears to be slowing, primarily as a result of hikes in interest rates, but also because of rising energy and commodity prices. In this environment, stock prices are likely to move unevenly, and individual stock selection will be important in influencing results. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 100.5% Energy - 2.0% Integrated Oil & Gas - 2.0% 5,500 ConocoPhillips $ 360,415 8,000 Repsol SA (A.D.R.) 224,480 ----------- $ 584,895 ----------- Total Energy $ 584,895 ----------- Materials - 1.8% Diversified Chemical - 1.8% 14,100 Dow Chemical Co. $ 550,323 ----------- Total Materials $ 550,323 ----------- Capital Goods - 12.0% Aerospace & Defense - 3.9% 3,800 L-3 Communications Holdings, Inc. $ 286,596 13,700 United Technologies Corp. 868,854 ----------- $ 1,155,450 ----------- Industrial Conglomerates - 8.1% 9,600 3M Co. $ 775,392 32,100 General Electric Co. 1,058,016 21,500 Tyco International, Ltd. 591,250 ----------- $ 2,424,658 ----------- Total Capital Goods $ 3,580,108 ----------- Consumer Durables & Apparel - 1.3% Footwear - 1.3% 5,000 Nike, Inc. $ 405,000 ----------- Total Consumer Durables & Apparel $ 405,000 ----------- Consumer Services - 1.3% Hotels, Resorts & Cruise Lines - 1.3% 9,400 Carnival Corp. $ 392,356 ----------- Total Consumer Services $ 392,356 ----------- Media - 2.1% Broadcasting & Cable TV - 1.1% 3,775 Liberty Media Holding Corp.* $ 316,232 ----------- Movies & Entertainment - 1.0% 8,350 Viacom, Inc. (Class B) $ 299,264 ----------- Total Media $ 615,496 ----------- Retailing - 7.1% Apparel Retail - 3.6% 10,600 Abercrombie & Fitch Co. $ 587,558 21,100 TJX Companies, Inc. 482,346 ----------- $ 1,069,904 ----------- Home Improvement Retail - 3.5% 29,400 Home Depot, Inc. $ 1,052,226 ----------- Total Retailing $ 2,122,130 -----------
Shares Value Food & Drug Retailing - 2.2% Drug Retail - 2.2% 21,700 CVS Corp. $ 666,190 ----------- Total Food & Drug Retailing $ 666,190 ----------- Food, Beverage & Tobacco - 4.9% Soft Drinks - 0.8% 2,700 Fomento Economico Mexicano SA de CV* $ 226,044 ----------- Tobacco - 4.1% 16,800 Altria Group, Inc. $ 1,233,624 ----------- Total Food, Beverage & Tobacco $ 1,459,668 ----------- Household & Personal Products - 3.5% Household Products - 3.5% 18,800 Procter & Gamble Co. $ 1,045,280 ----------- Total Household & Personal Products $ 1,045,280 ----------- Health Care Equipment & Services - 7.9% Health Care Equipment - 5.5% 14,600 Biomet, Inc. $ 456,834 71,353 Boston Scientific Corp.* 1,201,585 ----------- $ 1,658,419 ----------- Health Care Supplies - 1.2% 7,800 Cooper Companies, Inc.(a) $ 345,462 ----------- Managed Health Care - 1.2% 9,000 Aetna, Inc.* $ 359,370 ----------- Total Health Care Equipment & Services $ 2,363,251 ----------- Pharmaceuticals & Biotechnology - 15.6% Biotechnology - 5.8% 18,458 Amgen, Inc.* $ 1,204,015 8,900 Gilead Sciences, Inc.* 526,524 ----------- $ 1,730,539 ----------- Pharmaceuticals - 9.8% 12,400 Astrazeneca Plc (A.D.R.) $ 741,768 9,700 Eli Lilly & Co. 536,119 11,300 Johnson & Johnson 677,096 16,892 Par Pharmaceutical Co., Inc.*(a) 311,826 20,904 Teva Pharmaceutical Industries, Ltd.(a) 660,357 ----------- $ 2,927,166 ----------- Total Pharmaceuticals & Biotechnology $ 4,657,705 ----------- Diversified Financials - 5.5% Asset Management & Custody Banks - 2.2% 5,400 Franklin Resources, Inc.* $ 468,774 2,000 Legg Mason, Inc.* 199,040 ----------- $ 667,814 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Consumer Finance - 2.3% 12,600 American Express Co. $ 670,572 ----------- Investment Banking & Brokerage - 1.0% 4,300 Merrill Lynch & Co., Inc. $ 299,108 ----------- Total Diversified Financials $ 1,637,494 ----------- Software & Services - 7.9% Systems Software - 7.9% 36,900 Macrovision Corp.* $ 794,088 67,300 Microsoft Corp. 1,568,090 ----------- $ 2,362,178 ----------- Total Software & Services $ 2,362,178 ----------- Technology Hardware & Equipment - 18.3% Communications Equipment - 12.3% 64,050 Cisco Systems, Inc.* $ 1,250,897 23,300 Corning, Inc.* 563,627 6,060 F5 Networks, Inc.* 324,089 18,000 Foundry Networks, Inc.* 191,880 40,380 Juniper Networks, Inc.* 645,676 35,500 Motorola, Inc. 715,325 ----------- $ 3,691,494 ----------- Computer Hardware - 6.0% 11,100 Apple Computer, Inc.* $ 634,032 35,800 Dell, Inc.* 873,878 18,070 Palm, Inc.*(a) 290,927 ----------- $ 1,798,837 ----------- Total Technology Hardware & Equipment $ 5,490,331 ----------- Semiconductors - 4.4% Semiconductors - 4.4% 10,790 Maxim Integrated Products* $ 346,467 31,800 Texas Instruments, Inc. 963,222 ----------- $ 1,309,689 ----------- Total Semiconductors $ 1,309,689 ----------- Utilities - 2.7% Independent Power Producer & Energy Traders - 2.7% 13,800 TXU Corp. $ 825,102 ----------- Total Utilities $ 825,102 ----------- TOTAL COMMON STOCKS (Cost $30,881,619) $30,067,196 -----------
Shares Value TEMPORARY CASH INVESTMENTS - 5.1% Security Lending Collateral - 5.1% 1,519,655 Securities Lending Investment Fund, 5.16% $ 1,519,655 ----------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,519,655) $ 1,519,655 ----------- TOTAL INVESTMENT IN SECURITIES - 105.6% (Cost $32,401,274) $31,586,851 ----------- OTHER ASSETS AND LIABILITIES - (5.6)% $(1,673,720) ----------- TOTAL NET ASSETS - 100.0% $29,913,131 -----------
* Non-income producing security. (A.D.R.) American Depositary Receipt. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 7,722 Cooper Companies, Inc. $ 342,007 14,820 Palm, Inc.* 238,602 11,514 Par Pharmaceutical Co., Inc.* 212,548 20,695 Teva Pharmaceutical Industries, Ltd. 653,755 ----------- Total $ 1,446,912 ===========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 13.20 $ 12.87 $ 12.10 $ 9.70 $ 14.94 $ 18.50 ------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.00(a) $ (0.02) $ 0.06 $ (0.02) $ (0.13) $ (0.05) Net realized and unrealized gain (loss) on investments (0.38) 0.43 0.71 2.42 (5.11) (3.51) ------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ (0.38) $ 0.41 $ 0.77 $ 2.40 $ (5.24) $ (3.56) Distributions to shareowners: Net investment income -- (0.08) -- -- -- -- ------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ (0.38) $ 0.33 $ 0.77 $ 2.40 $ (5.24) $ (3.56) ------- -------- -------- -------- -------- -------- Net asset value, end of period $ 12.82 $ 13.20 $ 12.87 $ 12.10 $ 9.70 $ 14.94 ======= ======== ======== ======== ======== ======== Total return* (2.88)% 3.19% 6.36% 24.74% (35.07)% (19.24)% Ratio of net expenses to average net assets+ 1.30%** 1.24% 1.25% 1.44% 1.63% 1.58% Ratio of net investment income (loss) to average net assets+ 0.01%** (0.09)% 0.74% (0.40)% (0.64)% (0.61)% Portfolio turnover rate 102%** 79% 206% 58% 86% 111% Net assets, end of period (in thousands) $ 6,467 $ 7,096 $ 7,749 $ 3,049 $ 263 $ 658 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.30%** 1.24% 1.26% 1.44% 1.63% 1.58% Net investment income (loss) 0.01%** (0.09)% 0.73% (0.40)% (0.64)% (0.61)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: 1.30%** 1.24% 1.25% 1.44% 1.63% 1.58% Net expenses 0.01%** (0.09)% 0.74% (0.40)% (0.64)% (0.61)% Net investment income (loss)
(a) Amount rounds to less than one cent per share * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 8 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $1,446,912) (Cost $32,401,274) $ 31,586,851 Receivables -- Investment securities sold 1,235,287 Dividends, interest and foreign taxes withheld 51,596 Other 3,774 ------------- Total assets $ 32,877,508 ------------- LIABILITIES: Payables -- Investment securities purchased $ 1,188,348 Fund shares repurchased 52,196 Upon return of securities loaned 1,519,655 Due to bank 169,467 Due to affiliates 8,400 Accrued expenses 26,311 ------------- Total liabilities $ 2,964,377 ------------- NET ASSETS: Paid-in capital $ 66,458,982 Undistributed net investment income 39,631 Accumulated net realized loss on investments (35,771,059) Net unrealized loss on investments (814,423) ------------- Total net assets $ 29,913,131 ------------- NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 23,445,764 Shares outstanding 1,804,084 ------------- Net asset value per share $ 13.00 Class II: (No par value, unlimited number of shares authorized) Net assets $ 6,467,367 Shares outstanding 504,366 ------------- Net asset value per share $ 12.82
The accompanying notes are an integral part of these financial statements. 9 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $1,892) $ 208,529 Interest 3,834 Income on securities loaned, net 480 ------------ Total investment income $ 212,843 ------------ EXPENSES: Management fees $ 114,866 Transfer agent fees and expenses 5,007 Distribution fees (Class II) 8,674 Administrative reimbursements 9,558 Custodian fees 12,820 Professional fees 14,032 Printing expense 5,837 Fees and expenses of nonaffiliated trustees 2,072 Miscellaneous 180 ------------ Total expenses $ 173,046 ------------ Net expenses $ 173,046 ------------ Net investment income $ 39,797 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from investments $ 853,762 ------------ Change in net unrealized loss from investments $ (1,707,559) ------------ Net loss on investments $ (853,797) ============ Net decrease in net assets resulting from operations $ (814,000) ============
10 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 39,797 $ 49,245 Net realized gain on investments 853,762 3,211,502 Change in net unrealized loss on investments (1,707,559) (2,083,627) ------------ ------------ Net increase (decrease) in net assets resulting from operations $ (814,000) $ 1,177,120 ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (49,224) $ (221,887) Class II -- (50,023) ------------ ------------ Total distributions to shareowners $ (49,224) $ (271,910) ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 605,124 $ 2,192,354 Reinvestment of distributions 49,224 271,910 Cost of shares repurchased (3,959,678) (9,337,142) ------------ ------------ Net decrease in net assets resulting from Fund share transactions $ (3,305,330) $ (6,872,878) ------------ ------------ Net decrease in net assets $ (4,168,554) $ (5,967,668) ------------ ------------ NET ASSETS: Beginning of period $ 34,081,685 $ 40,049,353 ------------ ------------ End of period $ 29,913,131 $ 34,081,685 ============ ============ Undistributed net investment income, end of period $ 39,631 $ 49,058 ============ ============
The accompanying notes are an integral part of these financial statements. 11 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Growth Shares VCT Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts, or by qualified pension and retirement plans. The investment objective of Growth Shares Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market 12 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the exchange. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus. Please refer to those documents when considering the Portfolio's risks. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Growth Shares Portfolio had a net capital loss carryforward of $36,182,632, of which the following amounts will expire between 2009 and 2011, if not utilized: $9,618,208 in 2009, $19,245,183 in 2010 and $7,319,241 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 271,910 Long-Term Capital Gain -- ------------- $ 271,910 Return of Capital -- ------------- Total Distributions $ 271,910 ------------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 49,058 Undistributed long-term gain/(capital loss carryforward) (36,182,632) Unrealized appreciation (depreciation) 450,947 ------------- Total $ (35,682,627) ============= - --------------------------------------------------------------------------------
13 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- The difference between book-basis and tax-basis unrealized appreciation is primarily attributable to the tax deferral of losses on wash sales. C. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and the distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or sub custodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.70% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $897 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,459 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $44 payable to PFD at June 30, 2006. 14 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------- Growth Shares Portfolio $32,843,463 $1,327,536 $ (2,584,148) $ (1,256,612) =========== ========== ============ ============ - -------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $16,547,824 and $19,750,398, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 30, 2005:
- ------------------------------------------------------------------------------------------- '06 Shares '06 Amount Growth Shares Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ------------------------------------------------------------------------------------------- CLASS I: Shares sold 14,376 $ 195,725 34,054 $ 438,600 Reinvestment of distributions 3,819 49,224 17,362 221,887 Shares repurchased (229,888) (3,115,703) (512,773) (6,658,363) --------------------------------------------------------- Net decrease (211,693) $ (2,870,754) (461,357) $ (5,997,876) ========================================================= CLASS II: Shares sold 30,827 $ 409,399 137,249 $ 1,753,754 Reinvestment of distributions -- -- 3,965 50,023 Shares repurchased (63,951) (843,975) (205,695) (2,678,779) --------------------------------------------------------- Net decrease (33,124) $ (434,576) (64,481) $ (875,002) ========================================================= - -------------------------------------------------------------------------------------------
15 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19627-00-0806 [LOGO]PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer High Yield VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST Table of Contents - -------------------------------------------------------------------------------- Pioneer High Yield VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 5 Financial Statements 11 Notes to Financial Statements 15 Trustees, Officers and Service Providers 20
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment in securities) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] U.S. Corporate Bonds 73.3% U.S. Common Stocks 14.1% Convertible Corporate Bonds 7.2% Convertible Preferred Stocks 2.0% U.S. Preferred Stocks 1.8% Temporary Cash Investment 1.6%
Maturity Distribution (As a percentage of total investment in securities) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] 0-1 year 1.8% 1-3 years 16.5% 3-4 years 20.4% 4-6 years 49.8% 6-8 years 8.1% 8+ years 3.4%
Five Largest Holdings (As a percentage of long-term holdings) 1. Mueller Industries, Inc., 6.0%, 11/1/14 4.20% 2. DRS Technologies, Inc., 6.875%, 11/1/13 3.70 3. Wesco Distribution, Inc., 7.5%, 10/15/17 (144A) 3.37 4. Forest City Enterprises, 7.625%, 6/1/15 3.33 5. Allegheny Energy Supply, 7.8%, 3/15/11 3.29
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 10.57 $ 10.88
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.2975 $ 0.0731 $ 0.0801
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch (ML) High Yield Master II Index and of the ML Index of Convertible Bonds (Speculative Quality). Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
Pioneer High Yield ML High Yield ML Convertible Bonds VCT Portfolio Master II Speculative Quality 5/00 10000 10000 10000 6/00 10690 10193 10511 6/01 11846 10099 8075 6/02 12427 9658 7378 6/03 14688 11803 9201 6/04 16073 13006 11096 6/05 17156 14387 11243 6/06 17822 15064 12329
Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a commonly accepted measure of the performance of high yield securities. The ML Index of Convertible Bonds (speculative quality) is a commonly accepted measure of the performance of speculative grade convertible bond securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index.
- -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006) - -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 9.47% (5/1/00) 5 Years 8.51% 1 Year 3.89%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer High Yield VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II -------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,013.00 Expenses Paid During Period* $ 4.94
* Expenses are equal to the Portfolio's annualized expense ratio of 0.99% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer High Yield VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II -------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,019.89 Expenses Paid During Period* $ 4.96
* Expenses are equal to the Portfolio's annualized expense ratio of 0.99% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- During the six months ended June 30, 2006, sustained economic growth helped high-yield bonds provide positive returns driven by healthy interest income. Below, Portfolio Manager Margaret Patel describes the high-yield market and explains why the Portfolio underperformed its benchmark. Q. How did the Portfolio perform? A. During the six months ended June 30, 2006, the Portfolio's Class II shares had a total return based on net asset value of 1.30%. By comparison, the Merrill Lynch High Yield Master II Index returned 3.07%, and the 103 Lipper Variable Annuity High Current Yield funds returned an average 2.39%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What factors drove the high-yield market during the past six months? A. Positive economic fundamentals and low default rates helped high-yield bonds post generally positive returns during the period, driven largely by coupon income. However, these returns were muted due to price declines, as yields moved higher in reaction to rising Treasury rates. (Bond prices and yields move in opposite directions.) Treasury yields increased because the Federal Reserve Board continued its program of gradually withdrawing liquidity from the marketplace through a steady program of short-term interest rate hikes. Overall, two areas of the high-yield market outperformed: lower-quality CCC-rated issues and bonds in the automotive sector. Q. Why did the Portfolio lag the Merrill Lynch High Yield Master II Index? A. The Portfolio lagged because of our credit-quality positioning. We continued to emphasize the higher-quality segments of the high-yield market, because we felt that the extra yield offered by lower-quality bonds did not adequately compensate the Portfolio for the greater level of risk of potential future bankruptcies or erosion in credit quality inherent in lower-quality issues. During the period, lower-quality CCC-rated bonds significantly outperformed higher-quality securities, leading to our underperformance. Our decision generally to avoid the automotive sector also held back relative returns, as bonds from this group offered strong relative performance. Q. Which investments performed best during the period? Which disappointed? A. One of the Portfolio's top performers was a company that was acquired, leading to the substantial appreciation of its price. Hotel real estate investment trust (REIT) MeriStar Hospitality was bought by private equity firm The Blackstone Group, with our holdings of the company's common stock purchased at a premium. The convertible bonds of Coeur D'Alene Mines rose due to gains in silver prices. On the down side, the common stock of PDL BioPharma declined due to lower-than-expected royalty revenues from its leading products. Convertible securities issued by Lyondell, listed in the Portfolio's holdings as Millennium Chemical, depreciated along with the underlying stock price because of concerns about slowing end demand, softer prices, and the negative impact of a lead paint suit. Advertising agency Interpublic Group declined as investors became impatient with the pace of the company's reorganization as well as slow growth in its advertising businesses. Finally, Canadian paper and forest products manufacturer Abitibi Consolidated fell because the strength of the Canadian dollar increased its costs and due to concerns about declining demand for newsprint. Q. What is your outlook? A. We expect the fundamentals of the U.S. economy to remain strong, with growth in U.S. gross domestic product near its long-term trend rate of about 3% per year. We also anticipate that default rates should remain low (compared to historical averages) because of the strong economy and ample liquidity in the markets, which has made access to capital to even the most marginal of borrowers rather easy. In terms of the Portfolio, we feel it is best to maintain a relatively high credit quality, as lower-rated securities historically have proved more vulnerable during economic slowdowns. We also have moved some assets into equities to gain exposure to a wider range of industries and because, in some cases, they offer greater capital appreciation potential than bonds, whose prices would decline should rates continue to rise. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investments in high-yield or lower-rated securities are subject to greater-than-average risk. When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
S&P/Moody's Ratings Shares (unaudited) Value CONVERTIBLE PREFERRED STOCKS - 2.0% Materials - 1.4% Diversified Metals & Mining - 1.4% 1,200 NR/NR Freeport-MC Copp., 5.5%, 12/31/49 $ 1,504,050 ----------- Total Materials $ 1,504,050 ----------- Banks - 0.6% Thrifts & Mortgage Finance - 0.6% 14,000 NR/NR Sovereign Cap Trust IV, 4.375%, 3/1/34 $ 633,500 ----------- Total Banks $ 633,500 ----------- TOTAL CONVERTIBLE PREFERRED STOCKS $ 2,137,550 ----------- (Cost $1,831,500)
Principal Amount USD ($) CONVERTIBLE CORPORATE BONDS - 7.1% Materials - 1.0% Commodity Chemicals - 0.3% 200,000 B+/B1 Millennium Chemicals, Inc., 4.0%, 11/15/23 $ 358,250 ---------- Gold - 0.7% 800,000 B-/NR Coeur D'Alene Mines Corp 1.25%, 1/15/24 $ 728,000 ---------- Total Materials $1,086,250 ---------- Capital Goods - 1.5% Electrical Component & Equipment - 1.5% 2,595,000 BB-/B1 Roper Industries, Inc., 1.4813%, 1/15/34 $1,576,463 ---------- Total Capital Goods $1,576,463 ---------- Media - 1.7% Advertising - 1.7% 1,800,000 B/Ba3 Interpublic Group Cos., 4.5%, 3/15/23 $1,770,750 ---------- Total Media $1,770,750 ---------- Retailing - 0.9% Automotive Retail - 0.9% 1,000,000 B/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 $ 978,750 ---------- Total Retailing $ 978,750 ---------- Health Care Equipment & Services - 0.6% Health Care Equipment - 0.6% 375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) $ 251,250 450,000 NR/NR Wilson Greatbatch Tech., 2.25%, 6/15/13 391,500 ---------- $ 642,750 ---------- Total Health Care Equipment & Services $ 642,750 ----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Technology Hardware & Equipment - 1.4% Electronic Equipment & Instruments - 1.2% 300,000 NR/NR Flir Systems, Inc., 3.0%, 6/1/23 $ 360,000 1,000,000 NR/NR Veeco Instruments, 4.125%, 12/21/08 972,500 ---------- $1,332,500 ---------- Technology Distributors - 0.2% 300,000 NR/ NR Bell Microproducts, Inc., 3.75%, 3/5/24 $ 250,125 ---------- Total Technology Hardware & Equipment $1,582,625 ---------- TOTAL CONVERTIBLE CORPORATE BONDS $7,637,588 ---------- (Cost $8,078,583)
Shares PREFERRED STOCK - 1.8% Real Estate - 1.8% Real Estate Management & Development - 1.8% 75,000 Forest City Enterprises, 7.375%, 2/1/34 $1,871,250 ---------- Total Real Estate $1,871,250 ---------- TOTAL PREFERRED STOCK $1,871,250 ---------- (Cost $1,917,000) COMMON STOCKS - 13.9% Energy - 1.6% Oil & Gas Exploration & Production - 0.3% 8,110 Pogo Producing Co.* $ 373,871 ---------- Oil & Gas Refining & Marketing - 0.5% 7,800 Tesoro Petroleum Corp. $ 580,008 ---------- Oil & Gas Storage & Transportation - 0.8% 7,900 Kinder Morgan, Inc. $ 789,131 ---------- Total Energy $1,743,010 ---------- Materials - 2.3% Commodity Chemicals - 0.1% 3,500 Georgia Gulf Corp.* $ 87,570 ---------- Construction Materials - 0.1% 1,752 Texas Industries, Inc. $ 93,031 ---------- Gold - 0.5% 17,600 Barrick Gold Corp.* $ 520,960 ---------- Industrial Gases - 0.5% 8,600 Air Products & Chemicals, Inc. $ 549,712 ---------- Specialty Chemicals - 1.1% 1,700 Arch Chemicals, Inc. $ 61,285 63,100 RPM, Inc. 1,135,800 ---------- $1,197,085 ---------- Total Materials $2,448,358 ----------
6 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Capital Goods - 1.4% Electrical Component & Equipment - 0.9% 6,200 Franklin Electric Co., Inc.* $ 320,168 19,500 General Cable Corp.* 682,500 ------------ $ 1,002,668 ------------ Industrial Machinery - 0.5% 10,500 ITT Industries, Inc. $ 519,750 ------------ Total Capital Goods $ 1,522,418 ------------ Household & Personal Products - 1.1% Personal Products - 1.1% 24,600 Alberto-Culver Co. (Class B) $ 1,198,512 ------------ Total Household & Personal Products $ 1,198,512 ------------ Health Care Equipment & Services - 0.6% Health Care Equipment - 0.6% 10,900 Beckman Coulter, Inc.* $ 605,495 ------------ Total Health Care Equipment & Services $ 605,495 ------------ Pharmaceuticals & Biotechnology - 2.6% Biotechnology - 1.1% 11,900 PDL BioPharma, Inc.* $ 219,079 28,400 Vertex Pharmaceuticals, Inc.* 1,042,564 ------------ $ 1,261,643 ------------ Life Sciences Tools & Services - 1.1% 18,000 Bio-Rad Laboratories, Inc.* $ 1,168,920 ------------ Pharmaceuticals - 0.4% 15,000 Bristol-Myers Squibb Co. $ 387,900 ------------ Total Pharmaceuticals & Biotechnology $ 2,818,463 ------------ Real Estate - 0.1% Office Real Estate Investment Trusts - 0.1% 1,500 Equity Office Properties Trust(a) $ 54,765 ------------ Total Real Estate $ 54,765 ------------ Technology Hardware & Equipment - 0.5% Electronic Equipment & Instruments - 0.5% 10,000 Amphenol Corp.* $ 559,600 ------------ Total Technology Hardware & Equipment $ 559,600 ------------ Utilities - 3.7% Gas Utilities - 2.3% 10,900 Questar Corp. $ 877,341 47,700 Southern Union Co.* 1,290,762 9,600 Washington Gas Light Co.* 277,920 ------------ $ 2,446,023 ------------
The accompanying notes are an integral part of these financial statements. 7 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Independent Power Producer & Energy Traders - 1.4% 31,100 NRG Energy, Inc.* $ 1,498,398 ------------ Total Utilities $ 3,944,421 ------------ TOTAL COMMON STOCKS $ 14,895,042 ------------ (Cost $13,636,095)
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) CORPORATE BONDS - 72.5% Energy - 5.6% Coal & Consumable Fuels - 2.1% 2,500,000 NR/NR Massey Energy Co., 6.875%, 12/15/13 $ 2,325,000 ------------ Oil & Gas Refining & Marketing - 3.5% 1,031,000 B+/B1 Frontier Oil Corp., 6.625%, 10/1/11 $ 987,183 2,850,000 BB+/Ba1 Tesoro Petroleum Corp., 6.25%, 11/1/12 (144A) 2,707,500 ------------ $ 3,694,683 ------------ Total Energy $ 6,019,683 ------------ Materials - 19.7% Aluminum - 2.1% 2,300,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 2,208,000 ------------ Commodity Chemicals - 6.0% 1,750,000 BB-/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 2,056,250 2,000,000 BB-/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,985,000 2,500,000 BB-/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,396,875 ------------ $ 6,438,125 ------------ Construction Materials - 1.4% 1,500,000 BB-/Ba3 Texas Industries, Inc, 7.25%, 7/15/13 $ 1,485,000 ------------ Fertilizers & Agricultural Chemicals - 2.2% 2,500,000 B+/Ba2 Scotts Co., 6.625%, 11/15/13 $ 2,400,000 ------------ Metal & Glass Containers - 0.6% 800,000 B/B2 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 $ 702,000 ------------ Paper Products - 4.7% 200,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 162,000 2,250,000 B+/B1 Abitibi-Consolidated, Inc., 8.55%, 8/1/10 (a) 2,131,875 3,100,000 B+/B1 Bowater, Inc., 6.5%, 6/15/13 2,697,000 ------------ $ 4,990,875 ------------ Specialty Chemicals - 2.7% 2,090,000 B+/B1 Millennium America, Inc., 7.625%, 11/15/26 $ 1,766,050 1,000,000 B+/B1 Millennium America, Inc., 9.25%, 6/15/08 1,025,000 ------------ $ 2,791,050 ------------ Total Materials $ 21,015,050 ------------ Capital Goods - 14.4% Aerospace & Defense - 6.7% 4,000,000 B/B3 DRS Technologies, Inc., 6.875%, 11/1/13 $ 3,850,000 3,150,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 3,189,375 ------------ $ 7,039,375 ------------
8 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Industrial Machinery - 7.7% 2,500,000 B/B2 Gardner Denver, Inc., 8.0%, 5/1/13 (144A) $ 2,625,000 517,000 B+/B2 JLG Industries, Inc., 8.375%, 6/15/12 535,095 800,000 BB-/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 784,000 4,750,000 NR/NR Mueller Industries, Inc. 6.0%, 11/1/14 4,370,000 ------------ $ 8,314,095 ------------ Total Capital Goods $ 15,353,470 ------------ Consumer Durables & Apparel - 0.1% Homebuilding - 0.1% 185,000 BB-/Ba2 Meritage Homes Corp., 6.25%, 3/15/15 $ 155,863 ------------ Total Consumer Durables & Apparel $ 155,863 ------------ Media - 2.0% Advertising - 2.0% 2,300,000 B/Ba3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,087,250 ------------ Total Media $ 2,087,250 ------------ Retailing - 5.1% Automotive Retail - 1.9% 2,290,000 CCC/B3 Pep Boys-Manny Moe Jack, 7.5%, 12/15/14 $ 1,992,300 ------------ Distributors - 3.2% 3,500,000 B/B2 Wesco Distribution, Inc., 7.5%, 10/15/17 (144A) $ 3,500,000 ------------ Total Retailing $ 5,492,300 ------------ Health Care Equipment & Services - 1.4% Health Care Supplies - 1.4% 1,500,000 CCC+/Caa3 Inverness Medical Innovation, 8.75%, 2/15/12 $ 1,455,000 ------------ Total Health Care Equipment & Services $ 1,455,000 ------------ Pharmaceuticals & Biotechnology - 1.8% Pharmaceuticals - 1.8% 2,000,000 BB-/B1 Valeant Pharmaceuticals, 7.0%, 12/15/11 $ 1,900,000 ------------ Total Pharmaceuticals & Biotechnology $ 1,900,000 ------------ Real Estate - 8.2% Real Estate Management & Development - 3.2% 3,435,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 $ 3,460,763 ------------ Real Estate Investment Trusts - 2.7% 1,500,000 BB-/B2 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 1,522,500 1,300,000 B/B1 Crescent Real Estate, 9.25%, 4/15/09 1,351,350 ------------ $ 2,873,850 ------------ Retail Real Estate Investment Trusts - 2.3% 2,500,000 BB+/Ba1 Rouse Co Lp/TRC Co- ISSR 6.75%, 5/1/13 (144A) $ 2,434,763 ------------ Total Real Estate $ 8,769,376 ------------ Technology Hardware & Equipment - 5.5% Electronic Equipment & Instruments - 3.3% 1,835,000 B/B2 General Cable Corp., 9.5%, 11/15/10 $ 1,945,100 1,500,000 B/B2 Itron, Inc., 7.75%, 5/15/12 1,530,000 ------------ $ 3,475,100 ------------
The accompanying notes are an integral part of these financial statements. 9 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value Technology Distributors - 2.2% 1,600,000 BB+/Ba1 Anixter International Corp., 5.95%, 3/1/15 $ 1,472,000 1,000,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 982,812 ------------ $ 2,454,812 ------------ Total Technology Hardware & Equipment $ 5,929,912 ------------ Utilities - 8.7% Electric Utilities - 5.4% 3,300,000 BB-/Ba3 Allegheny Energy Supply, 7.8%, 3/15/11 $ 3,423,750 1,000,000 BB-/Ba3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,062,500 1,300,000 B+/B1 CMS Energy Corp., 7.5%, 1/15/09 1,316,250 ------------ $ 5,802,500 ------------ Multi-Utilities - 3.3% 3,000,000 B+/B1 CMS Energy Corp., 7.75%, 8/1/10 $ 3,045,000 450,000 B+/B1 CMS Energy Corp., 6.875%, 12/15/15 427,500 ------------ $ 3,472,500 ------------ Total Utilities $ 9,275,000 ------------ TOTAL CORPORATE BONDS (Cost $80,127,755) $ 77,452,904 ------------ Shares TEMPORARY CASH INVESTMENT - 1.6% Security Lending Collateral - 1.6% 1,695,184 Securities Lending Investment Fund, 5.16% $ 1,695,184 ------------ TOTAL TEMPORARY CASH INVESTMENT (Cost $1,695,184) $ 1,695,184 ------------ TOTAL INVESTMENT IN SECURITIES - 98.9% (Cost $107,286,117) $105,689,518 ------------ OTHER ASSETS AND LIABILITIES - 1.1% $ 1,161,880 ------------ TOTAL NET ASSETS - 100.0% $106,851,398 ============
NR Not rated by either S&P or Moody's * Non-income producing security. + Investment held by the fund representing 5% or more of the outstanding voting stock of such company. (a) At June 30, 2006, the following securities were out on loan:
Principal Amount Security Value $ 1,641,250 Abitibi-Consolidated, Inc., 8.55%, 8/1/10 $ 1,555,084 Shares 1,125 Equity Office Properties Trust 41,074 ----------- Total $ 1,596,158 ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year 5/1/01 6/30/06 Ended Ended Ended Ended to Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 10.88 $ 11.67 $ 11.46 $ 9.28 $ 10.33 $ 10.51 -------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income $ 0.29 $ 0.59 $ 0.58 $ 0.76 $ 0.80 $ 0.60 Net realized and unrealized gain (loss) on investments (0.15) ( 0.41) 0.27 2.17 (1.05) (0.07) -------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 0.14 $ 0.18 $ 0.85 $ 2.93 $ (0.25) $ 0.53 Distributions to shareowners: Net investment income (0.30) (0.59) (0.59) (0.75) (0.80) (0.60) Net realized gain (0.15) (0.38) (0.05) - - (0.11) -------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ (0.31) $ (0.79) $ 0.21 $ 2.18 $ (1.05) $ (0.18) -------- ------- ------- ------- ------- ------- Net asset value, end of period $ 10.57 $ 10.88 $ 11.67 $ 11.46 $ 9.28 $ 10.33 ======== ======= ======= ======= ======= ======= Total return* 1.30% 1.70% 7.76% 32.64% (2.42)% 5.39% Ratio of net expenses to average net assets+ 0.99%** 1.02% 1.04% 1.09% 1.82% 1.39%** Ratio of net investment income to average net assets+ 5.47%** 5.27% 5.12% 6.33% 8.67% 8.94%** Portfolio turnover rate 34%** 37% 42% 48% 42% 36% Net assets, end of period (in thousands) $ 44,904 $47,169 $51,912 $17,601 $ 228 $ 28 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.99%** 1.02% 1.04% 1.09% 1.82% 1.50%** Net investment income 5.47%** 5.27% 5.12% 6.33% 8.67% 8.83%** Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.99%** 1.02% 1.04% 1.09% 0.97% 0.85%** Net investment income 5.47%** 5.27% 5.12% 6.33% 0.01% 0.07%**
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios assuming no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges The accompanying notes are an integral part of these financial statements. 11 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $1,596,158) $105,689,518 (Cost $107,286,117) Cash 711,034 Receivables -- Investment securities sold 944,726 Fund shares sold 35,217 Dividends, interest and foreign taxes withheld 1,334,645 Other 6,303 ------------ Total assets $108,721,443 ------------ LIABILITIES: Payables -- Fund shares repurchased $ 120,084 Upon return for securities loaned 1,695,184 Due to affiliates 10,019 Accrued expenses 44,758 ------------ Total liabilities $ 1,870,045 ------------ NET ASSETS: Paid-in capital $108,601,819 Undistributed net investment income 31,588 Accumulated net realized loss (185,410) Net unrealized loss on Investments (1,596,599) ------------ Total net assets $106,851,398 ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 61,947,521 Shares outstanding 5,856,696 ------------ Net asset value per share $ 10.58 Class II: (No par value, unlimited number of shares authorized) Net assets $ 44,903,878 Shares outstanding 4,246,731 ------------ Net asset value per share $ 10.57
12 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $290) $ 198,071 Interest 3,429,052 Income on securities loaned, net 2,251 ------------ Total investment income $ 3,629,374 ------------ EXPENSES: Management fees $ 365,507 Transfer agent fees and expenses 4,858 Distribution fees (Class II) 60,958 Administrative reimbursements 10,548 Custodian fees 12,409 Professional fees 16,793 Printing expense 3,168 Fees and expenses of nonaffiliated trustees 1,574 Miscellaneous 817 ------------ Total expenses $ 476,632 ------------ Net expenses $ 476,632 ------------ Net investment income $ 3,152,742 ------------ REALIZED AND UNREALIZED LOSS ON INVESTMENTS: Net realized loss from investments $ (177,537) ------------ Change in net unrealized loss from investments $ (1,391,350) ------------ Net loss on investments $ (1,568,887) ============ Net increase in net assets resulting from operations $ 1,583,855 ============
The accompanying notes are an integral part of these financial statements. 13 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 3,152,742 $ 6,046,966 Net realized gain (loss) on investments (177,537) 1,530,055 Change in net unrealized loss on investments (1,391,350) (5,535,598) ------------- ------------- Net increase in net assets resulting from operations $ 1,583,855 $ 2,041,423 ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (1,828,845) $ (3,563,099) Class II (1,352,174) (2,466,908) Net realized gain Class I (896,053) (2,147,727) Class II (641,246) (1,587,624) ------------- ------------- Total distributions to shareowners $ (4,718,318) $ (9,765,358) ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 23,639,803 $ 43,512,782 Reinvestment of distributions 4,703,710 9,721,259 Cost of shares repurchased (28,978,600) (57,690,620) ------------- ------------- Net decrease in net assets resulting from Fund share transactions $ (635,087) $ (4,456,579) ------------- ------------- Net decrease in net assets $ (3,769,550) $ (12,180,514) ------------- ------------- NET ASSETS: Beginning of period $ 110,620,948 $ 122,801,462 ------------- ------------- End of period $ 106,851,398 $ 110,620,948 ============= ============= Undistributed net investment income, end of period $ 31,588 $ 59,865 ============= =============
14 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer High Yield VCT Portfolio (The Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty- seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The investment objective of High Yield Portfolio is to maximize total return through a combination of income and capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Portfolio's financial statements have been prepared in conformity with U.S. Generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. Investments in high-yield or lower-rated securities are subject to greater-than-average risk. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange 15 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the NYSE. The value of such securities used in computing the net asset value of the Portfolio's shares is based on the last sale price on the principal exchange where they traded. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. The High Yield Portfolio invests in below investment grade (high yield) debt securities and preferred stocks. These high yield securities may be convertible into equity securities of the issuer. Debt securities rated below investment grade are commonly referred to as "junk bonds" and are considered speculative. These securities involve greater risk of loss, are subject to greater price volatility, and are less liquid, especially during years of economic uncertainty or change, than higher rated debt securities. The Portfolio is not diversified, which means that it can invest a higher percentage of its asset in any one issuer than a diversified fund. Being non-diversified may magnify the fund's losses from adverse events affecting a particular issuer. In addition, the non-diversified Portfolio may have concentrations in certain asset types, which may subject the Portfolio to additional risks. Further description of these risks is included in the Trust's Prospectus. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. At June 30, 2006, the Portfolio had no open forward contracts. D. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if 16 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the year ended December 31, 2005, no such taxes were paid. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $6,600,658 Long-Term capital gain 3,164,700 ---------- $9,765,358 Return of Capital - ---------- Total distributions $9,765,358 ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 798,588 Undistributed long-term gain/(capital loss carryforward) 803,653 Unrealized appreciation (depreciation) (212,035) ---------- Total $1,390,206 ========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales and interest accrual on preferred stock. E. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006 Distribution fees for Class II are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted net assets at the beginning of the day. The Portfolio declares as daily dividends substantially all of its respective net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Distributions paid by a Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. F. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair 17 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian. G. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or sub custodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the portfolio. Management fees are calculated daily at the annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. June 30, 2006, $2,164 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,551 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $304 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ----------------------------------------------------------------------------------------------- High Yield Portfolio $107,292,903 $3,132,922 $(4,736,307) $(1,603,385) ============ ========== =========== =========== - -----------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $18,419,965 and $20,008,959, respectively. 18 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ------------------------------------------------------------------------------------------------- '06 Shares '06 Amount High Yield Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ------------------------------------------------------------------------------------------------- CLASS I: Shares sold 839,034 $ 9,137,961 1,902,148 $ 21,181,455 Reinvestment of distributions 252,418 2,710,344 514,993 5,666,754 Shares repurchased (1,066,068) (11,559,180) (2,659,638) (29,739,088) ------------------------------------------------------------- Net increase (decrease) 25,384 $ 289,125 (242,497) $ (2,890,879) ============================================================= CLASS II: Shares sold 1,328,901 $ 14,501,842 2,014,754 $ 22,331,327 Reinvestment of distributions 185,574 1,993,366 368,486 4,054,505 Shares repurchased (1,602,920) (17,419,420) (2,495,978) (27,951,532) ------------------------------------------------------------- Net decrease (88,445) $ (924,212) (112,738) $ (1,565,700) ============================================================= - -------------------------------------------------------------------------------------------------
19 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 21 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19622-00-0806 [LOGO]PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer International Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer International Value VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 10 Notes to Financial Statements 14 Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] International Common Stocks 83.4% Depositary Receipts for International Stocks 11.1% Temporary Cash Investment 2.6% U.S. Common Stocks 2.0% International Preferred Stocks 0.9%
Geographical Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] Japan 30.2% France 11.5% United Kingdom 11.3% Switzerland 7.9% Germany 6.6% Brazil 4.7% South Korea 4.0% Russia 3.4% Australia 2.4% Singapore 2.2% People's Republic of China 2.0% Spain 1.9% Sweden 1.8% United States 1.5% Turkey 1.3% Italy 1.0% Austria 1.0% Other (individually less than 1%) 5.3%
Five Largest Holdings (As a percentage of equity holdings) 1. BNP Paribas SA 2.31% 2. Royal Bank of Scotland Group Plc 2.25 3. Total SA 2.13 4. CS Group 2.11 5. Toyota Motor Co. 2.01
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 14.66 $ 13.63
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.0409 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer International Value VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.) Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer MCSI International All Country Value VCT World (ex. U.S.) Portfolio Index 6/96 $10,000 $10,000 $11,695 $11,414 6/98 $10,823 $11,572 $10,878 $12,675 6/00 $13,750 $14,969 $ 9,450 $11,406 6/02 $ 8,692 $10,474 $ 7,925 $10,035 6/04 $10,013 $13,297 $11,018 $15,551 6/06 $14,261 $19,967
The Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.) Index measures the performance of developed and emerging market stock markets. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
Net Asset Value 10 Years 3.61% 5 Years 8.58% 1 Year 29.43%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value - $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer International Value VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - --------------------------------------------------------------- Beginning Account Value on 1/1/06 $1,000.00 Ending Account Value on 6/30/06 $1,078.70 Expenses Paid During Period* $ 9.07
* Expenses are equal to the Portfolio's annualized expense ratio of 1.76% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer International Value VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - ---------------------------------------------------------------- Beginning Account Value on 1/1/06 $1,000.00 Ending Account Value on 6/30/06 $1,016.07 Expenses Paid During Period* $ 8.80
* Expenses are equal to the Portfolio's annualized expense ratio of 1.76% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- International stocks rallied considerably during the first half of the Portfolio's fiscal year - despite a retreat this spring, when global inflationary concerns sparked a more cautionary undercurrent and a general flight to quality. Lead portfolio manager Christopher Smart discusses these developments in the following interview. Q. How did the Portfolio perform during the first half of fiscal 2006? A. For the six months ended June 30, 2006, Class II shares rose 7.87% at net asset value. Three factors - an emphasis on emerging markets, stock selection in Japan and financial stocks in Europe - contributed to this return. Despite these successes, however, the Portfolio lagged the 9.99% return of the Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.) Index and the 8.95% average return for the 137 International Large-Cap Core funds in its Lipper category for the same period. We attribute this relative underperformance in part to the disappointing performance of two stocks in the telecom sector. Wireless provider Vodafone Group and telecommunications provider France Telecom encountered some headwinds during the fiscal year. Vodafone's stock fell in response to the company's announcement in November 2005 that it was facing substantially new competition in Europe. We believe the competition, combined with the difficulties that Vodafone is experiencing with the restructuring of its subsidiary in Japan, will generate much slower growth in the next few years. Consequently, we sold the entire position. Investments in France Telecom also fell during the year, but we believe the company's prospects are more attractive longer term and retained the stock in the Portfolio. Spanish oil giant Repsol also detracted from performance, as it was forced to reduce the estimated size of its oil reserves in Argentina and Bolivia. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. The Portfolio's exposure to key emerging markets helped performance. Could you mention some of those holdings? A. Certainly. The Portfolio's positions in South Korea and Russia were strong contributors to performance. We remain positive on the Korean market, based on our confidence in the continued health of both the consumer and export sectors. Two Korean shipbuilding companies stood out during the period - Daewoo Heavy Industries & Machinery and Hyundai Heavy Industries, which are benefiting from trade and globalization trends. In Russia, rising energy prices boosted shares of Lukoil and the natural gas giant Gazprom, which has become one of the largest listed companies in the world. A Word About Risk: Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. The Portfolio may invest a substantial amount of its assets in issuers located in a limited number of countries and therefore is susceptible to adverse economic, political or regulatory developments affecting those countries. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q. Europe is experiencing new signs of growth. Are the Portfolio's European investments benefiting? A. With the exception of the telecommunications sector, holdings across Europe fared well - particularly in the financial services sector. Societe Generale is focused on lowering costs to improve its profit margins. In addition, this diversified bank is expanding financial services businesses outside of France to increase its market share. Credit Suisse, which is domiciled in Switzerland, has initiated substantial internal restructuring and cost reductions that may contribute to its future profitability and growth prospects. Q. Are you concerned that the market's reversal this spring could be signaling a shift in investor sentiment, or do you see it a temporary correction? A. We do not anticipate a wholesale shift in investor sentiment at this time. High oil and commodity prices are understandably causing concerns for investors, but global growth remains solid and is supported by strong economic numbers. The correction appears to reflect a general reduction in risk appetite rather than a response to specific fundamental deterioration. As long as global inflationary pressures remain tame, we are upbeat about growth prospects worldwide. In Japan, domestic forces, including rising wages and climbing property values, are driving the recovery there. Europe may face some headwinds if the Central Bank tightens significantly, but consumers appear optimistic. New signs of growth in Germany suggest that the rest of the continent may see economic improvement. And in emerging markets, increasing prosperity and rising consumer demand are driving economic growth. We'll be keeping a sharp eye on valuations to ensure that stock prices remain reasonable relative to earnings prospects, but we still believe that the long-term outlook for international markets remains bright. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCK - 0.9% Utilities - 0.9% Multi-Utilities - 0.9% 3,360 RWE AG - Non-Voting $ 252,525 ----------- TOTAL PREFERRED STOCK (Cost $203,729) $ 252,525 ----------- COMMON STOCKS - 97.2% Energy - 9.9% Integrated Oil & Gas - 8.0% 7,875 Gazprom - Reg S, (A.D.R.)* $ 332,128 3,930 Lukoil Holding (A.D.R.) 328,352 4,020 Petrobras Brasileiro (A.D.R.) 320,957 18,950 Repsol SA 535,478 5,000 Statoil ASA* 142,302 8,980 Total SA* 588,753 ----------- $ 2,247,970 ----------- Oil & Gas Equipment & Services - 1.1% 3,500 Saipem S.p.A.* $ 79,452 4,080 Technip* 225,444 ----------- $ 304,896 ----------- Oil & Gas Exploration & Production - 0.8% 299,630 CNOOC, Ltd.* $ 240,525 ----------- Total Energy $ 2,793,391 ----------- Materials - 8.9% Construction Materials - 2.0% 3,720 CRH Plc $ 121,777 4,310 Holcim, Ltd.* 330,330 900 Lafarge Br* 112,803 ----------- $ 564,910 ----------- Diversified Metals & Mining - 3.1% 16,722 Broken Hill Proprietary Co., Ltd. $ 360,335 5,140 Freeport-McMoRan Copper & Gold, Inc. (Class B)(b) 284,807 4,650 Rio Tinto Plc 243,812 ----------- $ 888,954 ----------- Specialty Chemicals - 0.9% 4,500 Shin-Etsu Chemical Co., Ltd. $ 245,738 ----------- Steel - 2.9% 15,380 Companhia Vale do Rio Doce (A.D.R.) $ 316,520 25,600 Hitachi Metals, Ltd.* 253,081 5,800 JFE Holdings, Inc.* 246,269 ----------- $ 815,870 ----------- Total Materials $ 2,515,472 ----------- Shares Value Capital Goods - 11.2% Building Products - 1.1% 4,270 Compagnie de Saint Gobain* $ 304,618 ----------- Construction & Farm Machinery & Heavy Trucks - 3.1% 11,770 Daewoo Heavy Industries & Machinery, Ltd.* $ 345,202 2,380 Hyundai Heavy Industries* 267,370 12,800 Komatsu, Ltd.* 256,352 ----------- $ 868,924 ----------- Electrical Component & Equipment - 0.4% 1,100 Schneider Electric SA* $ 114,619 ----------- Heavy Electrical Equipment - 1.7% 59,000 Mitsubishi Electric Corp.* $ 474,742 ----------- Industrial Conglomerates - 2.8% 33,000 Keppel Corp* $ 306,443 61,711 KOC Holding AS* 183,487 3,560 Siemens 309,630 ----------- $ 799,560 ----------- Industrial Machinery - 1.1% 8,900 AB SKF* $ 139,855 14,220 Nabtesco Corp.* 160,157 ----------- $ 300,012 ----------- Trading Companies & Distributors - 1.0% 21,000 Sumitomo Corp.* $ 278,211 ----------- Total Capital Goods $ 3,140,686 ----------- Commercial Services & Supplies - 0.3% Office Services & Supplies - 0.3% 6,200 Buhrmann NV* $ 89,644 ----------- Total Commercial Services & Supplies $ 89,644 ----------- Transportation - 2.4% Air Freight & Couriers - 0.8% 700 Panalpina Welttransport Holding AG* $ 65,053 4,820 TNT NV 172,489 ----------- $ 237,542 ----------- Railroads - 1.6% 60 East Japan Railway Co.* $ 446,891 ----------- Total Transportation $ 684,433 ----------- Automobiles & Components - 4.5% Auto Parts & Equipment - 0.9% 8,120 Denso Corp.* $ 266,498 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Automobile Manufacturers - 3.0% 3,260 Hyundai Motor Co., Ltd.* $ 278,033 10,600 Toyota Motor Co. 554,409 ----------- $ 832,442 ----------- Tires & Rubber - 0.6% 1,660 Continental AG* $ 169,265 ----------- Total Automobiles & Components $ 1,268,205 ----------- Consumer Durables & Apparel - 3.3% Apparel, Accessories & Luxury Goods - 0.4% 2,300 Adidas-Salomon AG* $ 110,523 ----------- Consumer Electronics - 1.5% 9,800 Sony Corp.* $ 431,856 ----------- Footwear - 0.2% 140 Puma AG Rudolf Dassler Sport* $ 54,300 ----------- Homebuilding - 0.4% 5,350 Persimmon Plc. $ 121,863 ----------- Leisure Products - 0.8% 5,800 Sega Sammy Holdings, Inc.* $ 214,461 ----------- Total Consumer Durables & Apparel $ 933,003 ----------- Consumer Services - 0.4% Hotels, Resorts & Cruise Lines - 0.4% 2,370 Carnival Corp. $ 98,924 ----------- Total Consumer Services $ 98,924 ----------- Media - 1.5% Broadcasting & Cable TV - 0.8% 230 Jupiter Telecommunications Co., Ltd.* $ 159,392 6,100 Mediaset S.p.A* 71,816 ----------- $ 231,208 ----------- Movies & Entertainment - 0.7% 5,700 Vivendi SA* $ 199,381 ----------- Total Media $ 430,589 ----------- Retailing - 1.5% Apparel Retail - 0.8% 74,800 Truworths International, Ltd. $ 224,682 ----------- Department Stores - 0.7% 15,140 Takashimaya Co., Ltd.* $ 190,719 ----------- Total Retailing $ 415,401 ----------- Food & Drug Retailing - 2.4% Drug Retail - 0.3% 6,900 Boots Group Plc $ 97,829 ----------- Shares Value Hypermarkets & Supercenters - 2.1% 13,200 Aeon Co., Ltd.* $ 289,230 4,100 Brasil Distr Pao Acu (A.D.R.)* 127,674 2,770 Carrefour Supermarch* 162,120 ----------- $ 579,024 ----------- Total Food & Drug Retailing $ 676,853 ----------- Food, Beverage & Tobacco - 3.0% Brewers - 0.6% 9,700 South African Breweries Plc* $ 174,079 ----------- Packaged Foods & Meats - 1.1% 1,020 Nestle SA (Registered Shares)* $ 319,798 ----------- Soft Drinks - 0.5% 1,600 Fomento Economico Mexicano SA de C.V.* $ 133,952 ----------- Tobacco - 0.8% 8,300 British American Tobacco Plc $ 208,973 ----------- Total Food, Beverage & Tobacco $ 836,802 ----------- Household & Personal Products - 0.3% Household Products - 0.3% 2,000 Reckitt Benckiser Plc $ 74,514 ----------- Total Household & Personal Products $ 74,514 ----------- Health Care Equipment & Services - 0.8% Health Care Equipment - 0.5% 1,160 Synthes, Inc.* $ 139,657 ----------- Health Care Services - 0.3% 700 Fresenius Medical Care AG* $ 80,371 ----------- Total Health Care Equipment & Services $ 220,028 ----------- Pharmaceuticals & Biotechnology - 7.4% Pharmaceuticals - 7.4% 12,300 Astellas Pharma, Inc. $ 452,422 7,672 Astrazeneca Plc 459,200 14,000 Daiichi Sankyo Co., Ltd.* 384,878 3,028 Roche Holdings AG 499,712 4,340 Shire Pharmaceuticals Group Plc (A.D.R.) 191,958 1,640 UCB SA* 88,643 ----------- $ 2,076,813 ----------- Total Pharmaceuticals & Biotechnology $ 2,076,813 -----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Banks - 15.8% Diversified Banks - 15.8% 39,325 Barclays Plc $ 447,201 6,670 BNP Paribas SA* 637,222 8,850 Commonwealth Bank of Australia 291,867 5,700 Depfa Bank Plc* 94,744 25,200 Development Bank of Singapore, Ltd. 287,692 2,700 Kookmin Bank (A.D.R.)* 224,262 34 Mitsubishi UFJ Financial Group, Inc.* 475,627 18,910 Royal Bank of Scotland Group Plc 621,743 3,229 Societe Generale* 473,782 41 Sumitomo Mitsui Financial Group, Inc.* 435,056 37,210 Turkiye Is Bankasi (Isbank)* 182,371 4,090 Uniao de Bancos Brasileiros SA (Unibanco) (G.D.R.) (144A) 271,535 ----------- $ 4,443,102 ----------- Total Banks $ 4,443,102 ----------- Diversified Financials - 4.3% Asset Management & Custody Banks - 0.9% 1,940 Julius Baer Holding* $ 168,015 1,970 Man Group Plc 92,685 ----------- $ 260,700 ----------- Diversified Capital Markets - 2.8% 10,410 CS Group* $ 581,068 1,800 Deutsche Bank AG* 202,097 ----------- $ 783,165 ----------- Investment Banking & Brokerage - 0.6% 12,000 Nikko Cordinal Corp.*(b) $ 154,383 ----------- Total Diversified Financials $ 1,198,248 ----------- Insurance - 4.4% Life & Health Insurance - 1.1% 4,820 China Life Insurance Co. (A.D.R.)*(b) $ 305,106 ----------- Multi-Line Insurance - 2.3% 16,900 Aviva Plc $ 239,292 5,770 AXA* 188,874 1,020 Zurich Financial Services* 223,042 ----------- $ 651,208 ----------- Property & Casualty Insurance - 1.0% 21,840 Mitsui Sumitomo Insurance Co.* $ 273,481 ----------- Total Insurance $ 1,229,795 ----------- Real Estate - 1.5% Real Estate Management & Development - 1.5% 18,700 Mitsui Fudosan Co $ 408,238 ----------- Total Real Estate $ 408,238 ----------- Shares Value Software & Services - 0.5% Application Software - 0.5% 630 Sap AG* $ 132,677 ----------- Total Software & Services $ 132,677 ----------- Technology Hardware & Equipment - 3.6% Communications Equipment - 1.2% 104,050 Ericsson LM Tel Sur B* $ 343,743 ----------- Electronic Equipment & Instruments - 1.1% 1,200 Keyence Corp.* $ 306,789 ----------- Office Electronics - 1.3% 7,650 Canon, Inc. $ 374,047 ----------- Total Technology Hardware & Equipment $ 1,024,579 ----------- Semiconductors - 1.6% Semiconductor Equipment - 0.7% 2,800 Tokyo Electron, Ltd. $ 196,675 ----------- Semiconductors - 0.9% 20,570 Hon Hai Precision Industry (G.D.R.) $ 248,475 ----------- Total Semiconductors $ 445,150 ----------- Telecommunication Services - 4.6% Alternative Carriers - 0.9% 2,700 Fastweb* $ 117,180 23,100 Inmarsat Plc* 146,110 ----------- $ 263,290 ----------- Integrated Telecommunication Services - 2.7% 7,700 Brasil Telecom Participacoes SA* $ 250,789 8,400 France Telecom SA* 180,264 11,880 Telekom Austria AG* 264,126 10,430 Telekomunikacja Polska SA* 65,508 ----------- $ 760,687 ----------- Wireless Telecommunication Services - 1.0% 9,320 Mobile Telesystems (A.D.R.) $ 274,381 ----------- Total Telecommunication Services $ 1,298,358 ----------- Utilities - 3.3% Electric Utilities - 1.8% 4,433 E.On AG* $ 509,405 ----------- Gas Utilities - 1.5% 86,000 Tokyo Gas Co., Ltd. $ 404,964 ----------- Total Utilities $ 914,369 ----------- TOTAL COMMON STOCKS (Cost $23,129,164) $27,349,274 -----------
8 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value TEMPORARY CASH INVESTMENT - 2.6% Security Lending Collateral - 2.6% 743,621 Securities Lending Investment Fund, 5.2% $ 743,621 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $743,621) $ 743,621 ----------- TOTAL INVESTMENT IN SECURITIES - 100.7% (Cost $24,076,514)(a) $28,345,420 ----------- OTHER ASSETS AND LIABILITIES - (0.7)% $ (221,874) ----------- TOTAL NET ASSETS - 100.0% $28,123,546 ===========
* Non-income producing security (A.D.R.) American Depositary Receipt (G.D.R.) Global Depositary Receipt 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $271,535 or 1.0% of net assets. (a) Distributions of investments by country of issue, as percentage of total equity holdings (excluding temporary cash investments) is as follows: Japan 30.2% France 11.5 United Kingdom 11.3 Germany 6.6 Switzerland 7.9 Brazil 4.7 South Korea 4.0 Russia 3.4 Australia 2.4 Singapore 2.2 People's Republic of China 2.0 Spain 1.9 Sweden 1.8 United States 1.5 Turkey 1.3 Italy 1.0 Austria 1.0 Other (individually less than 1%) 5.3 ----- 100.0% =====
(b) At June 30, 2006, the following securities were out on loan:
Shares Security Value 11,000 Nikko Cordinal Corp.* $145,974 4,764 China Life Insurance Co. (A.D.R.)* 301,561 Freeport-McMoRan Copper & Gold, 5,089 Inc. (Class B) 281,981 -------- Total $729,516 ========
The accompanying notes are an integral part of these financial statements. 9 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 6/30/06 Ended Ended 5/1/03 (a) Class II (unaudited) 12/31/05 12/31/04 to 12/31/03 Net asset value, beginning of period $13.63 $11.84 $10.04 $ 7.76 ------ ------ ------ ------ Increase from investment operations: Net investment income (loss) $ 0.08 $ 0.04 $(0.02) $ 0.05 Net realized and unrealized gain on investments and foreign currency transactions 0.99 1.76 1.86 2.29 ------ ------ ------ ------ Net increase from investment operations $ 1.07 $ 1.80 $ 1.84 $ 2.34 Distributions to shareowners: Net investment income (0.04) (0.01) (0.04) (0.06) ------ ------ ------ ------ Net increase in net asset value $ 1.03 $ 1.79 $ 1.80 $ 2.28 ------ ------ ------ ------ Net asset value, end of period $14.66 $13.63 $11.84 $10.04 ====== ====== ====== ====== Total return* 7.87%** 15.19% 18.42% 30.31%(b) Ratio of net expenses to average net assets+ 1.76%** 1.84% 2.13% 2.02%** Ratio of net investment gain (loss) to average net assets+ 1.26%** 0.36% (0.11)% (0.81)%** Portfolio turnover rate 114%** 108% 129% 99% Net assets, end of period (in thousands) $7,275 $5,726 $4,133 $1,081 Ratios assuming no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.76%** 1.84% 2.13% 2.02%** Net investment income (loss) 1.26%** 0.36% (0.11)% (0.81)%**
(a) Class II shares were first publicly offered on May 1, 2003. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period.) ** Annualized. + Ratios with no reduction for fees paid indirectly. (b) Not annualized. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 10 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $729,516) (Cost $24,076,514) $28,345,420 Cash 518,610 Futures collateral 40 Foreign currencies, at value (Cost $40) 19,362 Receivables -- Fund shares sold 45,937 Dividends, interest and foreign taxes withheld 3,660 ----------- Other $28,933,029 ----------- Total assets LIABILITIES: Payables -- Fund shares repurchased $ 944 Upon return of securities loaned 743,621 Due to affiliates 9,661 Accrued expenses 55,257 ----------- Total liabilities $ 809,483 ----------- NET ASSETS: Paid-in capital $30,364,401 Undistributed net investment income 201,886 Accumulated net realized loss (6,711,987) Net unrealized gain on: Investments 4,268,906 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 340 ----------- Total net assets $28,123,546 ----------- NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $20,848,150 Shares outstanding 1,414,874 ----------- Net asset value per share $ 14.73 Class II: (No par value, unlimited number of shares authorized) Net assets $ 7,275,396 Shares outstanding 496,375 ----------- Net asset value per share $ 14.66
The accompanying notes are an integral part of these financial statements. 11 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $56,387) $ 401,984 Interest 3,659 Income on securities loaned, net 10,758 ----------- Total investment income $ 416,401 ----------- EXPENSES: Management fees $ 120,195 Transfer agent fees and expenses 5,011 Distribution fees (Class II) 8,308 Administrative reimbursements 9,536 Custodian fees 40,746 Professional fees 19,579 Printing expense 3,748 Fees and expenses of nonaffiliated trustees 1,955 Miscellaneous 5,302 ----------- Total expenses $ 214,380 ----------- Net expenses $ 214,380 ----------- Net investment income (loss) $ 202,021 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 3,182,264 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (12,056) ----------- $ 3,170,208 ----------- Change in net unrealized gain or loss from: Investments $(1,263,381) Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 834 ----------- $(1,262,547) ----------- Net gain on investments and foreign currency transactions $ 1,907,661 =========== Net increase in net assets resulting from operations $ 2,109,682 ===========
12 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 202,021 $ 163,925 Net realized gain on investments and foreign currency transactions 3,170,208 4,186,631 Change in net unrealized loss on investments and foreign currency transactions (1,262,547) (617,934) ----------- ----------- Net increase in net assets resulting from operations $ 2,109,682 $ 3,732,622 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (100,557) $ (31,154) Class II (20,185) (3,084) ----------- ----------- Total distributions to shareowners $ (120,742) $ (34,238) ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 2,991,315 $ 3,244,454 Reinvestment of distributions 120,741 34,238 Cost of shares repurchased (3,879,174) (7,067,685) ----------- ----------- Net decrease in net assets resulting from Fund share transactions $ (767,118) $(3,788,993) ----------- ----------- Net increase (decrease) in net assets $ 1,221,822 $ (90,609) ----------- ----------- NET ASSETS: Beginning of period $26,901,724 $26,992,333 ----------- ----------- End of period $28,123,546 $26,901,724 =========== =========== Undistributed net investment income, end of period $ 201,886 $ 120,607 =========== ===========
The accompanying notes are an integral part of these financial statements. 13 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer International Value Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty- seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (ClassII shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The Portfolio commenced operations on May 1, 2003. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objective of International Value VCT Portfolio is to seek long-term capital growth. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic and political conditions. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 14 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the NYSE. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. The principal exchanges and markets for such securities have closing times prior to the close of the NYSE. However, the value of these securities may be influenced by changes in global markets occurring after the closing times of the local exchanges and markets up to the time the Portfolio determines its net asset value. Consequently, the Board of Trustees of the Portfolio has determined that the use of daily fair valuations as provided by a pricing service is appropriate for the Portfolio. The Portfolio may also take into consideration other significant events in determining the fair value of these securities. Thus, the Portfolio's securities valuations may differ from prices reported by the various local exchanges and markets. At June 30, 2006, there were no fair valued securities. All securities that trade in foreign markets whose closing prices are as of times prior to the close of the NYSE and that are held by International Value Portfolio are fair valued using vendor-supplied pricing updates for each security to the time of the close of the NYSE. Temporary cash investments and securities held by the Portfolio are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. The Portfolio's investments in emerging markets or countries with limited or developing markets may subject the Portfolio to a greater degree of risk than in a developed market. Risks associated with these developing markets include political, social or economic factors and may affect the price of the Portfolio's investments and income generated by these investments, as well as the Portfolio's ability to repatriate such amounts. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. As of June 30, 2006, the Portfolio had no outstanding portfolio or settlement hedges. D. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be required to pay local 15 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (continued) - -------------------------------------------------------------------------------- taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the year ended December 31, 2005, no such taxes were paid. In determining the daily net asset value, the Portfolio estimates the reserve for such taxes, if any, associated with investments in certain countries. The estimated reserve for taxes on capital gains is based on the net unrealized appreciation on certain portfolio securities, the holding year of such securities and the related tax rates, tax loss carryforward (if applicable) and other such factors. The estimated reserve for taxes on repatriation of foreign currencies is based on principal balances and/or unrealized appreciation of applicable securities, the holding year of such investments and the related tax rates and other such factors. As of June 30, 2006, the Portfolio had no reserves related to taxes on the repatriation of foreign currencies. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, International Value VCT Portfolio had a capital loss carryforward of $9,866,967 of which the following amounts will expire between 2009 and 2011 if not utilized: $2,426,453 in 2009, $5,309,516 in 2010 and $2,130,998 in 2011. The tax character of current year distributions paid will be determined at the end of the fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 34,238 Long-Term capital gain -- ----------- $ 34,238 Return of Capital -- ----------- Total distributions $ 34,238 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 120,607 Undistributed long-term gain/(capital loss carryforward) (9,866,967) Unrealized appreciation (depreciation) 5,516,565 ----------- Total $(4,229,795) ===========
For the fiscal year ending December 31, 2005, International Value Portfolio has elected to pass through foreign tax credits of $58,710. The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable to the tax deferral of losses on wash sales. E. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at 16 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. F. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian. G. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or sub custodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 1.00% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $943 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $8,669 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $49 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ----------------------------------------------------------------------------------------------------- International Value Portfolio $24,091,742 $4,835,999 $ (582,321) $4,253,678 =========== ========== ========== ========== - -----------------------------------------------------------------------------------------------------
17 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (continued) - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the year ended June 30, 2006, were $15,889,704 and $17,170,894, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ----------------------------------------------------------------------------------------------- '06 Shares '06 Amount International Value Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ----------------------------------------------------------------------------------------------- CLASS I: Shares sold 56,236 $ 831,610 48,222 $ 576,930 Reinvestment of distributions 7,188 100,557 2,721 31,154 Shares repurchased (192,976) (2,841,013) (430,261) (5,229,863) ------------------------------------------------------------- Net decrease (129,552) $(1,908,846) (379,318) $(4,621,779) ============================================================= CLASS II: Shares sold 147,514 $ 2,159,705 218,007 $ 2,667,524 Reinvestment of distributions 1,451 20,184 270 3,084 Shares repurchased (72,693) (1,038,161) (147,285) (1,837,822) ------------------------------------------------------------- Net increase 76,272 $ 1,141,728 70,992 $ 832,786 =============================================================
18 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's website at http://www.sec.gov. 19 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 21 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19630-00-0806 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Mid Cap Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Table of Contents - ------------------------------------------------------- Pioneer Mid Cap Value VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 5 Financial Statements 8 Notes to Financial Statements 12 Trustees, Officers and Service Providers 17
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] U.S. Common Stocks 94.7% Temporary Cash Investment 4.5% Depositary Receipts for International Stocks 0.8%
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] Sector Distribution (As a percentage of equity holdings) Financials 23.9% Information Technology 12.4% Consumer Discretionary 12.0% Utilities 10.3% Industrials 10.2% Materials 9.3% Consumer Staples 9.2% Health Care 7.4% Energy 5.1% Telecommunication Services 0.2%
Five Largest Holdings (As a percentage of equity holdings) 1. Safeway, Inc. 2.54% 2. Xerox Corp. 2.39 3. CIGNA Corp. 2.33 4. W.W. Grainger, Inc. 2.29 5. NCR Corp. 2.24
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $18.22 $24.72 Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ - $1.8961 $4.70
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Mid Cap Value VCT Portfolio at net asset value, compared to that of the Russell Midcap Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.]
Pioneer Mid Cap Value Russell Midcap VCT Portfolio Value Index 6/96 $10,000 $10,000 6/97 $11,460 $12,797 6/98 $13,408 $16,092 6/99 $13,804 $16,997 6/00 $13,617 $15,653 6/01 $17,004 $19,398 6/02 $16,407 $19,771 6/03 $16,728 $19,645 6/04 $22,062 $25,698 6/05 $25,749 $31,299 6/06 $26,883 $35,760
The Russell Midcap Value Index measures the performance of U.S. mid-cap value stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- 10 Years 10.39% 5 Years 9.59% 1 Year 4.40%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Mid Cap Value VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II -------------------------------------------------- Beginning Account Value on 1/1/06 $1,000.00 Ending Account Value on 6/30/06 $1,010.60 Expenses Paid During Period* $ 4.82
* Expenses are equal to the Portfolio's annualized expense ratio of 0.97% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Mid Cap Value VCT Portfolio Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006
Share Class II --------------------------------------------------- Beginning Account Value on 7/1/05 $1,000.00 Ending Account Value on 12/31/05 $1,019.93 Expenses Paid During Period* $ 4.84
* Expenses are equal to the Portfolio's annualized expense ratio of 0.97% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- The domestic stock market produced generally modest, but positive, returns over the first six months of 2006. A vibrant rally in the early months faded in May, as investors grew concerned about the direction of the nation's monetary policy. Worries intensified when Ben Bernanke, the new chairman of the Federal Reserve Board, appeared to hint that the central bank might raise short-term interest rates more than had been anticipated. This raised concerns among many investors that the Fed could move too aggressively in fighting inflation and controlling growth. As a consequence, stock prices fell hard beginning in May and continued to slump through most of June. In the following discussion, Rod Wright, leader of the team that manages Pioneer Mid Cap Value VCT Portfolio, provides an update on the Portfolio, his investment strategies and the economic environment during the six months. Q. How did the Portfolio perform? A. The Portfolio had disappointing results. Class II shares had a total return of 1.06%, at net asset value, over the six months ended June 30, 2006. During that time, the Standard & Poor's 500 Index, which broadly reflects the overall market, returned 2.71%, while the benchmark Russell Midcap Value Index rose 7.02%. The Portfolio's 62 Mid-Cap Value Lipper peers returned an average of 3.81% over the same six months. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What were the principal factors influencing performance? A. The Portfolio's underperformance relative to the market benchmarks was related to several factors. Our emphasis on higher-quality companies with strong fundamentals did not help in a period when lower-quality value stocks tended to do well. We generally avoid lower-quality companies that are asset-intensive, have low operating profit margins and whose businesses are highly cyclical. In particular, our underweighting of real estate investments trusts (REITs), utility stocks, and steel and mining companies held back results when in fact these types of stocks performed relatively well. Performance also was held back by some underperforming holdings. These included Expedia, the on-line travel service, which changed its business model as it made heavy investments in system upgrades, and Boston Scientific, the producer of cardiac devices, whose stock fell because of concerns that it was paying too much in acquiring Guidant, another cardiac device corporation. We have liquidated the position in Expedia, but have retained the investment in Boston Scientific because of the company's longer-term prospects. Q. What were some of the investments that contributed positively to performance during the six months? A. Our investment in Tellabs had a major positive influence on results. This long-term holding had been an earlier disappointment, but its stock appreciated sharply during the six months on the expectations that the communications industry would be making significant new capital expenditures. We sold the position on strength, taking profits. Deere, the manufacturer of farm and heavy construction equipment, was another significant performer, as rising commodity prices encouraged farmers to invest in new equipment. Two energy holdings also did particularly well: Weatherford International, which provides oil field services to exploration and production companies; and Questar, a gas utility that also is involved in gas and oil exploration and production. Another holding that performed well was H.J. Heinz, the well-known food company. Q. What is your investment outlook? A. While we are encouraged about the health of the general economy, we are more cautious about the stock market. Leading economic indicators, including rising interest rates and high energy costs, indicate that some slowing in the rate of economic growth may occur. In this environment, we will maintain our focus on company-by-company stock selection, emphasizing fundamental research. We intend to continue to invest in high-quality companies with strong balance sheets and high profitability. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. A Word About Risk: Investments in mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerfunds.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 96.0% Energy - 4.9% Coal & Consumable Fuels - 1.5% 150,010 Massey Energy Co. $ 5,400,360 ------------ Integrated Oil & Gas - 1.3% 90,310 Hess Corporation* $ 4,772,884 ------------ Oil & Gas Drilling - 0.6% 26,954 Transocean Offshore Inc.* $ 2,164,945 ------------ Oil & Gas Equipment & Services - 0.7% 53,552 Weatherford Intl, Inc.* $ 2,657,250 ------------ Oil & Gas Refining & Marketing - 0.8% 40,504 Tesoro Petroleum Corp. $ 3,011,877 ------------ Total Energy $ 18,007,316 ------------ Materials - 8.9% Aluminum - 0.8% 130,872 Novelis, Inc. $ 2,824,218 ------------ Diversified Chemical - 2.6% 90,869 Ashland, Inc. $ 6,060,962 56,792 PPG Industries, Inc. 3,748,272 ------------ $ 9,809,234 ------------ Diversified Metals & Mining - 0.6% 40,417 Freeport-McMoRan Copper & Gold, Inc. (Class B) $ 2,239,506 ------------ Industrial Gases - 1.8% 101,682 Air Products & Chemicals, Inc. $ 6,499,513 ------------ Metal & Glass Containers - 1.7% 171,636 Ball Corp. $ 6,357,397 ------------ Specialty Chemicals - 1.4% 144,610 International Flavor & Fragrances, Inc. $ 5,096,056 ------------ Total Materials $ 32,825,924 ------------ Capital Goods - 6.1% Construction & Farm Machinery & Heavy Trucks - 1.5% 67,336 Deere & Co. $ 5,621,883 ------------ Electrical Component & Equipment - 1.1% 74,300 Thomas & Betts Corp.* $ 3,811,590 ------------ Industrial Conglomerates - 1.3% 174,210 Tyco International Ltd. $ 4,790,775 ------------ Trading Companies & Distributors - 2.2% 107,746 W.W. Grainger, Inc. $ 8,105,732 ------------ Total Capital Goods $ 22,329,980 ------------ Commercial Services & Supplies - 2.4% Commercial Printing - 1.0% 120,793 R.R. Donnelly & Sons Co. $ 3,859,336 ------------ Shares Value Environmental & Facilities Services - 1.4% 123,873 Republic Services, Inc. $ 4,997,037 ------------ Total Commercial Services & Supplies $ 8,856,373 ------------ Transportation - 1.3% Railroads - 1.3% 67,400 CSX Corp.* $ 4,747,656 ------------ Total Transportation $ 4,747,656 ------------ Automobiles & Components - 2.4% Auto Parts & Equipment - 1.1% 60,400 Borg-Warner Automotive Inc. $ 3,932,040 ------------ Motorcycle Manufacturers - 1.3% 86,410 Harley -Davidson, Inc. $ 4,743,045 ------------ Total Automobiles & Components $ 8,675,085 ------------ Consumer Services - 2.6% Casinos & Gaming - 1.7% 91,210 Harrah's Entertainment, Inc.* $ 6,492,328 ------------ Hotels, Resorts & Cruise Lines - 0.9% 84,779 Royal Caribbean Cruises, Ltd. $ 3,242,797 ------------ Total Consumer Services $ 9,735,125 ------------ Media - 4.6% Advertising - 1.5% 658,080 The Interpublic Group of Companies, Inc.* $ 5,494,968 ------------ Broadcasting & Cable Television - 3.1% 248,222 Clear Channel Communications, Inc. $ 7,682,471 140,715 Entercom Communications Corp.* 3,681,104 ------------ $ 11,363,575 ------------ Total Media $ 16,858,543 ------------ Retailing - 2.0% Apparel Retail - 0.6% 40,600 Abercrombie & Fitch Co. $ 2,250,458 ------------ Department Stores - 1.4% 26,522 Federated Department Stores, Inc.* $ 970,705 60,500 J.C. Penney Co., Inc. 4,084,355 ------------ $ 5,055,060 ------------ Total Retailing $ 7,305,518 ------------ Food & Drug Retailing - 3.1% Drug Retail - 0.7% 80,850 CVS Corp. $ 2,482,095 ------------ Food Retail - 2.4% 345,308 Safeway, Inc. $ 8,978,008 ------------ Total Food & Drug Retailing $ 11,460,103 ------------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Food, Beverage & Tobacco - 5.7% Brewers - 1.9% 100,531 Molson Coors Brewing Co. (Class B) $ 6,824,044 ------------ Packaged Foods & Meats - 1.7% 90,535 H.J. Heinz Co., Inc. $ 3,731,853 54,300 William Wrigley Jr. Co. 2,463,048 ------------ $ 6,194,901 ------------ Tobacco - 2.1% 174,410 UST, Inc.* $ 7,881,588 ------------ Total Food, Beverage & Tobacco $ 20,900,533 ------------ Health Care Equipment & Services - 6.0% Health Care Equipment - 1.0% 223,910 Boston Scientific Corp.* $ 3,770,644 ------------ Health Care Facilities - 1.1% 292,879 Tenet Healthcare Corp.* $ 2,044,295 45,224 Triad Hospitals, Inc.* 1,789,966 ------------ $ 3,834,261 ------------ Health Care Services - 1.7% 101,362 Laboratory Corporation of America Holdings* $ 6,307,757 ------------ Managed Health Care - 2.2% 83,614 CIGNA Corp. $ 8,236,815 ------------ Total Health Care Equipment & Services $ 22,149,477 ------------ Pharmaceuticals & Biotechnology - 1.1% Pharmaceuticals - 1.1% 26,856 Shire Pharmaceuticals Group Plc (A.D.R.) $ 1,187,841 93,910 Teva Pharmaceutical Industries, Ltd. 2,966,617 ------------ $ 4,154,458 ------------ Total Pharmaceuticals & Biotechnology $ 4,154,458 ------------ Banks - 9.9% Regional Banks - 7.3% 34,956 City National Corp. $ 2,275,286 124,225 KeyCorp 4,432,348 100,710 Marshall & Ilsley Corp. 4,606,475 83,610 PNC Bank Corp. 5,866,914 53,900 Regions Financial Corp. 1,785,168 121,310 TCF Financial Corp.* 3,208,650 57,200 Zions Bancorporation 4,458,168 ------------ $ 26,633,009 ------------ Thrifts & Mortgage Finance - 2.6% 242,021 Hudson City Bancorp, Inc. $ 3,226,140 144,599 The PMI Group, Inc. 6,446,223 ------------ $ 9,672,363 ------------ Total Banks $ 36,305,372 ------------ Shares Value Diversified Financials - 3.6% Asset Management & Custody Banks - 3.0% 155,014 Federated Investors, Inc.* $ 4,882,941 19,900 Legg Mason, Inc.* 1,980,448 120,459 Mellon Bank Corp. 4,147,403 ------------ $ 11,010,792 ------------ Investment Banking & Brokerage - 0.6% 94,500 E*TRADE Group, Inc.* $ 2,156,490 ------------ Total Diversified Financials $ 13,167,282 ------------ Insurance - 7.5% Insurance Brokers - 1.2% 128,510 Aon Corp.* $ 4,474,718 ------------ Life & Health Insurance - 2.1% 416,511 UNUM Corp. $ 7,551,344 ------------ Multi-Line Insurance - 2.0% 47,260 Assurant, Inc. $ 2,287,384 148,028 Genworth Financial, Inc. 5,157,296 ------------ $ 7,444,680 ------------ Property & Casualty Insurance - 1.2% 21,567 Ambac Financial Group, Inc.* $ 1,749,084 5,698 White Mountains Insurance Group, Ltd. 2,774,926 ------------ $ 4,524,010 ------------ Reinsurance - 1.0% 127,992 Platinum Underwriter Holdings, Ltd. $ 3,581,216 ------------ Total Insurance $ 27,575,968 ------------ Real Estate - 2.1% Industrial Real Estate Investment Trusts - 0.8% 53,900 ProLogis Trust $ 2,809,268 ------------ Mortgage Real Estate Investment Trusts - 0.8% 220,210 Annaly Mortgage Management, Inc. $ 2,820,890 ------------ Specialized Real Estate Investment Trusts - 0.5% 93,210 Host Hotels & Resorts, Inc.* $ 2,038,503 ------------ Total Real Estate $ 7,668,661 ------------ Software & Services - 1.0% Data Processing & Outsourced Services - 1.0% 269,882 The BISYS Group, Inc.* $ 3,697,383 ------------ Total Software & Services $ 3,697,383 ------------ Technology Hardware & Equipment - 9.3% Communications Equipment - 1.2% 270,020 Juniper Networks, Inc.* $ 4,317,620 ------------ Computer Hardware - 4.1% 182,110 Dell, Inc.* $ 4,445,305 215,810 NCR Corp.* 7,907,278 168,910 Palm, Inc.* 2,719,451 ------------ $ 15,072,034 ------------
6 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Electronic Equipment & Instruments - 1.7% 590,910 Symbol Technologies, Inc.* $ 6,375,919 ------------ Office Electronics - 2.3% 606,719 Xerox Corp.* $ 8,439,461 ------------ Total Technology Hardware & Equipment $ 34,205,034 ------------ Semiconductors - 1.6% Semiconductors - 1.6% 195,710 Freescale Semiconductor, Inc. (Class B)* $ 5,753,874 ------------ Total Semiconductors $ 5,753,874 ------------ Telecommunication Services - 0.2% Integrated Telecommunication Services - 0.2% 138,313 Cincinnati Bell, Inc.* $ 567,083 ------------ Total Telecommunication Services $ 567,083 ------------ Utilities - 9.9% Electric Utilities - 4.6% 114,310 Allegheny Energy, Inc.* $ 4,237,472 135,581 Edison International 5,287,659 86,810 Firstenergy Corp. 4,705,970 85,700 PPL Corp.* 2,768,110 ------------ $ 16,999,211 ------------ Gas Utilities - 1.6% 73,800 Questar Corp. $ 5,940,162 ------------ Indep Power Producer & Energy Traders - 1.5% 113,166 NRG Energy, Inc.* $ 5,452,338 ------------ Multi-Utilities - 2.2% 110,084 NSTAR $ 3,148,402 120,971 PG&E Corp. 4,751,744 ------------ $ 7,900,146 ------------ Total Utilities $ 36,291,857 ------------ TOTAL COMMON STOCKS (Cost $332,079,994) $353,238,605 ------------ Principal Amount Value TEMPORARY CASH INVESTMENTS - 4.6% Repurchase Agreement - 4.6% $16,800,000 UBS Warburg, Inc., 4.4%, dated 6/30/06, repurchase price of $16,800,000 plus accrued interest on 7/3/06 collateralized by $17,158,000 U.S. Treasury Bill, 5.125%, 6/30/08 $ 16,800,000 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $16,800,000) $ 16,800,000 ------------ TOTAL INVESTMENT IN SECURITIES - 100.6% (Cost $348,879,994) $370,038,605 ------------ OTHER ASSETS AND LIABILITIES - (0.6)% $ (2,101,567) ------------ TOTAL NET ASSETS - 100.0% $367,937,038 ============
* Non-income producing security. The accompanying notes are an integral part of these financial statements. 7 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/06 Ended Ended Ended Ended Ended Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 24.72 $ 24.44 $ 20.32 $ 14.86 $ 17.28 $ 17.75 ------- ------- -------- -------- -------- ------- Increase (decrease) from investment operations: Net investment income $ -- $ 0.35 $ 0.01 $ 0.06 $ 0.04 $ 0.14 Net realized and unrealized gain (loss) on investments 0.10 1.47 4.38 5.44 (1.96) 0.94 ------- ------- -------- -------- -------- ------- Net increase (decrease) from investment operations $ 0.10 $ 1.82 $ 4.39 $ 5.50 $ (1.92) $ 1.08 Distributions to shareholders: Net investment income -- (0.05) (0.06) (0.04) (0.04) (0.08) Net realized gain (6.60) (1.49) (0.21) -- (0.46) (1.47) ------- ------- -------- -------- -------- ------- Net increase (decrease) in net asset value $ (6.50) $ 0.28 $ 4.12 $ 5.46 $ (2.42) $ (0.47) ------- ------- -------- -------- -------- ------- Net asset value, end of period $ 18.22 $ 24.72 $ 24.44 $ 20.32 $ 14.86 $ 17.28 ======= ======= ======== ======== ======= ======= Total return* 1.06% 7.64% 21.77% 37.09% (11.38)% 6.22% Ratio of net expenses to average net assets+ 0.97%** 0.95% 0.97% 1.00% 1.07% 1.11% Ratio of net investment income to average net assets+ 0.64%** 0.25% 0.29% 0.60% 0.24% 0.10% Portfolio turnover rate 115%** 42% 55% 52% 68% 95% Net assets, end of period (in thousands) $94,098 $88,217 $536,837 $211,120 $61,038 $10,195 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.97%** 0.95% 0.97% 1.00% 1.07% 1.11% Net investment income 0.64%** 0.25% 0.29% 0.60% 0.24% 0.10% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.97%** 0.95% 0.97% 1.00% 1.07% 1.11% Net investment income 0.64%** 0.25% 0.29% 0.60% 0.24% 0.10%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized + Ratios with no reduction for fees paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 8 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (Cost $348,879,994) $370,038,605 Receivables -- Investment securities sold 5,261,104 Fund shares sold 134,741 Dividends, interest and foreign taxes withheld 386,844 Other 61,331 ------------ Total assets $375,882,625 ------------ LIABILITIES: Payables -- Investment securities purchased $ 7,210,113 Fund shares repurchased 425,989 Due to bank 180,277 Due to affiliates 22,470 Accrued expenses 106,738 ------------ Total liabilities $ 7,945,587 ------------ NET ASSETS: Paid-in capital $322,562,891 Undistributed net investment income 1,554,166 Accumulated net realized gain 22,661,370 Net unrealized gain on investments 21,158,611 ------------ Total net assets $367,937,038 ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $273,838,888 Shares outstanding 14,995,239 ------------ Net asset value per share $ 18.26 Class II: (No par value, unlimited number of shares authorized) Net assets $ 94,098,150 Shares outstanding 5,165,326 ------------ Net asset value per share $ 18.22
The accompanying notes are an integral part of these financial statements. 9 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $4,143) $ 2,801,601 Interest 220,983 ------------ Total investment income $ 3,022,584 ------------ EXPENSES: Management fees $ 1,223,963 Transfer agent fees and expenses 4,577 Distribution fees (Class II) 115,590 Administrative reimbursements 55,072 Custodian fees 11,251 Professional fees 19,514 Printing expense 37,440 Fees and expenses of nonaffiliated trustees 2,645 Miscellaneous 1,921 ------------ Total expenses $ 1,471,973 Less fees paid indirectly (4,021) ------------ Net expenses $ 1,467,952 ------------ Net investment income $ 1,554,632 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from investments $ 27,674,699 ------------ Change in net unrealized loss from investments $(24,698,742) ------------ Net gain on investments $ 2,975,957 ============ Net increase in net assets resulting from operations $ 4,530,589 ============
10 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 1,554,632 $ 2,876,590 Net realized gain on investments and redemptions in kind 27,674,699 146,233,723 Change in net unrealized gain or loss on investments (24,698,742) (98,298,212) ------------ ------------- Net increase in net assets resulting from operations $ 4,530,589 $ 50,812,101 ------------ ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (2,875,198) $ (980,182) Class II -- (1,186,576) Net realized gain Class I (71,620,430) (18,901,870) Class II (24,935,216) (33,992,323) ------------ ------------- Total distributions to shareowners $(99,430,844) $ (55,060,951) ------------ ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 23,886,018 $ 138,080,446 Reinvestment of distributions 99,430,844 55,060,951 Cost of shares repurchased (37,533,546) (163,603,573) Redemptions in kind -- (488,210,933) ------------ ------------- Net increase (decrease) in net assets resulting from Fund share transactions $ 85,783,316 $(458,673,109) ------------ ------------- Net increase (decrease) in net assets $ (9,116,939) $(462,921,959) ------------ ------------- NET ASSETS: Beginning of period $377,053,977 $ 839,975,936 ------------ ------------- End of period $367,937,038 $ 377,053,977 ------------ ------------- Undistributed net investment income, end of period $ 1,554,166 $ 2,874,732 ============ =============
The accompanying notes are an integral part of these financial statements. 11 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Mid Cap Value VCT Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty- seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans. The investment objective of Mid Cap Value Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. Information concerning the Portfolio's principal investment risks is contained in the Portfolio's prospectus (es). Please refer to those documents when considering the Portfolio's risks. Investing in mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange 12 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realizes a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2006, Mid Cap Value Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. 13 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Mid Cap Value Portfolio had a net capital loss carryforward of $3,859,922, of which the following amounts will expire between 2009 and 2010, if not utilized: $1,330,134 in 2009 and $2,529,788 in 2010. The tax character of current year distributions paid will be determined at the end of the fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 6,510,571 Long-Term capital gain 48,550,380 ------------ $ 55,060,951 Return of Capital -- ------------ Total distributions $ 55,060,951 ============ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 30,629,491 Capital loss carryforward from merger (3,859,922 Undistributed long-term gain 68,794,908 Unrealized appreciation (depreciation) 44,709,925 ------------ Total $140,274,402 ============ - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is primarily attributable to the tax deferral of losses on wash sales. F. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted net assets at the beginning of the day. Distributions paid by a Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolio has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Portfolio invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from 14 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $14,552 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,276 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $642 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - --------------------------------------------------------------------------------------------------- Mid Cap Value Portfolio $350,027,408 $33,294,480 $(13,283,283) $20,011,197 ============ =========== ============ =========== - ---------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $210,947,409 and $228,145,769, respectively. For the year ended September 23, 2005, the Portfolio had redemptions in kind which resulted in redemptions out of the Portfolio totaling $488,210,933. 15 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005: - --------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------- '06 Shares '06 Amount Mid Cap Value Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - --------------------------------------------------------------------------------------------------------------- CLASS I: Shares sold 374,576 $ 9,587,662 2,037,703 $ 50,295,966 Class I shares issued in reorganization -- -- -- -- Reinvestment of distributions 4,182,798 74,495,628 821,233 19,882,052 Shares repurchased (1,115,637) (28,263,675) (2,727,151) (66,908,971) Redemptions in kind -- -- (868,079) (21,000,610) ----------------------------------------------------------------- Net increase (decrease) 3,441,737 $ 55,819,615 (736,294) $ (17,731,563) ================================================================= CLASS II: Shares sold 570,095 $ 14,298,356 3,599,252 $ 87,784,480 Reinvestment of distributions 1,403,220 24,935,216 1,468,235 35,178,899 Shares repurchased (377,034) (9,269,871) (3,965,242) (96,694,602 Redemptions in kind -- -- (19,499,464) (467,210,323) ----------------------------------------------------------------- Net increase (decrease) 1,596,281 $ 29,963,701 (18,397,219) $(440,941,546) ================================================================= - ---------------------------------------------------------------------------------------------------------------
8. Merger Information On December 8, 2004, beneficial owners of Safeco RST Core Equity Portfolio, Safeco RST Money Market Portfolio and Safeco RST Multi-Cap Core Portfolio, three of the six portfolios that comprised Safeco Resource Series Trust, approved a proposed Agreement and Plan of Reorganization that provided for the mergers listed below. These tax-free reorganizations were accomplished on December 10, 2004 ("Closing Date"), by exchanging all of the Safeco's net assets for Class I shares as indicated below, based on Class I shares' ending net asset value on the Closing Date. The following charts show the details of the reorganizations as of that Closing Date: Pioneer Mid Cap Value VCT Portfolio
- ----------------------------------------------------------------------------------------------------- Pioneer Mid Cap Value Safeco RST Multi- Pioneer Mid Cap VCT Portfolio Cap Core Portfolio Value VCT Portfolio (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - ----------------------------------------------------------------------------------------------------- Net Assets $757,206,652 $49,670,328 $858,922,877 Shares Outstanding 32,072,498 $ 2,399,533 34,160,364 ------------ ----------- ------------ Class I Shares Issued $ 2,087,866 ============ - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- Unrealized Appreciation Realized Gain (Loss) on Closing Date on Closing Date - ----------------------------------------------------------------------------------------------------- Safeco RST Multi-Cap Core Portfolio $5,550,191 $7,992,587 ========== ========== - -----------------------------------------------------------------------------------------------------
16 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19624-00-0806 [LOGO]PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Real Estate Shares VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Real Estate Shares VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 7 Notes to Financial Statements 11 Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] U.S. Common Stocks 84.1% Temporary Cash Investment 15.9%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] Office 20.0% Apartment 19.5% Regional Mall 13.3% Industrial 13.2% Shopping Center 12.8% Hotel 8.9% Self Storage 4.9% Diversified 4.6% Triple-Net Lease 1.4% Health Care 1.1% Manufactured Homes 0.3%
Five Largest Holdings (As a percentage of equity holdings) 1. Simon DeBartolo Group, Inc. 7.24% 2. Boston Properties, Inc. 5.49 3. ProLogis Trust 5.29 4. AvalonBay Communities, Inc. 4.88 5. Equity Residential Property Trust 4.78
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 28.01 $ 26.09
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.3400 $ - $ 1.4942
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Real Estate Shares VCT Portfolio at net asset value, compared to that of the Wilshire Real Estate Securities Index. Portfolio returns are based on net asset value and do not reflect applicable insurance fees and surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Wilshire Real Estate Pioneer Real Estate Securities Index Shares VCT Portfolio 6/96 10000 10000 13355 13702 6/98 14223 14698 13244 13328 6/00 13834 13947 17231 16679 6/02 19603 19096 20182 19546 6/04 26073 25195 35100 34027 6/06 42769 42100
The Wilshire Real Estate Securities Index is a market-capitalization weighted measure of the performance of real estate investment trusts (equity and hybrid) and real estate operating companies. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- 10 Years 15.15% 5 Years 20.04% 1 Year 23.43%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares VCT Portfolio Based on actual returns from January 1, 2006 through June 20, 2006.
Share Class II ------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,146.60 Expenses Paid During Period* $ 6.01
* Expenses are equal to the Portfolio's annualized expense ratio of 1.13% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares VCT Portfolio Based on a hypothetical 5% return per year return before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II ------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,019.19 Expenses Paid During Period* $ 5.66
* Expenses are equal to the Portfolio's annualized expense ratio of 1.13% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Real estate investments enjoyed strong performance during the six months ended June 30, 2006 - the first half of the Portfolio's fiscal year. Investments in the apartment and office sectors proved particularly rewarding, as Matthew Troxell of AEW Capital management, L.P., the Portfolio's Sub-Advisor, explains in the following interview. Q. How well did the Portfolio perform during the six months ended June 30, 2006? A. The Portfolio posted strong performance, both on an absolute basis and relative to its benchmark and peer group. For the first half of fiscal 2006, Class II shares generated a return of 14.66% at net asset value. In comparison, the Wilshire Real Estate Securities Index returned 14.08% for the same six-month period. The average return for the 52 real estate funds in the Portfolio's Lipper category was 13.19%. We think effective stock selection and the Portfolio's greater-than-benchmark weighting in the apartment sector contributed to these results. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What is contributing to the rally in the apartment sector? A. The sector's outlook has improved, as many of the negative factors that had overshadowed this group of stocks and depressed investor demand have dissipated. With the return of higher interest rates, renting has become a more attractive option relative to buying a home. In addition, property values appear to have leveled off or even declined in some markets - thereby discouraging potential homebuyers who might have been drawn to the rising equity value offered by owning a home. On the other hand, the growth in supply of apartments has remained in check, in part due to the escalating cost of new construction. Also, during the last few years, many apartments were converted into condominiums to meet the high demand for home ownership, reducing the supply of apartments in the face of today's rising demand in some markets. This is benefiting the bottom line of the apartment real estate investment trust (REIT) operators, since landlords are better able to maintain full occupancy. With stronger demand, landlords have greater pricing power and are able to push through rent increases. Investments in Camden Properties outperformed dramatically for the six months ended June 30. We have a high level of confidence in the management team at this REIT, which is embracing technological innovations to improve efficiency and maximize revenue. The company also owns high-quality properties, which they manage very effectively in our opinion. Q. Did office REITs also experience a resurgence? A. Yes, and for similar reasons, albeit with somewhat of a lag to the multifamily sector. With the U.S. economy prospering and job growth expanding, demand for office space is increasing occupancy as existing tenants expand their businesses or new tenants arrive. The increased demand has allowed landlords to raise rents. Highwoods Properties rose dramatically in the final weeks of the reporting period in response to an unsolicited offer for the company at a value substantially higher than the trading price. While the offer was rejected by the board, we think it corroborated the inherent value that we'd seen in the stock for some time. One of the Portfolio's holdings, Equity Office Properties, also was a stronger performer for the semiannual period. However, we'd limited the Portfolio's exposure to this REIT, because we had concerns about the ability of the company to participate in the nascent office recovery. Our decision was a drawback, however, since it performed well. A Word About Risk: The Portfolio invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q. Is the mall sector still benefiting from the economic recovery? A. Yes, but to a lesser degree than apartment or office REITs, because regional malls and shopping centers have enjoyed strong outperformance relative to other property types for some time. Two holdings produced contrasting results and contributed to weaker, albeit positive, results during the reporting period. Mills Corp. turned in disappointing performance, because of questions surrounding the company's financial reporting and a proposed large-scale project in New Jersey. In contrast, Taubman Centers delivered strong performance, and its considerable weighting in the Portfolio magnified this result. Q. What is your outlook for balance of the fiscal year? A. We think that the fundamentals across most property types should continue to improve for the foreseeable future - although to varying degrees since their respective lease terms make them respond differently to the economic recovery. Our research-driven investment approach will be critical to determining which companies offer the most attractive value and are in the best position to capitalize on the positive fundamentals within their industries. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 98.3% Consumer Services - 3.8% Hotels, Resorts & Cruise Lines - 3.8% 74,000 Hilton Hotels Corp. $ 2,092,720 30,000 Starwood Hotels & Resorts* 1,810,200 ------------- $ 3,902,920 ------------- Total Consumer Services $ 3,902,920 ------------- Real Estate - 94.5% Diversified Real Estate Investment Trusts - 8.8% 82,500 Liberty Property Trust (a) $ 3,646,500 18,000 PS Business Parks, Inc. 1,062,000 52,700 Spirit Finance Corp. 593,402 39,000 Vornado Realty Trust 3,804,450 ------------- $ 9,106,352 ------------- Industrial Real Estate Investment Trusts - 7.4% 35,000 AMB Property Corp. $ 1,769,250 17,700 First Potomac Realty Trust 527,283 103,500 ProLogis Trust 5,394,420 ------------- $ 7,690,953 ------------- Mortgage Real Estate Investment Trusts - 0.8% 23,500 iStar Financial, Inc. $ 887,125 ------------- Office Real Estate Investment Trusts - 18.1% 28,000 BioMed Property Trust, Inc. $ 838,320 62,000 Boston Properties, Inc. 5,604,800 71,000 Brandywine Realty Trust 2,284,070 7,000 Carramerica Realty Corp. 311,850 26,500 Corporate Office Properties (a) 1,115,120 30,000 Duke Realty Investments, Inc. 1,054,500 44,500 Equity Office Properties Trust (a) 1,624,695 55,500 Highwoods Properties, Inc. 2,007,990 20,000 Kilroy Realty Corp. 1,445,000 13,500 Mack-Cali Realty Corp. 619,920 65,000 Trizec Properties, Inc. 1,861,600 ------------- $ 18,767,865 ------------- Real Estate Management & Development - 3.3% 108,000 Brookfield Properties Corp. (a) $ 3,474,360 ------------- Residential Real Estate Investment Trusts - 19.5% 23,100 Apartment Investment & Management Co. $ 1,003,695 74,500 Archstone Communities Trust 3,789,815 45,000 AvalonBay Communities, Inc. (a) 4,977,900 39,000 Camden Property Trust 2,868,450 8,000 Equity Lifestyle Properties, Inc. 350,640 109,000 Equity Residential Property Trust (a) 4,875,570 13,900 Home Properties, Inc.*(a) 771,589 57,000 United Dominion Realty Trust 1,596,570 ------------- $ 20,234,229 -------------
Shares Value Retail Real Estate Investment Trusts - 25.8% 67,000 Developers Diversifies Realty Corp. $ 3,496,060 35,200 Federal Realty Investment Trust 2,464,000 63,000 General Growth Properties, Inc. 2,838,780 52,500 Kimco Realty Corp. (a) 1,915,725 40,900 Kite Realty Group Trust 637,631 33,000 Pan Pacific Retail Properties, Inc. 2,289,210 37,000 Regency Centers Corp. 2,299,550 89,000 Simon DeBartolo Group, Inc. 7,381,660 48,000 Taubman Centers, Inc. 1,963,200 20,900 The Macerich Co. 1,467,180 ------------- $ 26,752,996 ------------- Specialized Real Estate Investment Trusts - 10.8% 41,000 Extra Space Storage, Inc.* $ 665,840 11,000 Healthcare Realty Trust, Inc. 350,350 12,000 Hospitality Properties Trust 527,040 190,000 Host Hotels & Resorts, Inc.*(a) 4,155,300 34,500 Nationwide Health Properties, Inc.* 776,595 42,100 Public Storage, Inc. 3,195,390 13,500 Shurgard Storage Centers, Inc. 843,750 20,000 Strategic Hotels & Resorts, Inc.* 414,800 14,500 U-Store-It Trust* 273,470 ------------- $ 11,202,535 ------------- Total Real Estate $ 98,116,415 ------------- TOTAL COMMON STOCKS (Cost $56,906,299) $ 102,019,335 ------------- TEMPORARY CASH INVESTMENT - 18.5% Security Lending Collateral - 18.5% 19,238,901 Securities Lending Investment Fund, 5.16% $ 19,238,901 ------------- TOTAL TEMPORARY CASH INVESTMENT (Cost $19,238,901) $ 19,238,901 ------------- TOTAL INVESTMENT IN SECURITIES - 116.8% (Cost $76,145,200) $ 121,258,236 ------------- OTHER ASSETS AND LIABILITIES - (16.8)% $ (17,416,823) ------------- TOTAL NET ASSETS - 100.0% $ 103,841,413 =============
* Non-income producing security. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 35,000 AvalonBay Communities, Inc. $ 3,871,700 52,400 Brookfield Properties Corp. 1,685,708 26,235 Corporate Office Properties 1,103,969 44,055 Equity Office Properties Trust 1,608,448 31,910 Equity Residential Property Trust 1,427,334 13,761 Home Properties, Inc.* 763,873 188,100 Host Hotels & Resorts, Inc.* 4,113,747 20,200 Kimco Realty Corp. 737,098 81,675 Liberty Property Trust 3,610,035 ------------ Total $ 18,921,912 ============
6 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 Year Ended Year Ended Year Ended Year Ended Year Ended Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $ 26.09 $ 24.26 $ 18.55 $ 14.45 $ 14.75 $ 14.40 ------- ------- ------- ------- ------- ------- Increase from investment operations: Net investment income $ 0.34 $ 0.36 $ 0.44 $ 0.68 $ 0.55 $ 0.41 Net realized and unrealized gain (loss) on investments 3.41 3.11 6.00 4.18 (0.20) 0.63 ------- ------- ------- ------- ------- ------- Net increase from investment operations $ 3.75 $ 3.47 $ 6.44 $ 4.86 $ 0.35 $ 1.04 Distributions to shareholders: Net investment income (0.34) (0.33) (0.40) (0.56) (0.65) (0.52) Net realized gain (1.49) (1.31) (0.33) -- -- -- Tax Return of Capital -- -- -- (0.20) -- (0.17) ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 1.92 $ 1.83 $ 5.71 $ 4.10 $ (0.30) $ 0.35 ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 28.01 $ 26.09 $ 24.26 $ 18.55 $ 14.45 $ 14.75 ======= ======= ======= ======= ======= ======= Total return* 14.66% 14.86% 35.39% 34.45% 2.28% 7.52% Ratio of net expenses to average net assets+ 1.13%** 1.18% 1.23% 1.28% 1.32% 1.52% Ratio of net investment income to average net assets+ 2.40%** 1.46% 2.20% 4.26% 4.21% 4.36% Portfolio turnover rate 18%** 12% 35% 20% 29% 34% Net assets, end of period (in thousands) $71,990 $67,383 $61,799 $39,892 $31,985 $11,972
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. The accompanying notes are an integral part of these financial statements. 7 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
ASSETS: Investment in securities, at value (including securities loaned of $18,921,912) (Cost $76,145,200) $ 121,258,236 Cash 1,226,876 Receivables -- Investment securities sold 295,747 Fund shares sold 69,653 Dividends, interest and foreign taxes withheld 369,768 Other 5,905 ------------- Total assets $ 123,226,185 ------------- LIABILITIES: Payables -- Investment securities purchased $ 42,070 Fund shares repurchased 52,917 Upon return of securities loaned 19,238,901 Due to affiliates 10,706 Accrued expenses 40,178 ------------- Total liabilities $ 19,384,772 ------------- NET ASSETS: Paid-in capital $ 53,200,452 Undistributed net investment income 229,457 Accumulated net realized gain on investments 5,298,468 Net unrealized gain on investments 45,113,036 ------------- Total net assets $ 103,841,413 ------------- NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 31,851,653 Shares outstanding 1,135,310 ------------- Net asset value per share $ 28.06 Class II: (No par value, unlimited number of shares authorized) Net assets $ 71,989,760 Shares outstanding 2,570,361 ------------- Net asset value per share $ 28.01
8 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $6,237) $ 1,787,776 Interest 20,348 Income on securities loaned, net 10,145 ----------- Total investment income $ 1,818,269 ----------- EXPENSES: Management fees $ 412,565 Transfer agent fees and expenses 4,996 Distribution fees (Class II) 88,416 Administrative reimbursements 9,698 Custodian fees 7,208 Professional fees 17,406 Fees and expenses of nonaffiliated trustees 1,862 Miscellaneous 472 ----------- Total expenses $ 542,623 ----------- Net expenses $ 542,623 ----------- Net investment income $ 1,275,646 ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain from investments $ 5,583,655 ----------- Change in net unrealized gain from investments $ 7,249,324 ----------- Net gain on investments $12,832,979 =========== Net increase in net assets resulting from operations $14,108,625 ===========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 1,275,646 $ 1,488,954 Net realized gain on investments 5,583,655 6,859,537 Change in net unrealized gain or loss on investments 7,249,324 5,415,473 ------------- ------------- Net increase in net assets resulting from operations $ 14,108,625 $ 13,763,964 ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (420,758) $ (513,835) Class II (836,959) (868,561) Net realized gain Class I (1,594,710) (1,720,481) Class II (3,624,498) (3,467,765) ------------- ------------- Total distributions to shareowners $ (6,476,925) $ (6,570,642) ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 4,325,603 $ 14,850,583 Reinvestment of distributions 6,476,926 6,570,642 Cost of shares repurchased (14,062,070) (27,391,461) ------------- ------------- Net decrease in net assets resulting from Fund share transactions $ (3,259,541) $ (5,970,236) ------------- ------------- Net increase in net assets $ 4,372,159 $ 1,223,086 ------------- ------------- NET ASSETS: Beginning of period $ 99,469,254 $ 98,246,168 ------------- ------------- End of period $ 103,841,413 $ 99,469,254 ============= ============= Undistributed net investment income, end of period $ 229,457 $ 211,528 ============= =============
10 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Real Estate Shares VCT Portfolio (the Portfolio) is a Portfolio of the Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts, or by qualified pension and retirement plans. The investment objective of Real Estate Shares Portfolio is to pursue long-term capital growth, with current income as a secondary objective. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Portfolio financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. The Portfolio also may use the fair value of a security, 11 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Because Real Estate Shares Portfolio invests a substantial portion of its assets in real estate investment trusts (REITs), the Portfolio may be subject to certain risks associated with direct investments in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and return of capital distributions may be made at any time. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code or its failure to maintain exemption from registration under the Investment Company Act of 1940. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As June 30, 2006, Real Estate Shares had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if 12 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. A portion of the dividend income recorded by Real Estate Shares Portfolio is from distributions by publicly traded REITs, and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Portfolio as a reduction of the cost basis of the securities held and those determined to be capital gain are reflected as such on the statement of operations. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 1,584,389 Long-Term capital gain 4,986,253 ----------- 6,570,642 Return of Capital -- ----------- Total distributions $ 6,570,642 =========== Distributable Earnings (Accumulated Losses): Undistributed long-term gain/(capital loss carry forward) $ 5,283,368 REIT Dividend Payable 211,528 Unrealized appreciation (depreciation) 37,514,365 ----------- Total $43,009,261 =========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is primarily attributable to the tax deferral of losses on wash sales. F. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees for Class II Shares are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted net assets at the beginning of the day. Distributions paid by a Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may 13 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.80% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $2,528 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $7,691 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $487 payable to PFD at June 30, 2006. 14 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------------------- Real Estate Shares Portfolio $76,427,953 $44,874,867 $ (44,584) $44,830,283 =========== =========== ========= =========== - ----------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $9,304,012 and $18,417,009, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- --------------------------------------------------------------------------------------------- '06 Shares '06 Amount Real Estate Shares Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - --------------------------------------------------------------------------------------------- CLASS I: Shares sold 33,257 $ 937,604 57,099 $ 1,401,143 Reinvestment of distributions 74,125 2,015,469 91,076 2,234,316 Shares repurchased (199,965) (5,670,285) (420,029) (10,198,782) ------------------------------------------------------- Net decrease (92,583) $ (2,717,212) (271,854) $ (6,563,323) ======================================================= CLASS II: Shares sold 118,596 $ 3,387,999 558,332 $ 13,449,440 Reinvestment of distributions 164,596 4,461,457 176,725 4,336,326 Shares repurchased (296,023) (8,391,785) (699,655) (17,192,679) ------------------------------------------------------- Net increase (decrease) (12,831) $ (542,329) 35,402 $ 593,087 ======================================================= - ---------------------------------------------------------------------------------------------
15 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO]PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19621-00-0806 [Logo] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Small Cap Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Small Cap Value VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 10 Notes to Financial Statements 14 Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] U.S. Common Stocks 81.6% Temporary Cash Investment 14.3% International Common Stocks 3.0% Exchange Traded Fund 0.7% Preferred Stocks 0.4%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] Financials 24.8% Information Technology 20.4% Industrials 17.1% Energy 10.2% Health Care 9.0% Consumer Discretionary 7.3% Consumer Staples 3.8% Materials 3.1% Utilities 2.6% Telecommunication Services 1.7%
Five Largest Holdings (As a percentage of equity holdings) 1. Insight Enterprises, Inc. 1.93% 2. Apollo Investment Corp. 1.92 3. Assured Guaranty, Ltd. 1.84 4. Pacer International, Inc. 1.69 5. Alaska Communications Systems Group, Inc. 1.67
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 16.39 $ 16.07
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.0003 $ 0.1027 $ 0.4162
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Small Cap Value VCT Portfolio at net asset value, compared to that of the Russell 2000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Small Cap Value VCT Russell 2000 Russell 2000 Portfolio Value Index Index 11/01 $10,000 $10,000 $10,000 6/02 11,061 10,118 11,382 6/03 10,078 9,952 10,950 6/04 13,133 13,273 14,800 6/05 14,858 14,526 16,930 6/06 17,159 16,644 19,403
The Russell 2000 Value Index measures the performance of U.S. small-cap Value stocks. The Russell 2000 Index measures the performance of U.S. small-cap stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 12.72% (11/8/01) 1 Year 15.23%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [divided by] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Small Cap Value VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,053.40 Expenses Paid During Period* $ 6.47
* Expenses are equal to the Portfolio's annualized expense ratio of 1.27% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Small Cap Value VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
Share Class II - -------------------------------------------------------------------------------- Beginning Account Value on 1/1/06 $ 1,000.00 Ending Account Value on 6/30/06 $ 1,018.50 Expenses Paid During Period* $ 6.36
* Expenses are equal to the Portfolio's annualized expense ratio of 1.27% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- In the following discussion, portfolio managers David Adams and John McPherson review the economic background and describe some of the decisions that contributed to the performance of Pioneer Small Cap Value VCT Portfolio over the six months ended June 30, 2006. Q. How did the Portfolio perform over this period? A. For the six months ended June 30, 2006, Class II shares of the Portfolio returned 5.34% at net asset value. These results were behind the 8.21% return on the Russell 2000 Index, the Fund's benchmark. The Portfolio's 39 Lipper Small-Cap Value peers returned an average of 8.09% over the six months. The first four months of the year were characterized by strong performance from the lower-quality, more speculative names that comprise the Russell 2000 Index. Our more conservative style leads us to invest in higher-quality issues with strong fundamentals and this focus contributed to the Portfolio's underperformance versus the benchmark. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. Please describe the investment background over the past year and how it affected small-cap stocks. A. An extended surge in the nation's growth rate fueled strong equity markets through most of the period. But the economy's strength also raised fears of inflation, dampening hopes for an end to the Federal Reserve Board's long campaign of interest rate hikes. Burdensome energy costs and geopolitical tensions centering on Iran, combined with rising interest rates and soaring commodity prices, cut the rally short, setting off a sharp downtrend beginning in mid-May. Q. Which of your investment decisions had the most favorable impact on results? A. Although we were slightly underweight among health-care issues, successful stock selection enabled us to outperform the benchmark in this sector. In the consumer discretionary sector, our slightly underweight stance also aided results. The Portfolio outperformed among industrials as well, the Russell 2000 Index's best-performing sector. Only three of the Portfolio's industry sectors showed declines over the past six months; any underperformance was relative to the benchmark sector. For example, information technology was slightly down, lagging benchmark returns. Energy showed net positive results, but still trailed the benchmark as the result of selling which trimmed gains in several issues that had been rising for several quarters. We have been pruning energy holdings as valuations bumped into the upper parameters set by our value-based approach. We are still overweight in this volatile sector, but by a smaller margin than in the last few years. Aspen Technology, the Portfolio's strongest contributor during the period, moved higher as new management aggressively put the corporate house in order. Aspen's design and process management software is widely used in the petrochemical and refining industries. Internal issues at Aspen had left customers wary of committing to new products, but a revamped infrastructure and other changes have begun to boost sales. Flowserve, which fabricates high-tolerance valves and pipes for the harsh conditions found in refineries, also contributed. Initiatives by new management to address financial and operational issues coincided with growth in Flowserve's markets, including new petrochemical facilities in China and elsewhere. Sharply higher metals prices, the result of the global boom in commodities, drove up shares of Carpenter Technology, a leading metals processor. We sold a large portion of the Portfolio's position to lock in profits. We also took profits in Piper Jaffray, a regional brokerage firm that recently bounced back after a period of disappointment. Amerigroup, an HMO focused on Medicaid patients, rebounded sharply after a sell-off last fall, thanks to improved earnings expectations. A Word About Risk: Investments in small companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q. Which of your choices held back results? A. North Sea supply boat operator Gulfmark Offshore disappointed during this period following an extended upward run. Demand for Gulfmark's boats is strong and the North Sea drilling outlook remains favorable over the longer term. However, the energy group was the target of profit-takers amid concerns about slackening global energy demand. We have been bullish on natural gas price trends in North America for some time. That thesis aided Portfolio returns considerably over the past three years, but hurt results this year as the relatively mild winter caused demand to weaken and prices to slide. In particular, Southwestern Energy, Swift Energy and Forest Oil, all long-time holdings, started to drop in February as a result of the weakening pricing environment. However, we believe that, over time, supply/demand imbalances will cause gas prices to rebound, which we think may benefit the Portfolio's holdings. Casualty insurer Quanta Capital Holdings fell when ratings service AM Best withdrew its favorable rating, curtailing Quanta's ability to write new business. We are awaiting an announcement from the company regarding its strategy for the eventual "run-off" of the company's book of business. Run-off is an industry term used to describe when a company allows its existing book of insurance contracts to lapse without writing new contracts. Avid Technology, a leader in the digitization of film and other media, slumped amid difficulties integrating Pinnacle Software, its first consumer acquisition, into the company. Until acquiring Pinnacle, Avid had worked exclusively in professional markets. Based on reports from the company, we are retaining our holdings. Symmetricom is the leading provider of precision atomic clocks used to send voice and data on telecom networks as well as in defense and space applications. Shares declined when what we believe to be a short-term cutback in government business diluted the benefit of increased sales to telecom companies. Q. What is your outlook for the economy and how have you positioned the Portfolio? A. We believe stocks in general should hold up well over the next several months, although returns are likely to be subdued and volatile. Underlying business fundamentals remain strong, and we believe the economy, though perhaps moderating in its growth rate, is healthy. The imponderables are macroeconomic forces that include geopolitical tensions, higher inflation driven by energy costs, and rising interest rates. As always, we remain disciplined and sensitive to valuations, both in terms of current holdings and possible new commitments. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCKS - 0.4% Insurance - 0.4% Multi-Line Insurance - 0.4% 18,640 Quanta Capital Holdings, 10.25%, 12/1/49 $ 347,822 ----------- Total Insurance $ 347,822 ----------- TOTAL PREFERRED STOCKS (Cost $466,000) $ 347,822 ----------- COMMON STOCKS - 90.3% Energy - 9.4% Coal & Consumable Fuels - 1.0% 24,687 Massey Energy Co.(a) $ 888,732 ----------- Integrated Oil & Gas - 1.0% 11,175 CNX Gas Corp.* $ 335,250 19,914 CNX Gas Corp. (144A)* 597,420 ----------- $ 932,670 ----------- Oil & Gas Drilling - 0.8% 15,617 Bronco Drilling Co., Inc.* $ 326,239 5,974 Todco 244,038 3,532 Unit Corp.* 200,935 ----------- $ 771,212 ----------- Oil & Gas Equipment & Services - 3.5% 39,235 Dresser-Rand Group, Inc.* $ 921,238 44,028 Gulfmark Offshore, Inc.* 1,137,243 74,311 Key Energy Services, Inc.* 1,133,243 ----------- $ 3,191,724 ----------- Oil & Gas Exploration & Production - 2.9% 18,726 Forest Oil Corp.* $ 620,954 10,917 Penn Virginia Corp. 762,880 32,107 Riata Energy, Inc. (144A)* 593,980 2,175 Rosetta Resources, Inc.*(a) 36,149 12,658 Rosetta Resources, Inc. (144A)* 210,376 13,890 Southwestern Energy Co.* 432,812 ----------- $ 2,657,151 ----------- Oil & Gas Storage & Transportation - 0.2% 6,859 Arlington Tankers, Ltd. $ 155,562 ----------- Total Energy $ 8,597,051 ----------- Materials - 2.9% Gold - 1.7% 82,876 Cambior, Inc.*(a) $ 222,936 18,153 Glamis Gold, Ltd.* 687,273 71,819 IAMGOLD Corp.* 639,189 ----------- $ 1,549,398 ----------- Paper Products - 0.4% 61,740 Domtar, Inc. $ 381,553 -----------
Shares Value Specialty Chemicals - 0.3% 23,401 Chemtura Corp. $ 218,565 ----------- Steel - 0.5% 1,961 Carpenter Technology $ 226,496 20,843 NN, Inc. 257,411 ----------- $ 483,907 ----------- Total Materials $ 2,633,423 ----------- Capital Goods - 7.3% Building Products - 0.1% 5,397 Goodman Global, Inc.* $ 81,926 ----------- Construction & Engineering - 0.5% 20,241 Insituform Technologies, Inc.* $ 463,316 ----------- Construction, Farm Machinery & Heavy Trucks - 3.4% 39,361 Commercial Vehicle Group, Inc.* $ 813,985 39,452 Federal Signal Corp. 597,303 3,071 Joy Global, Inc. 159,968 2,531 Nacco Industries, Inc. 347,785 32,101 Wabtec Corp. 1,200,577 ----------- $ 3,119,618 ----------- Electrical Component & Equipment - 2.3% 53,700 C&D Technologies, Inc. $ 403,824 105,167 Graftech International, Ltd.* 609,969 173,224 Power-One, Inc.* 1,143,278 ----------- $ 2,157,071 ----------- Industrial Machinery - 0.7% 7,900 Basin Water, Inc.*(a) $ 79,158 9,147 Flowserve Corp.* 520,464 ----------- $ 599,622 ----------- Trading Companies & Distributors - 0.3% 12,867 Applied Industrial Technologies, Inc. $ 312,797 ----------- Total Capital Goods $ 6,734,350 ----------- Commercial Services & Supplies - 3.2% Diversified Commercial Services - 1.3% 23,998 Cornell Companies, Inc.* $ 368,609 3,670 Corrections Corporation of America* 194,290 18,684 School Specialty, Inc.* 595,085 ----------- $ 1,157,984 ----------- Human Resource & Employment Services - 1.9% 24,649 Korn/Ferry International* $ 482,874 38,330 On Assignment, Inc.* 352,253 26,638 Watson Wyatt Worldwide, Inc. 936,059 ----------- $ 1,771,186 ----------- Total Commercial Services & Supplies $ 2,929,170 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Transportation - 5.1% Air Freight & Couriers - 2.1% 12,351 Forward Air Corp. $ 503,056 43,544 Pacer International, Inc. 1,418,664 ----------- $ 1,921,720 ----------- Marine - 1.0% 4,569 Dryships, Inc.(a) $ 49,300 24,826 Excel Maritime Carriers, Ltd.*(a) 256,949 12,232 Genco Shipping & Trading, Ltd. 212,348 45,905 Quintana Maritime, Ltd.(a) 376,421 ----------- $ 895,018 ----------- Railroads - 1.1% 29,891 Genesee & Wyoming, Inc.* $ 1,059,935 ----------- Trucking - 0.9% 11,590 Dollar Thrifty Automotive Group* $ 522,361 8,501 Universal Truckload Services, Inc.* 290,139 ----------- $ 812,500 ----------- Total Transportation $ 4,689,173 ----------- Automobiles & Components - 0.8% Tires & Rubber - 0.8% 70,050 Cooper Tire & Rubber*(a) $ 780,357 ----------- Total Automobiles & Components $ 780,357 ----------- Consumer Durables & Apparel - 1.1% Housewares & Specialties - 1.1% 31,841 Jarden Corp.* $ 969,558 ----------- Total Consumer Durables & Apparel $ 969,558 ----------- Consumer Services - 1.5% Casinos & Gaming - 0.5% 28,243 Bally Technologies, Inc.*(a) $ 465,162 ----------- Restaurants - 1.0% 19,375 AFC Enterprises, Inc.*(a) $ 247,031 37,277 O'Charley's, Inc.* 633,709 ----------- $ 880,740 ----------- Total Consumer Services $ 1,345,902 ----------- Retailing - 3.3% Apparel Retail - 1.0% 28,049 Stage Stores, Inc.* $ 925,617 ----------- Computer & Electronics Retail - 0.3% 37,715 Tweeter Home Entertainment Group, Inc.* $ 267,777 ----------- General Merchandise Stores - 0.5% 35,527 Fred's, Inc. $ 474,285 ----------- Internet Retail - 0.4% 66,104 1-800-FLOWERS.COM, Inc.* $ 381,420 -----------
Shares Value Specialty Stores - 1.1% 64,781 Hancock Fabrics, Inc.(a) $ 216,369 101,898 Rent-Way, Inc.* 752,007 ----------- $ 968,376 ----------- Total Retailing $ 3,017,475 ----------- Food, Beverage & Tobacco - 1.1% Agricultural Products - 0.4% 20,007 Fresh Del Monte Produce, Inc.*(a) $ 345,521 ----------- Packaged Foods & Meats - 0.7% 43,912 B & G Foods, Inc. $ 711,814 ----------- Total Food, Beverage & Tobacco $ 1,057,335 ----------- Household & Personal Products - 2.3% Personal Products - 2.3% 13,795 Herbalife, Ltd.* $ 550,421 87,412 Nu Skin Enterprises, Inc. 1,298,068 29,736 Reliv' International, Inc.* 293,792 ----------- $ 2,142,281 ----------- Total Household & Personal Products $ 2,142,281 ----------- Health Care Equipment & Services - 8.0% Health Care Equipment - 1.1% 21,618 Analogic Corp.* $ 1,007,615 ----------- Health Care Facilities - 0.7% 9,950 Lifepoint Hospitals, Inc.* $ 319,694 1 Sunrise Senior Living, Inc.* 28 7,765 Triad Hospitals, Inc.* 307,339 ----------- $ 627,061 ----------- Health Care Services - 4.0% 15,497 Chemed Corp. $ 845,051 69,362 Cross Country Healthcares, Inc.* 1,261,695 18,008 Pediatrix Medical Group, Inc.* 815,762 27,349 Providence Service Corp.* 744,713 ----------- $ 3,667,221 ----------- Health Care Supplies - 0.9% 61,120 Merit Medical Systems, Inc.* $ 841,011 ----------- Managed Health Care - 1.3% 40,150 AMERIGROUP Corp.* $ 1,246,256 ----------- Total Health Care Equipment & Services $ 7,389,164 ----------- Pharmaceuticals & Biotechnology - 0.2% Biotechnology - 0.1% 5,625 Cubist Pharmaceuticals, Inc.* $ 141,638 ----------- Pharmaceuticals - 0.1% 5,100 Connetics Corp.* $ 59,976 ----------- Total Pharmaceuticals & Biotechnology $ 201,614 -----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Banks - 5.5% Regional Banks - 4.5% 15,483 Alliance Bankshares Corp.* $ 253,916 21,650 Cadence Financial Corp.* 482,146 45,965 Cardinal Financial Corp. 534,113 11,445 City National Corp. 744,955 3,209 Signature Bank* 103,907 36,508 Southwest Bancorp, Inc.* 930,954 31,768 Sterling Bancshares, Inc. 595,650 21,509 Texas Capital Bancshares, Inc.* 501,160 ----------- $ 4,146,801 ----------- Thrifts & Mortgage Finance - 1.0% 35,388 BankAtlantic Bancorp, Inc. $ 525,158 19,304 Provident Financial Services, Inc. 346,507 ----------- $ 871,665 ----------- Total Banks $ 5,018,466 ----------- Diversified Financials - 6.3% Asset Management & Custody Banks - 1.8% 87,183 Apollo Investment Corp. $ 1,611,142 ----------- Consumer Finance - 2.7% 37,268 Advanta Corp. $ 1,285,442 23,736 Cash America International, Inc. 759,552 7,322 The First Marblehead Corp. 416,915 ----------- $ 2,461,909 ----------- Investment Banking & Brokerage - 1.1% 18,905 A.G. Edwards, Inc. $ 1,045,825 ----------- Multi-Sector Holding - 0.6% 38,750 Compass Diversified Trust* $ 552,963 ----------- Specialized Finance - 0.1% 4,026 Nasdaq Stock Market, Inc.* $ 120,377 ----------- Total Diversified Financials $ 5,792,216 ----------- Insurance - 5.9% Life & Health Insurance - 0.4% 33,818 American Equity Investment Life Holding*(a) $ 360,500 ----------- Multi-Line Insurance - 0.4% 131,214 Quanta Capital Holdings* $ 339,844 ----------- Property & Casualty Insurance - 2.1% 61,034 Assured Guaranty, Ltd. $ 1,548,433 1,236 National Interstate Corp. 33,520 7,428 Selective Insurance Group, Inc. 415,002 ----------- $ 1,996,955 -----------
Shares Value Reinsurance - 3.0% 43,325 IPC Holdings, Ltd. $ 1,068,395 20,466 Max Re Capital, Ltd. 446,977 22,588 Platinum Underwriter Holdings, Ltd. 632,012 47,217 Ram Holdings, Ltd.* 593,518 ----------- $ 2,740,902 ----------- Total Insurance $ 5,438,201 ----------- Real Estate - 3.8% Mortgage Real Estate Investment Trusts - 2.2% 40,535 Annaly Mortgage Management, Inc. $ 519,253 107,041 Deerfield Triarc Capital Corp. 1,389,392 10,900 Hanover Capital Mortgage Holdings, Inc. 57,225 ----------- $ 1,965,870 ----------- Office Real Estate Investment Trusts - 1.4% 43,195 BioMed Property Trust, Inc. $ 1,293,258 ----------- Retail Real Estate Investment Trusts - 0.2% 19,736 Feldman Mall Properties, Inc. $ 216,307 ----------- Total Real Estate $ 3,475,435 ----------- Software & Services - 7.6% Application Software - 4.8% 106,102 Aspen Technology, Inc.* $ 1,392,058 46,449 Bottomline Technologies, Inc.* 378,095 27,241 Corel Corp.* 328,526 51,213 Sonic Solutions*(a) 845,015 23,429 SPSS, Inc.* 753,008 95,989 TIBCO Software, Inc.* 676,722 ----------- $ 4,373,424 ----------- IT Consulting & Other Services - 0.9% 45,493 Gartner Group, Inc.* $ 646,001 14,955 NCI, Inc.* 195,911 ----------- $ 841,912 ----------- Systems Software - 1.9% 127,328 Borland Software Corp.* $ 672,292 34,805 Internet Security Systems, Inc.* 656,074 20,672 Sybase, Inc.* 401,037 ----------- $ 1,729,403 ----------- Total Software & Services $ 6,944,739 ----------- Technology Hardware & Equipment - 10.1% Communications Equipment - 3.3% 28,658 Black Box Corp. $ 1,098,461 39,724 Dycom Industries, Inc.* 845,724 150,883 Symmetricom, Inc.* 1,066,743 ----------- $ 3,010,928 ----------- Computer Hardware - 1.9% 39,061 Avid Technology, Inc.*(a) $ 1,301,903 186,936 Concurrent Computer Corp.* 487,903 ----------- $ 1,789,806 -----------
8 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Computer Storage & Peripherals - 0.3% 14,214 Electronics for Imaging, Inc.* $ 296,788 ----------- Electronic Equipment & Instruments - 1.5% 4,344 Electro Scientific Industrials* $ 78,149 20,990 Planar Systems, Inc.* 252,720 47,162 Technitrol, Inc. 1,091,800 ----------- $ 1,422,669 ----------- Electronic Manufacturing Services - 1.3% 36,389 Mercury Computer Systems, Inc.* $ 560,027 69,225 Smart Modular Technologies (WWH), Inc.* 607,796 ----------- $ 1,167,823 ----------- Technology Distributors - 1.8% 85,306 Insight Enterprises, Inc.* $ 1,625,050 ----------- Total Technology Hardware & Equipment $ 9,313,064 ----------- Semiconductors - 1.0% Semiconductor Equipment - 0.3% 26,413 Brooks Automation, Inc.* $ 311,673 ----------- Semiconductors - 0.7% 98,244 Lattice Semiconductor Corp.* $ 607,148 ----------- Total Semiconductors $ 918,821 ----------- Telecommunication Services - 1.5% Integrated Telecommunication Services - 1.5% 110,933 Alaska Communications Systems Group, Inc. $ 1,403,302 ----------- Total Telecommunication Services $ 1,403,302 ----------- Utilities - 2.4% Gas Utilities - 2.4% 22,698 AGL Resources, Inc. $ 865,248 14,006 Energen Corp. 537,971 21,870 People's Energy Corp.(a) 785,352 ----------- $ 2,188,571 ----------- Total Utilities $ 2,188,571 ----------- TOTAL COMMON STOCKS (Cost $76,526,286) $82,979,668 ----------- EXCHANGE TRADED FUNDS - 0.8% 3,177 Russell 2000 Exchange Traded Fund(a) $ 227,791 3,645 Russell 2000 Growth Exchange Traded Fund(a) 268,272 3,620 Russell 2000 Value Exchange Traded Fund(a) 261,979 ----------- $ 758,042 ----------- TOTAL EXCHANGE TRADED FUNDS (Cost $641,672) $ 758,042 -----------
Principal Amount Value TEMPORARY CASH INVESTMENTS - 15.3% Repurchase Agreement - 8.3% $ 7,600,000 UBS Warburg, Inc., 4.40%, dated 6/30/06, repurchase price of $7,600,000 plus accrued interest on 7/3/06 collateralized by $7,762,000 U.S. Treasury Bill, 5.125%, 6/30/08 $ 7,600,000 ----------- Shares Security Lending Collateral - 7.0% 6,454,751 Securities Lending Investment Fund, 5.16% $ 6,454,751 ----------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $14,054,751) $14,054,751 ----------- TOTAL INVESTMENT IN SECURITIES - 106.8% (Cost $91,688,709) $98,140,283 ----------- OTHER ASSETS AND LIABILITIES - (6.8)% $(6,241,863) ----------- TOTAL NET ASSETS - 100.0% $91,898,420 ===========
* Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $1,401,776 or 1.5% of total net assets. (a) At June 30, 2006, the following securities were out on loan:
Shares Security Value 11,203 AFC Enterprises, Inc.* $ 142,838 American Equity Investment 30,931 Life Holding* 329,724 35,725 Avid Technology, Inc.* 1,190,714 25,795 Bally Technologies, Inc.* 424,844 7,130 Basin Water, Inc.* 71,443 75,701 Cambior, Inc.* 203,636 69,349 Cooper Tire & Rubber* 772,548 4,512 Dryships, Inc. 48,684 22,611 Excel Maritime Carriers ,Ltd.* 234,024 8,793 Fresh Del Monte Produce, Inc.* 151,855 58,921 Hancock Fabrics, Inc. 196,796 10,474 Massey Energy Co. 377,064 7,717 People's Energy Corp. 277,117 41,939 Quintana Maritime, Ltd. 343,900 1,980 Rosetta Resources, Inc.* 32,908 2,859 Russell 2000 Exchange Traded Fund 204,990 Russell 2000 Growth Exchange 3,316 Traded Fund 244,058 Russell 2000 Value Exchange 3,584 Traded Fund 259,374 42,712 Sonic Solutions* 704,748 ---------- Total $6,211,265 ==========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 5/1/03 (a) 6/30/06 Ended Ended to Class II (unaudited) 12/31/05 12/31/04 12/31/03 Net asset value, beginning of period $ 16.07 $ 14.95 $ 12.47 $ 9.11 --------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.02 $ 0.02 $ (0.03) $ (0.01) Net realized and unrealized gain on investments and foreign currency transactions 0.82 1.59 2.51 3.37 --------- -------- -------- ---------- Net increase from investment operations $ 0.84 $ 1.61 $ 2.48 $ 3.36 Distributions to shareowners: Net investment income 0.00(c) - - - Net realized gain (0.52) (0.49) - - ---------- -------- -------- ---------- Net increase in net asset value $ 0.32 $ 1.12 $ 2.48 $ 3.36 ---------- -------- -------- ---------- Net asset value, end of period $ 16.39 $ 16.07 $ 14.95 $ 12.47 ========== ======== ======== ========== Total return* 5.34% 11.10% 19.89% 36.88%(b) Ratio of net expenses to average net assets+ 1.27%** 1.39% 1.54% 1.58%** Ratio of net investment income (loss) to average net assets+ 0.49%** 0.16% (0.41)% (0.15)%** Portfolio turnover rate 146%** 38% 36% 74% Net assets, end of period (in thousands) $ 32,758 $ 21,700 $ 10,845 $ 2,760 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.27%** 1.39% 1.59% 2.65%** Net investment income (loss) 0.49%** 0.16% (0.46)% (1.22)%** Ratios with waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.27%** 1.39% 1.54% 1.58%** Net investment income (loss) 0.49%** 0.16% (0.41)% (0.15)%**
(a) Class II shares were first publicly offered on May 1, 2003. (b) Not annualized. (c) Amount rounds to less than one cent per share. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at the net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fee paid indirectly. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 10 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $6,211,265) (Cost $91,688,709) $ 98,140,283 Cash 26,127 Receivables -- Investment securities sold 4,833 Fund shares sold 250,498 Variation margin 25,250 Dividends, interest and foreign taxes withheld 137,978 Due from Pioneer Investment Management, Inc. 3,102 Other 9,564 ------------ Total assets $ 98,597,635 ------------ LIABILITIES: Payables -- Investment securities purchased $ 40,105 Fund shares repurchased 64,060 Upon return of securities loaned 6,454,751 Due to affiliates 2,167 Accrued expenses 138,132 ------------ Total liabilities $ 6,699,215 ------------ NET ASSETS: Paid-in capital $ 68,936,874 Undistributed net investment income 206,359 Accumulated net realized gain on investments 16,211,745 Net unrealized gain on: Investments 6,451,574 Futures contracts 91,868 ------------ Total net assets $ 91,898,420 ------------ NET ASSET VALUE PER SHARE: Class I: (No par value, unlimited number of shares authorized) Net assets $ 59,140,617 Shares outstanding 3,582,110 ------------ Net asset value per share $ 16.51 Class II: (No par value, unlimited number of shares authorized) Net assets $ 32,757,803 Shares outstanding 1,998,916 ------------ Net asset value per share $ 16.39
The accompanying notes are an integral part of these financial statements. 11 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Dividends $ 328,598 Interest 130,202 Income on securities loaned, net 20,763 ------------- Total investment income $ 479,563 ------------- EXPENSES: Management fees $ 197,413 Transfer agent fees and expenses 1,483 Distribution fees (Class II) 31,324 Administrative reimbursements 8,805 Custodian fees 17,163 Professional fees 23,576 Printing expense 11,330 Fees and expenses of nonaffiliated trustees 2,300 Miscellaneous 491 ------------- Total expenses $ 293,885 ------------- Net expenses $ 293,885 ------------- Net investment income $ 185,678 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 16,357,805 Redemption in kind 2,170,274 Futures contracts (6,512) Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 165 ------------- $ 18,521,732 ------------- Change in net unrealized gain or loss from: Investments $ (15,901,452) Futures contracts 109,596 ------------- $ (15,791,856) ------------- Net gain on investments, futures contracts and foreign currency transactions $ 2,729,876 ============= Net increase in net assets resulting from operations $ 2,915,554 =============
12 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/06 Ended (unaudited) 12/31/05 FROM OPERATIONS: Net investment income $ 185,678 $ 92,250 Net realized gain on investments, redemptions in kind, futures contracts and foreign currency transactions 18,521,732 3,025,018 Change in net unrealized gain or loss on investments and futures contracts (15,791,856) 1,010,721 ------------- ------------ Net increase in net assets resulting from operations $ 2,915,554 $ 4,127,989 ------------- ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (73,422) $ - Class II (580) - Net realized gain Class I (1,788,652) (593,880) Class II (1,003,743) (497,417) ------------- ------------ Total distributions to shareowners $ (2,866,397) $ (1,091,297) ------------- ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 15,453,544 $ 20,346,152 Shares issued in reorganization 51,400,124 - Reinvestment of distributions 2,866,397 - Cost of shares repurchased (8,332,855) (9,966,656) Redemptions in kind (11,792,154) - ------------- ------------ Net increase in net assets resulting from Fund share transactions $ 49,595,056 $ 10,379,496 ------------- ------------ Net increase in net assets $ 49,644,213 $ 13,416,188 ------------- ------------ NET ASSETS: Beginning of period $ 42,254,207 $ 28,838,019 ------------- ------------ End of period $ 91,898,420 $ 42,254,207 ============= ============ Undistributed net investment income, end of period $ 206,359 $ 94,683 ============= ============
The accompanying notes are an integral part of these financial statements. 13 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Small Cap Value VCT Portfolio (the Portfolio) is a Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Small Cap Value Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements, which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market 14 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no securities fair valued. Temporary cash investments are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes withheld on capital gains at the applicable country rates. Small capitalization stocks, while offering the potential for higher returns, such as those held by the portfolio may be subject to greater short-term price fluctuations than securities of larger companies. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus(es). Please refer to those documents when considering the Portfolio's risks. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2006, Small Cap Value Portfolio had the following open contracts:
- --------------------------------------------------------------------------------------------------------------- Number of Contracts Settlement Market Unrealized Future Contracts Type Long/(Short) Month Value Gain/(Loss) - --------------------------------------------------------------------------------------------------------------- Small Cap Value Portfolio Russell 2000 5 9/06 $1,828,750 $91,868 - ---------------------------------------------------------------------------------------------------------------
C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. 15 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- E. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with federal income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------- 2005 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ - Long-Term Capital Gain 1,091,297 ---------- $1,091,297 Return of Capital - ---------- Total Distributions $1,091,297 ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 646,863 Undistributed long-term gain/(Capital loss carryforward) 2,238,710 Unrealized appreciation (depreciation) 6,006,705 ---------- Total $8,892,278 ========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is primarily attributable to the tax deferral of losses on wash sales. F. Portfolio Shares The Portfolio records sales and repurchases of its shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006. Distribution fees are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of the adjusted net assets at the beginning of the day. Distributions paid by a Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on 16 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the portfolio. Management fees are calculated daily at the annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $1,442 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $502 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $223 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ----------------------------------------------------------------------------------------------------- Small Cap Value Portfolio $91,844,645 $10,071,511 $(3,775,873) $6,295,638 =========== =========== ============ ========== - -----------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $38,553,305 and $50,592,666, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005: 17 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------- '06 Shares '06 Amount '05 Shares '05 Amount Small Cap Value Portfolio (unaudited) (unaudited) - ----------------------------------------------------------------------------------------------------- CLASS I: Shares sold 245,412 $ 4,167,166 571,103 $ 8,553,972 Shares issued in reorganization 2,861,983 48,796,816 - - Redemption in kind (654,874) (11,792,154) - - Reinvestment of distributions 116,744 1,862,074 40,427 589,019 Shares repurchased (256,798) (4,378,928) (539,585) (8,145,222) ------------------------------------------------------------- Net increase 2,312,467 $ 38,654,974 71,945 $ 997,769 ============================================================= CLASS II: Shares sold 665,015 $ 11,286,378 712,018 $ 10,705,770 Shares issued in reorganization 153,951 2,603,308 - - Reinvestment of distributions 63,445 1,004,323 34,350 497,391 Shares repurchased (233,745) (3,953,927) (121,596) (1,821,434) ------------------------------------------------------------- Net increase 648,666 $ 10,940,082 624,772 $ 9,381,727 ============================================================= - -----------------------------------------------------------------------------------------------------
8. Merger Information On May 23, 2006, beneficial owners of Pioneer Small Company VCT Portfolio and Pioneer Small Cap Value II VCT Portfolio approved a proposed Agreement and Plan of Reorganization that provided for the merger listed below. This tax-free reorganization was accomplished on May 24, 2006, by exchanging all of Pioneer Small Company VCT Portfolio's Class I and Class II net assets and Pioneer Small Cap Value II VCT Portfolio's Class I net assets for Pioneer Small Cap Value VCT Portfolio's shares, based on Pioneer Small Cap Value VCT Portfolio's Class I and Class II shares' ending net asset value, respectively. The following charts show the details of the reorganization as of that closing date ("Closing Date"):
- ----------------------------------------------------------------------------------------------------------------------------- Pioneer Pioneer Pioneer Pioneer Small Cap Value Small Company Small Cap Value II Small Cap Value VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio (Pre-Reorganization) (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization) - ----------------------------------------------------------------------------------------------------------------------------- Net Assets Class I $11,665,357 $3,024,464 $45,772,352 $60,462,173 Class II $30,138,805 $2,603,308 - $32,742,113 ----------- ---------- ----------- ----------- Total Net Assets $41,804,162 $5,627,772 $45,772,352 $93,204,286 ----------- ---------- ----------- ----------- Shares Outstanding Class I 684,211 247,234 2,521,638 3,546,194 Class II 1,782,074 215,447 - 1,936,024 Shares Issued in Reorganization Class I 2,861,983 Class II 153,951 - -----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------- Unrealized Accumulated Appreciation Gain/(Loss) on on Closing Date Closing Date - --------------------------------------------------------------------------------- Pioneer Small Company VCT Portfolio $ 1,554,529 $ 1,706 Pioneer Small Cap Value II VCT Portfolio $14,635,856 $ (85,337) ----------- --------- Total $16,190,385 $ (83,631) =========== ========= - ---------------------------------------------------------------------------------
18 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers Trustees John F. Cogan, Jr., President John F. Cogan, Jr., Chairman Osbert M. Hood, Executive Vice President David R. Bock Vincent Nave, Treasurer Mary K. Bush Dorothy E. Bourassa, Secretary Margaret B.W. Graham Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 19 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 21 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19628-00-0806 [LOGO]PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Global High Yield VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2006 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Global High Yield VCT Portfolio Portfolio and Performance Update 2 Comparing Ongoing Portfolio Expenses 3 Portfolio Management Discussion 4 Schedule of Investments 6 Financial Statements 14 Notes to Financial Statements 18 Trustees, Officers and Service Providers 22
Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. The Trust files a complete statement of investments with the Securities and Exchange Commission for the first and the third quarters for each fiscal year on Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's web site at http://www.sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, D.C. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/06 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment in securities [THE TABLE BELOW WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Corporate Bonds 86.5% Temporary Cash Investment 5.2% Asset Backed Securities 3.3% Convertible Corporate Bonds 1.8% Municipal Bonds 1.8% Foreign Government Bonds 1.4%
Maturity Distribution (As a percentage of total investment in securities) [THE TABLE BELOW WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
0-1 years 14.1% 1-3 years 12.6% 3-4 years 6.2% 4-6 years 52.7% 6-8 years 10.9% 8+ years 3.5%
Five Largest Holdings (As a percentage of long-term holdings) 1. DDI Holding AS, 9.3%, 1/19/12 1.69% - ------------------------------------------------ 2. Gol Finance, 8.75%, 4/29/49 (144A) 1.43 - ------------------------------------------------ 3. Thule Drilling, 10.0%, 5/10/07 1.35 - ------------------------------------------------ 4. Eschelon Operating Co., 8.375%, 3/15/10 1.30 - ------------------------------------------------ 5. Ashtead Holdings Plc, 8.625%, 8/1/15 (144A) 1.25
The Portfolio is actively managed, and current holdings may be different. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/06 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/06 12/31/05 Net Asset Value per Share $ 10.00 $ 10.02
Net Distributions per Share Investment Short-Term Long-Term (1/1/06 - 6/30/06) Income Capital Gains Capital Gains $ 0.377556 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Global High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch (ML) Global High Yield and Emerging Markets Plus Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE TABLE BELOW WAS DEPICTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Global ML Global High Yield High Yield and Emerging Markets VCT Portfolio Plus Index 3/31/2005 $10,000 $10,000 6/30/2005 $10,238 $10,280 6/30/2006 $10,964 $10,888
Index comparisons begin on 4/30/00. The ML Global High Yield and Emerging Markets Plus Index tracks the performance of the below- and border-line investment-grade global debt markets denominated in the major developed market currencies. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Cumulative Total Returns (As of June 30, 2006)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 7.06% (3/18/05) 1 Year 7.10%
All total returns shown assume reinvestment of distributions at net asset value. Please refer to the variable product's report wrapper for performance that reflects the deduction of the variable product's fees and charges. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Please refer to variable product's semiannual report for performance that reflects the deduction of the variable products fees and charges. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 2 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- COMPARING ONGOING PORTFOLIO EXPENSES - -------------------------------------------------------------------------------- As a shareowner in the Portfolio, you incur two types of costs: (1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and (2) transaction costs, including sales charges (loads) on purchase payments. This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other variable annuities. The example is based on an investment of $1,000 at the beginning of the Portfolio's latest six-month period and held throughout the six months. Using the Tables Actual Expenses The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows: 1. Divide your account value by $1,000 Example: an $8,600 account value [Divided By] $1,000 = 8.6 2. Multiply the result in (1) above by the corresponding share class's number in the third row under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. Expenses Paid on a $1,000 Investment in Pioneer Global High Yield VCT Portfolio Based on actual returns from January 1, 2006 through June 30, 2006.
- --------------------------------------------------------- Share Class II - --------------------------------------------------------- Beginning Account Value on 1/1/06 $1,000.00 Ending Account Value on 6/30/06 $1,035.70 Expenses Paid During Period* $ 5.05
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Hypothetical Example for Comparison Purposes The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher. Expenses Paid on a $1,000 Investment in Pioneer Global High Yield VCT Portfolio Based on a hypothetical 5% return per year before expenses, reflecting the period from January 1, 2006 through June 30, 2006.
- --------------------------------------------------------- Share Class II - --------------------------------------------------------- Beginning Account Value on 1/1/06 $1,000.00 Ending Account Value on 6/30/06 $1,019.84 Expenses Paid During Period* $ 5.01
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for Class II shares, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 3 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 - -------------------------------------------------------------------------------- Lower quality, high-yielding bonds performed well in a generally favorable environment early in 2006, outperforming higher-quality issues in most of the world's fixed-income markets. That situation changed abruptly in the second quarter, however, as investors grew increasingly risk-averse because of fears that actions of the U.S. Federal Reserve and other major central banks would stall the worldwide economic recovery. In the following interview, Andrew D. Feltus, leader of the team managing Global High Yield VCT Portfolio, provides an update on the Portfolio, its investment strategies and the investment environment for the six months ended June 30, 2006. Q. How did the Portfolio perform during the first half of 2006? A. Pioneer Global High Yield VCT Portfolio, Class II shares, had a total return of 3.57%, at net asset value, for the six months ended June 30, 2006. During the same six months, the Merrill Lynch Global High Yield and Emerging Markets Plus Index returned 3.26%. The average return of the 103 portfolios in the Lipper Current High Yield variable annuity fund category was 2.39%. The Portfolio also continued to provide current income. On June 30, 2006, the Portfolio's 30-day SEC yield was 6.91%. Call 1-800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Q. What was the investment environment during the six months? A. The markets for high-yielding bonds grew increasingly volatile over the six months. Early in 2006, generally strong economic and corporate profit growth resulted in continued good performance from lower-rated bonds, including emerging market debt and domestic high-yield bonds. The U.S. Treasury market was relatively stable. That environment dramatically changed in the second quarter of the year, when investors became more cautious about credit risk because of concerns that the U.S. Federal Reserve and other central banks might raise rates too far and cause an economic slowdown. After the Federal Reserve raised the Fed funds rate to 5.00% on May 10 (the rate subsequently would be raised again, to 5.25% in late June), prices of emerging market debt, sensitive to global economic growth, and domestic high-yield bonds fell sharply as investors sought to lower their risk profiles. The U.S. dollar lost value against most major currencies during the six months. Treasury securities also lost value as longer-term interest rates rose. Q. What were your principal strategies during the period? A. Throughout the six months, we focused on domestic high-yielding corporate debt while deemphasizing both emerging market and international high-yield debt. We also increased overall credit quality during the period, positioning the Portfolio for the possibility of slowing economic growth. We reduced holdings in securities rated CCC or lower to just 6.2% of Portfolio assets by the close of the period on June 30, 2006. By sector, we focused on bonds from less cyclical parts of the economy, reducing positions in chemicals, for example, while adding investments in health care. We also increased investments in energy-related bonds. At the end of the period, on June 30, 2006, 57.2% of Portfolio assets were invested in domestic high-yield securities, while 22.7% and 10.3% of assets were invested in emerging markets and high-yield bonds from foreign, developed markets, respectively. Average credit quality of Portfolio assets was B+. We kept duration - or sensitivity to interest-rate changes - relatively short to protect the Portfolio's net asset value as long-term interest rates rose. The Portfolio's effective duration was 4.26 years on June 30, 2006. A Word About Risk: Investments in high yield or lower-rated securities are subject to greater-than-average risk. When interest rates rise, the prices of fixed income securities in the Portfolio will generally fall. Conversely, when interest rates fall, the prices of fixed income securities in the Portfolio will generally rise. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Prepayment risk is the chance that mortgage-backed bonds will be paid off early if falling interest rates prompt homeowners to refinance their mortgages. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation associated with falling interest rates. At times, the Portfolio's investments may represent industries or industry sectors that are interrelated or have common risks, making it more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. Call 800-688-9915 or visit www.pioneerinvestments.com for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted. The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown. Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information. 4 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Q. What types of investments had the greatest influence on performance? A. Our investments in bonds of several companies that subsequently announced they were being acquired had substantial positive effects on results, as these companies bought back their debt at profits to the Portfolio. The companies included: Doane Pet Care, a pet food company; Indocoal, an Indonesian company; and Stone Energy, an oil and gas exploration company. Other companies bought back their debt, also at a profit to the Portfolio, as they recapitalized themselves after strong earnings results. Those firms included Resolution Performance, a specialty chemicals company, and Hanger Orthopedic Group, a manufacturer of prosthetic devices. Another company, truck manufacturer Navistar, was forced to buy back its debt after it was late in filing some financial statements. Airline bonds, which had detracted from results earlier, recovered during the period, helping support Portfolio performance. The bonds included the issues of AMR, parent of American Airlines, and of Continental Airlines. We did have some disappointments, however. The lower-than-benchmark position in foreign currencies detracted from results as the U.S. dollar weakened. Specific investments that did not help included bonds of Ainsworth Lumber, a forest products company, and of Cell C, a South African wireless communications company. In addition, the investments in bonds of two Kazakh banks held back performance. Q. What is your investment outlook? A. The high-yield market was quite volatile in the second quarter of 2006. However, the underlying performance of the high-yield companies that we analyze was quite good. As we enter the second half of the year, we plan to continue to focus on domestic high-yield companies, which we believe offer superior risk/rewards opportunities to foreign securities. We also plan to continue to upgrade overall credit quality to protect the Portfolio in a period of slowing economic growth. Finally, we will maintain our emphasis on individual, intensive company research and credit analysis. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 5 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) - --------------------------------------------------------------------------------
Principal Amount USD ($) Value CONVERTIBLE CORPORATE BONDS - 1.7% Pharmaceuticals & Biotechnology - 0.8% Pharmaceuticals - 0.8% 65,000 Pharm Resources, 2.875%, 9/30/10 $ 52,975 ---------- Total Pharmaceuticals & Biotechnology $ 52,975 ---------- Software & Services - 0.9% Application Software - 0.9% 75,000 Magma Design Automation, 0.0%, 5/15/08 $ 63,735 ---------- Total Software & Services $ 63,735 ---------- TOTAL CONVERTIBLE CORPORATE BONDS (Cost $120,007) $ 116,710 ---------- ASSET BACKED SECURITIES - 3.2% Transportation - 1.2% Airlines - 1.2% 25,679 American Airlines, Inc., 7.377%, 5/23/19 $ 23,496 12,751 American Airlines, Inc., 7.379%, 5/23/16 11,539 13,543 Continental Airlines, Inc., 8.312%, 4/2/11 12,836 29,684 Continental Airlines, Inc., 8.499%, 5/1/11 29,140 ---------- $ 77,011 ---------- Total Transportation $ 77,011 ---------- Retailing - 0.9% Distributors - 0.9% 60,000 NTComex, Inc., 11.75%, 1/15/11 (144A) $ 59,550 ---------- Total Retailing $ 59,550 ---------- Utilities - 1.1% Electric Utilities - 1.1% 56,429 Ormat Funding Corp., 8.25%, 12/30/20 $ 57,840 19,545 Tenaska Alabama, 7.0%, 6/30/21 (144A) 19,049 ---------- $ 76,889 ---------- Total Utilities $ 76,889 ---------- TOTAL ASSET BACKED SECURITIES (Cost $205,104) $ 213,450 ---------- CORPORATE BONDS - 82.2% Energy - 14.0% Oil & Gas Drilling - 2.5% 70,000 Copano Energy LLC, 8.125%, 3/1/16 (144A) $ 69,650 100,000 DDI Holding AS, 9.3%, 1/19/12 102,750 ---------- $ 172,400 ---------- Oil & Gas Equipment & Services - 2.1% 35,000 Pipe Acquisition Finance, Floating Rate Note, 12/15/10 (144) (a) $ 34,475 25,000 Semgroup LP, 8.75%, 11/15/15 (144A) 24,875 500,000 Thule Drilling, 10.0%, 5/10/07 81,884 ---------- $ 141,234 ----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount USD ($) Value Oil & Gas Exploration & Production - 7.7% 25,000 Baytex Energy, Ltd., 9.625%, 7/15/10 $ 25,813 50,000 Chesapeake Energy Corp., 7.625%, 7/15/13 50,313 35,000 Clayton Williams Energy, 7.75%, 8/1/13 32,200 75,000 Compton Petroleum Corp., 7.625%, 12/1/13 71,621 15,000 Energy Partners, Ltd., 8.75%, 8/1/10 14,438 40,000 Gazprom International SA, 7.201%, 2/1/20 (144A) 40,550 35,000 Harvest Operations Corp., 7.875%, 10/15/11 33,250 20,000 Hilcorp Energy, 9.0%, 6/1/16 (144A) 20,150 50,000 Mariner Energy, Inc., 7.5%, 4/15/13 (144A) 48,125 15,000 Petroquest Energy, Inc., 10.375%, 5/15/12 15,525 50,000 Pogo Producing Co., 7.875%, 5/1/13 (144A) 50,125 35,000 Quicksilver Resources, Inc., 7.125%, 4/1/16 32,813 60,000 Range Resources Corp., 7.5%, 5/15/16 59,250 25,000 Stone Energy Corp., 6.75%, 12/15/14 25,094 ---------- $ 519,267 ---------- Oil & Gas Storage & Transportation - 1.7% 50,000 Inergy LP, 8.25%, 3/1/16 $ 50,500 20,000 Targa Resources, Inc., 8.5%, 11/1/13 (144A) 19,300 40,000 Transmontaigne, Inc., 9.125%, 6/1/10 42,600 ---------- $ 112,400 ---------- Total Energy $ 945,301 ---------- Materials - 18.4% Aluminum - 1.1% 55,000 Asia Aluminum Holdings, 8.0%, 12/23/11 (144A) $ 51,563 20,000 Indalex Holding, 11.5%, 2/1/14 (144A) 20,400 ---------- $ 71,963 ---------- Commodity Chemicals - 2.2% 40,000 Invista, 9.25%, 5/1/12 (144A) $ 42,000 50,000 Tronox Worldwide, 9.5%, 12/1/12 (144A) 51,500 50,000 Verasun Energy Corp., 9.875%, 12/15/12 (144A) 52,750 ---------- $ 146,250 ---------- Construction Materials - 1.4% 20,000 RMCC Acquisition Co., 9.5%, 11/1/12 (144A) $ 20,800 45,000 U.S. Concrete, Inc., 8.375%, 4/1/14 45,450 25,000 U.S. Concrete, Inc., 8.375%, 4/1/14 (144A) 24,625 ---------- $ 90,875 ---------- Diversified Chemical - 4.3% 50,000 Braskem International, Ltd., 9.375%, 6/1/15 (144A) $ 50,250 45,000 Braskem SA, 11.75%, 1/22/14 (144A) 50,175 20,000 Huntsman International LLC, 10.125%, 7/1/09 25,955 50,000 Ineos Group Holdings Plc, 7.875%, 2/15/16 (144A) 59,612 50,000 Nell AF Sarl, 8.375%, 8/15/15 (144A) 64,567 40,000 Nova Chemicals Corp., Floating Rate Note, 11/15/13 (a) 39,700 ---------- $ 290,259 ----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - ------------------------------------------------------------------------- ------
Principal Amount USD ($) Value Diversified Metals & Mining - 0.7% 10,000 American Rock Salt Co., LLC, 9.5%, 3/15/14 $ 10,125 40,000 Vedenta Resources Plc, 6.625%, 2/22/10 (144A) 38,200 ---------- $ 48,325 ---------- Forest Products - 1.1% 30,000 Ainsworth Lumber, 6.75%, 3/15/14 $ 22,800 30,000 Mandra Foresty, 12.0%, 5/15/13 (144A) 23,100 25,000 Sino Forest Corp., 9.125%, 8/17/11 (144A) 25,750 ---------- $ 71,650 ---------- Paper Packaging - 2.4% 75,000 AEP Industries, Inc., 7.875%, 3/15/13 $ 75,188 50,000 Graphic Packaging Co., 9.5%, 8/15/13 (a) 49,500 40,000 Graham Packaging Co., 9.875%, 10/15/14 (a) 39,600 ---------- $ 164,288 ---------- Paper Products - 1.3% 60,000 Exopac Holding Corp., 11.25%, 2/1/14 (144A) $ 60,600 30,000 P.H. Glatfelter, 7.125%, 5/1/16 (144A) 29,614 ---------- $ 90,214 ---------- Specialty Chemicals - 3.1% 50,000 Crystal US Holdings, Inc., Floating Rate Note, 10/1/14 (a) $ 39,125 50,000 Kronos International, Inc., 6.5%, 4/15/13 (144A) 61,450 50,000 LPG International, Inc., 7.25%, 12/20/15 46,000 60,000 Polyone Corp., 8.875%, 5/1/12 (b) 60,225 ---------- $ 206,800 ---------- Steel - 0.8% 20,000 CSN Islands IX Corp., 10.5%, 1/15/15 (144A) $ 22,000 35,000 CSN Islands X Corp., 9.5%, 7/1/49 (144A) 34,720 ---------- $ 56,720 ---------- Total Materials $1,237,344 ---------- Capital Goods - 7.4% Aerospace & Defense - 0.8% 60,000 L-3 Communications Corp., 6.375%, 10/15/15 $ 57,300 ---------- Building Products - 1.8% 50,000 Builders Firstsource, Inc., Floating Rate Note, 2/15/12 (a) $ 51,250 50,000 Desarrolladora Homex SA, 7.5%, 9/28/15 47,000 25,000 Loma Negra C.I. ASA, 7.25%, 3/15/13 (144A) 22,750 ---------- $ 121,000 ---------- Construction & Engineering - 0.5% 200,000 Kvaerner ASA, 0.0%, 10/30/11 $ 31,710 ---------- Construction, Farm Machinery & Heavy Trucks - 2.6% 60,000 Accuride Corp. 8.5%, 2/1/15 $ 57,600 70,000 Commercial Vehicle Group, 8.0%, 7/1/13 67,025 25,000 Greenbrier Co., Inc., 8.375%, 5/15/15 25,531 25,000 Stanadyne Corp., 10.0%, 8/15/14 23,375 ---------- $ 173,531 ----------
8 The accompanying notes are an integral part of these financial statements. Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount USD ($) Value Trading Companies & Distributors - 1.7% 25,000 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 22,832 40,000 Interline Brands, Inc., 8.125%, 6/15/14 39,900 60,000 Noble Group, Ltd., 6.625%, 3/17/15 (144A) 52,011 ---------- $ 114,743 ---------- Total Capital Goods $ 498,284 ---------- Commercial Services & Supplies - 5.6% Diversified Commercial Services - 3.6% 75,000 Ashtead Holdings Plc, 8.625%, 8/1/15 (144A) $ 75,750 35,000 Cardtronics, Inc., 9.25%, 8/15/13 (144A) 34,475 20,000 Cornell Co's, Inc., 10.75%, 7/1/12 21,275 50,000 FS Funding AS, Floating Rate Note, 5/15/16 (144A) (a) 62,329 20,000 FTI Consulting, 7.625%, 6/15/13 20,250 20,000 Park-Ohio Industries, Inc., 8.375%, 11/15/14 17,600 15,000 United Rentals NA, Inc., 7.75%, 11/15/13 (b) 14,250 ---------- $ 245,929 ---------- Environmental & Facilities Services - 1.4% 13,000 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 14,625 15,000 Hydrochem Industrial Service, 9.25%, 2/15/13 (144A) 14,475 50,000 New Reclamation Group, 8.125%, 2/1/13 (144A) 62,489 ---------- $ 91,589 ---------- Human Resource & Employment Services - 0.2% 15,000 Knowledge Learning Center, 7.25%, 2/1/15 (144A) $ 13,725 ---------- Office Services & Supplies - 0.4% 25,000 Nutro Products, Inc., 10.75%, 4/15/14 (144A) $ 25,719 ---------- Total Commercial Services & Supplies $ 376,962 ---------- Transportation - 3.9% Airlines - 2.0% 50,000 AMR Corp., 10.2%, 3/15/20 $ 46,875 100,000 Gol Finance, 8.75%, 4/29/49 (144A) 87,000 ---------- $ 133,875 - ----------- Airport Services - 0.7% 50,000 K&F Acquisition, Inc., 7.75%, 11/15/14 $ 49,250 ---------- Marine - 0.9% 65,000 Stena AB, 7.0%, 12/1/16 $ 59,800 ---------- Railroads - 0.3% 20,000 TFM SA De CV, 9.375%, 5/1/12 $ 21,300 ---------- Total Transportation $ 264,225 ---------- Automobiles & Components - 1.5% Auto Parts & Equipment - 0.2% 20,000 Cooper Standard Auto, 8.375%, 12/15/14 $ 15,775 ---------- Automobile Manufacturers - 0.6% 25,000 Ford Motor Credit Corp., 7.375%, 10/28/09 $ 23,113 20,000 General Motors Acceptance Corp, 6.75%, 12/1/14 18,576 ---------- $ 41,689 ----------
The accompanying notes are an integral part of these financial statements. 9 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount USD ($) Value Tires & Rubber - 0.7% 50,000 Goodyear Tire & Rubber, 9.0%, 7/1/15 (b) $ 47,750 ---------- Total Automobiles & Components $ 105,214 ---------- Consumer Durables & Apparel - 1.5% Homebuilding - 1.5% 40,000 Urbi Desarrollos Urbanos, 8.5%, 4/19/16 (144A) $ 40,000 10,000 WCI Communities, Inc., 6.625%, 3/15/15 (b) 8,300 15,000 WCI Communities, Inc., 7.875%, 10/1/13 13,163 25,000 William Lyon Homes, 7.5%, 2/15/14 20,750 20,000 William Lyon Homes, 7.625%, 12/15/12 16,600 ---------- $ 98,813 ---------- Total Consumer Durables & Apparel $ 98,813 ---------- Consumer Services - 6.2% Casinos & Gaming - 5.0% 50,000 Codere Finance SA, 8.25%, 6/15/15 (144A) $ 66,644 40,000 Little Traverse Bay Odawa Inn, 10.25%, 2/15/14 (144A) 39,500 50,000 Lottomatica S.p.A, Floating Rate Note, 3/31/66 (144A) (a) 63,844 25,000 Pokagon Gaming Authority, 10.375%, 6/15/14 (144A) 25,844 70,000 San Pasqual Casino, 8.0%, 9/15/13 (144A) 69,825 25,000 Station Casinos, Inc., 6.625%, 3/15/18 22,625 50,000 Trump Entertainment Resorts, 8.5%, 6/1/15 (b) 48,063 ---------- $ 336,345 ---------- Hotels, Resorts & Cruise Lines - 0.3% 20,000 HRP Myrtle Beach, Floating Rate Note, 4/1/12 (144A) (a) $ 19,800 ---------- Specialized Consumer Services - 0.9% 50,000 Tui AG, Floating Rate Note, 12/10/10 (144A) (a) $ 62,249 ---------- Total Consumer Services $ 418,394 ---------- Media - 2.8% Broadcasting & Cable TV - 1.9% 40,000 Cablemas Sa De Cv, 9.375%, 11/15/15 (144A) $ 41,200 60,000 Huges Network System, 9.5%, 4/15/14 (144A) 58,800 25,000 Kabel Deutschland GMBH, 10.625%, 7/1/14 26,375 ---------- $ 126,375 ---------- Movies & Entertainment - 0.5% 35,000 Corp Interamer De Entret, 8.875%, 6/14/15 (144A) $ 33,250 ---------- Publishing - 0.4% 30,000 Sheridan Acquisition Corp., 10.25%, 8/15/11 $ 30,488 ---------- Total Media $ 190,113 ---------- Retailing - 0.6% Computer & Electronics Retail - 0.6% 40,000 GSC Holdings Corp., 8.0%, 10/1/12 (b) $ 40,000 ---------- Total Retailing $ 40,000 ---------- Food & Drug Retailing - 0.3% Drug Retail - 0.3% 25,000 Duane Reade, Inc., 9.75%, 8/1/11 (b) $ 20,125 ---------- Total Food & Drug Retailing $ 20,125 ----------
10 The accompanying notes are an integral part of these financial statements. Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount USD ($) Value Food, Beverage & Tobacco - 0.9% Agricultural Products - 0.5% 40,000 Cosan SA Industrials, 8.25%, 2/15/49 (144A) $ 36,000 ---------- Brewers - 0.4% 25,000 Argentine Beverages, 7.375%, 3/22/12 (144A) $ 24,000 ---------- Total Food, Beverage & Tobacco $ 60,000 ---------- Health Care Equipment & Services - 2.0% Health Care Equipment - 0.7% 50,000 Accellent, Inc., 10.5%, 12/1/13 $ 51,125 ---------- Health Care Facilities - 0.4% 25,000 Hanger Orthopedic Group, 10.25%, 6/1/14 (144A) $ 24,750 ---------- Health Care Supplies - 0.3% 20,000 Medical Services Co., Floating Rate Note, 10/15/11 (a) $ 17,500 ---------- Managed Health Care - 0.6% 40,000 Multiplan, Inc., 10.375% 4/15/16 (144A) $ 40,500 ---------- Total Health Care Equipment & Services $ 133,875 ---------- Pharmaceuticals & Biotechnology - 1.6% Biotechnology - 0.8% 60,000 Angiotech Pharmaceutical, 7.75%, 4/1/14 (144A) $ 57,300 ---------- Pharmaceuticals - 0.8% 50,000 Warner Chilcott Corp., 8.75%, 2/1/15 $ 50,625 ---------- Total Pharmaceuticals & Biotechnology $ 107,925 ---------- Banks - 2.1% Diversified Banks - 2.1% 75,000 ATF Bank JSC, 9.25%, 4/12/12 (144A) $ 74,640 40,000 Russian Stand Bank, 7.5%, 10/7/10 (144A) 37,300 30,000 Turanalem Finance BV, 8.5%, 2/10/15 (144A) 29,438 ---------- $ 141,378 ---------- Total Banks $ 141,378 ---------- Diversified Financials - 1.9% Investment Banking & Brokerage - 0.8% 50,000 Sistema Finance SA, 10.25%, 4/14/08 $ 51,610 ---------- Diversified Financial Services - 0.3% 20,000 AAC Group Holding Corp., 12.75%, 10/1/12 (144A) $ 20,000 ---------- Specialized Finance - 0.8% 52,000 Dollar Financial Group, 9.75%, 11/15/11 $ 55,900 ---------- Total Diversified Financials $ 127,510 ---------- Insurance - 0.7% Life & Health Insurance - 0.4% 25,000 Presidential Life Corp., 7.875%, 2/15/09 $ 24,875 ---------- Reinsurance - 0.3% 20,000 Platinum Underwriters Holdings, 7.5%, 6/1/17 $ 19,620 ---------- Total Insurance $ 44,495 ----------
The accompanying notes are an integral part of these financial statements. 11 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount USD ($) Value Real Estate - 0.9% Real Estate Investment Trusts - 0.9% 20,000 Host Marriott LP, 6.375%, 3/15/15 $ 18,800 40,000 Trustreet Properties, Inc., 7.5%, 4/1/15 39,400 ---------- $ 58,200 ---------- Total Real Estate $ 58,200 ---------- Technology Hardware & Equipment - 1.0% Electronic Manufacturing Services - 1.0% 70,000 Sanmina-Sci Corp., 6.75%, 3/1/13 $ 65,275 ---------- Total Technology Hardware & Equipment $ 65,275 ---------- Telecommunication Services - 8.0% Integrated Telecommunication Services - 2.7% 60,000 Dycom Industries, 8.125%, 10/15/15 $ 60,150 83,000 Eschelon Operating Co., 8.375%, 3/15/10 78,850 42,000 Tele Norte Leste Participacoes , 8.0%, 12/18/13 43,680 ---------- $ 182,680 ---------- Wireless Telecommunication Services - 5.3% 15,000 Cell C Pty, Ltd., 8.625%, 7/1/12 (144A) $ 18,076 60,000 Cell C Pty, Ltd., 11.0%, 7/1/15 (144A) 50,100 40,000 Cleveland Unlimited, Inc., Floating Rate Note, 12/15/10 (144A) (a) 42,100 60,000 Horizon PCS, Inc., 11.375%, 7/15/12 67,425 30,000 Inmarsat Finance Plc, Floating Rate Note, 11/15/12 (a) 25,538 25,000 Mobile Satellite Venture, Floating Rate Note, 4/1/13 (144A) (a) 13,750 50,000 Mobile Telesystems Finance, 8.0%, 1/28/12 48,813 40,000 Stratos Global Corp., 9.875%, 2/15/13 (144A) 37,600 75,000 Zeus Special Sub, Ltd., Floating Rate Note, 2/1/15 (144A) (a) 51,750 ---------- $ 355,152 ---------- Total Telecommunication Services $ 537,832 ---------- Utilities - 0.9% Independent Power Producer & Energy Traders - 0.9% 60,000 Mirant JPSCO Finance, Ltd., 11.0%, 7/6/16 (144A) $ 60,000 ---------- Total Utilities $ 60,000 ---------- TOTAL CORPORATE BONDS (Cost $5,588,122) $5,531,265 ---------- FOREIGN GOVERNMENT BONDS - 1.3% ITL 35,000,000 Banco Nac De Desen Econo, 8.0%, 4/28/10 $ 24,837 COP 40,000 Republic of Colombia, 10.75%, 1/15/13 47,100 COP 40,000,000 Republic of Columbia, 11.75%, 3/1/10 16,629 ---------- $ 88,566 ---------- TOTAL FOREIGN GOVERNMENT BONDS (Cost $91,686) $ 88,566 ---------- MUNICIPAL BONDS - 1.7% Muni Medical - 0.8% 50,000 Massachusetts Health & Educational Facilities, 5.0%, 1/15/10 $ 52,231 ---------- Muni Utilities - 0.9% 50,000 San Antonio Texas Electric & Gas, Floating Rate Note, 2/1/19 (144A) (a) $ 64,368 ---------- TOTAL MUNICIPAL BONDS (Cost $118,283) $ 116,599 ----------
12 The accompanying notes are an integral part of these financial statements. Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value WARRANTS - 0.0% Materials - 0.0% Forest Products - 0.0% 5 Mandra Forestry-CW13, Exp. 5/15/13* $ -- ---------- Total Materials $ -- ---------- TOTAL WARRANTS (Cost $0) $ -- ---------- TEMPORARY CASH INVESTMENT - 5.0% Security Lending Collateral - 5.0% 332,202 Securities Lending Investment Fund, 5.16% $ 332,202 ---------- TOTAL TEMPORARY CASH INVESTMENT (Cost $332,202) $ 332,202 ---------- TOTAL INVESTMENT IN SECURITIES - 95.1% (Cost $6,455,404) $6,398,792 ---------- OTHER ASSETS AND LIABILITIES - 4.9% $ 330,693 ---------- TOTAL NET ASSETS - 100.0% $6,729,485 ==========
* Non-income producing security. 144A Security is exempt from registration under Rule 144A of t he Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2006, the value of these securities amounted to $2,860,333 or 42.5% of total net assets. (a) Debt obligation initially issued at one coupon which conv erts to a higher coupon at a specified date. The rate shown is the rate at period end. (b) At June 30, 2006, the following securities were out on loan:
Principal Amount Security Value $ 24,750 Duane Reade, Inc., 9.75%, 8/1/11 $ 19,924 39,600 GSC Holdings Corp., 8.0%, 10/1/12 39,600 49,500 Goodyear Tire & Rubber, 9.0%, 7/1/15 47,273 39,600 Graham Packaging Co., 9.875%, 10/15/14 39,204 47,500 Graphic Packaging Co., 9.5%, 8/15/13 47,025 57,000 Polyone Corp., 8.875%, 5/1/12 57,214 49,500 Trump Entertainment Resorts, 8.5%, 6/1/15 47,582 14,850 United Rentals NA, Inc., 7.75%, 11/15/13 14,108 9,900 WCI Communities, Inc., 6.625%, 3/15/15 8,217 -------- Total $320,147 ========
(c) Distributions of investments by country of issue, as a percentage of total equity holdings (excluding temporary cash investments) is as follows: United States 59.6% Canada 5.2 Brazil 4.8 United Kingdom 3.8 Norway 3.6 Luxembourg 3.3 Mexico 3.0 South Africa 2.2 Bermuda 2.0 Other (individually less than 1%) 1.9 Cayman Islands 1.7 Germany 1.5 Kazakhstan 1.2 Columbia 1.1 Spain 1.1 Denmark 1.0 Italy 1.0 Jamaica 1.0 Sweden 1.0 ----- 100.0% =====
NOTE: Principal amounts are denominated in U.S. dollars unless otherwise noted. COP Columbian Peso ITL Italian Lira The accompanying notes are an integral part of these financial statements. 13 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 3/18/05 (a) 6/30/06 to Class II (unaudited) 12/31/05 Net asset value, beginning of period $ 10.02 $ 10.00 ------- ------- Increase (decrease) from investment operations: Net investment income $ 0.38 $ 0.51 Net realized and unrealized gain (loss) on investments and foreign (0.02) 0.01 currency transactions ------- ------- Net increase from investment operations $ 0.36 $ 0.52 Distributions to shareowners: Net investment income (0.38) (0.50) ------- ------- Net increase (decrease) in net asset value $ (0.02) $ 0.02 ------- ------- Net asset value, end of period $ 10.00 $ 10.02 ======= ======= Total return* 3.57% 5.34%(b) Ratio of net expenses to average net assets 1.00%** 0.99%** Ratio of net investment income to average net assets 7.47%** 6.72%** Portfolio turnover rate 29%** 26%(b) Net assets, end of period (in thousands) $ 6,729 $ 3,632 Ratios with no waiver of management fees and assumption of expenses by PIM: Net expenses 3.13%** 5.65%** Net investment income 5.34%** 2.06%**
(a) The Portfolio commenced operations on March 18, 2005. (b) Not annualized. * Assumes initial investment at net asset value at the beginning of the period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of the period. ** Annualized. NOTE: The above financial highlights do not reflect the deduction of non-fund expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. 14 The accompanying notes are an integral part of these financial statements. Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (including securities loaned of $320,147) (cost $6,398,792 $6,455,404) Cash 621,939 Receivables -- Investment securities sold 20,077 Fund shares sold 7,371 Dividends, interest and foreign taxes withheld 123,963 Due from Pioneer Investment Management, Inc. 5,653 ---------- Total assets $7,177,795 ---------- LIABILITIES: Payables -- Investment securities purchased $ 84,565 Fund shares repurchased 1,721 Dividends 4,192 Upon return of securities loaned 332,202 Forward foreign currency settlement contracts, net 2,125 Forward foreign currency portfolio hedge contracts, open -- net 2,473 Due to affiliates 708 Accrued expenses 20,324 ---------- Total liabilities $ 448,310 ---------- NET ASSETS: Paid-in capital $6,762,864 Distributions in excess of net investment income (1,810) Accumulated net realized gain on investments 29,435 Net unrealized loss on: Investments (56,612) Forward foreign currency contracts and other assets and liabilities denominated in (4,392) foreign currencies ---------- Total net assets $6,729,485 ---------- NET ASSET VALUE PER SHARE: Class II: (No par value, unlimited number of shares authorized) Net assets $6,729,485 Shares outstanding 672,652 ---------- Net asset value per share $ 10.00
The accompanying notes are an integral part of these financial statements. 15 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Six Months Ended 6/30/06 INVESTMENT INCOME: Interest (net of foreign taxes withheld of $33) $ 195,710 Income on securities loaned, net 354 --------- Total investment income $ 196,064 --------- EXPENSES: Management fees $ 14,990 Transfer agent fees and expenses 677 Distribution fees 8,404 Administrative reimbursements 9,475 Custodian fees 7,340 Professional fees 18,955 Printing expense 8,538 Fees and expenses of nonaffiliated trustees 1,576 Miscellaneous 2,136 --------- Total expenses $ 72,091 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (49,033) --------- Net expenses $ 23,058 --------- Net investment income $ 173,006 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 40,502 Forward foreign currency contracts and other assets and liabilities denominated in (5,529) foreign currencies --------- $ 34,973 --------- Change in net unrealized gain or loss from: Investments $ (78,036) Forward foreign currency contracts and other assets and liabilities denominated in (5,110) foreign currencies -------- $ (83,146) --------- Net loss on investments and foreign currency transactions $ (48,173) --------- Net increase in net assets resulting from operations $ 124,833 =========
16 The accompanying notes are an integral part of these financial statements. Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
For the period Six Months from 3/18/05 Ended (Commencement 6/30/06 of Operations) (unaudited) to 12/13/05 FROM OPERATIONS: Net investment income $ 173,006 $ 97,143 Net realized gain (loss) on investments 34,973 (11,404) Change in net unrealized gain or loss on investments and foreign (83,146) 22,142 currency transactions ---------- ---------- Net increase in net assets resulting from operations $ 124,833 $ 107,881 ---------- ---------- DISTRIBUTIONS TO SHAREOWNERS Net investment income: Class II $ (172,504) $ (94,049) ---------- ---------- Total distributions to shareowners $ (172,504) $ (94,049) ---------- ---------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $3,278,295 $3,610,396 Reinvestment of distributions 146,075 58,955 Cost of shares repurchased (278,807) (51,590) ---------- ---------- Net increase in net assets resulting from Fund share transactions $3,145,563 $3,617,761 ---------- ---------- Net increase in net assets $3,097,892 $3,631,593 NET ASSETS: Beginning of period 3,631,593 -- ---------- ---------- End of period $6,729,485 $3,631,593 ---------- ---------- Distributions in excess of net investment income, end of period $ (1,810) $ (2,312) ========== ==========
The accompanying notes are an integral part of these financial statements. 17 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Global High Yield VCT Portfolio (the Portfolio) is a Portfolio of the Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of twenty-seven separate diversified portfolios, thirteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares only) Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio) (Class I shares only) Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only) Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares only) Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio) (Class II shares only) Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio) (Class II shares only) Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate Allocation Portfolio) (Class II shares only) Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation Portfolio) (Class II shares only) Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only) The Global High Yield Portfolio commenced operations on March 18, 2005. Portfolio shares may be purchased only by either insurance companies for the purpose of funding variable annuity and variable life insurance contracts, or by qualified pension and retirement plans. The Global High Yield Portfolio seeks to maximize total return through a combination of income and capital appreciation. The financial statements and financial highlights of all other Portfolios are presented in separate books. The Portfolio's financial statements have been prepared in conformity with U.S. generally accepted accounting principles that require the management of the Portfolio to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio, in the preparation of its financial statements which are consistent with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolio are computed once daily, on each day the New York Stock Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Fixed income securities with remaining maturity of more than 60 days are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and 18 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which there are no other readily available valuation methods are valued at their fair values as determined by, or under the direction of, the Board of Trustees and may include yield equivalents or a pricing matrix. The Portfolio also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the NYSE. At June 30, 2006, there were no fair valued securities. Temporary cash investments are valued at amortized cost. Discounts and premiums on debt securities are accreted or amortized daily, respectively, on a yield-to-maturity basis into interest income with a corresponding increase or decrease in the cost basis of the security. Interest income is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes. Investing in foreign and/or emerging market securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions. Investments in the Portfolio are subject to possible loss due to the financial failure of underlying securities and their inability to meet their debt obligations. Information regarding the Portfolio's principal investment risks is contained in the Portfolio's prospectus. Please refer to those documents when considering the Portfolio's risks. B. Taxes It is the Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amounts and characterizations of distributions to shareowners for financial reporting purposes are determined in accordance with income tax rules. Therefore, the source of the Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2005, Global High Yield Portfolio had a net capital loss carryforward of $5,538, which will expire in 2013, if not utilized. The Portfolio elected to defer $2,312 in foreign currency losses recognized between November 1, 2005 and December 31, 2005 to its fiscal year ended December 31, 2006. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2005 and the distributions paid during the year ended December 31, 2005 on a tax basis.
- ------------------------------------------------------------------------------- 2005 - ------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 94,049 Long-Term Capital Gain -- -------- $ 94,049 Return of Capital -- -------- Total Distributions $ 94,049 ======== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/(capital loss carryforward) (5,538) Unrealized appreciation (depreciation) 22,142 Post-October loss deferred (2,312) -------- Total $ 14,292 ======== - -------------------------------------------------------------------------------
19 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- C. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $462,503 in commissions on the sale of Trust shares for the six months ended June 30, 2006 Distribution fees are calculated based on the average daily net asset values attributable to Class II shares of the Portfolio. D. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive payments in lieu of interest or dividends on the securities loaned. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for the account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is sponsored by Brown Brothers Harriman & Co., the Trust's custodian. E. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM, a wholly owned indirect subsidiary of UniCredito Italiano manages the portfolio. Management fees are calculated daily at the annual rate of 0.65% of the Portfolio's average daily net assets up to $500 million and 0.60% on assets over $500 million. Through May 1, 2007, PIM has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses of the Portfolio to the extent required to reduce Class II expenses to 1.00% of the average daily net assets attributable to Class II shares. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2006, $236 was payable to PIM related to management fees, administrative reimbursements and certain other services, and is included in due to affiliates. 3. Transfer Agent PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $427 in transfer agent fees payable to PIMSS at June 30, 2006. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with the Portfolio's Class II shares. Included in due to affiliates is $45 payable to PFD at June 30, 2006. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2006, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - -------------------------------------------------------------------------------------------------- Global High Yield Portfolio $6,455,404 $77,868 $ (134,480) $ (56,612) ========== ======= ========== ========== - --------------------------------------------------------------------------------------------------
20 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2006, were $3,358,105 and $648,260, respectively. 7. Capital Shares At June 30, 2006, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ---------------------------------------------------------------------------------------------- '06 Shares '06 Amount Global High Yield Portfolio (unaudited) (unaudited) '05 Shares '05 Amount - ---------------------------------------------------------------------------------------------- CLASS II: Shares sold 323,137 $3,278,295 361,651 $3,610,396 Reinvestment of distributions 14,409 146,075 5,886 58,955 Shares repurchased (27,262) (278,807) (5,169) (51,590) --------------------------------------------------------- Net increase 310,284 $3,145,563 362,368 $3,617,761 ======================================================== - ----------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts During the six months ended June 30, 2006, certain Portfolios had entered into various contracts that obligate the Portfolios to deliver currencies at specified future dates. At the maturity of a contract, the Portfolios must make delivery of the foreign currency. Alternatively, prior to the settlement date of a portfolio hedge, the Portfolio may close out such contracts by entering into an offsetting hedge contract. As of June 30, 2006, open portfolio hedges were as follows:
- ------------------------------------------------------------------------------------------------------------- Net Contracts to In Exchange Settlement Unrealized Portfolio Deliver For Date Value Gain (Loss) - ------------------------------------------------------------------------------------------------------------- Global High Yield Portfolio EUR(175,000) $ (221,622) 7/20/06 $ (224,095) $ (2,473) - -------------------------------------------------------------------------------------------------------------
Outstanding forward currency settlement contracts as of June 30, 2006 were as follows:
- -------------------------------------------------------------------------------------------- Net Gross Settlement Gross Receivable/ Portfolio Receivable Date Payable (Payable) - -------------------------------------------------------------------------------------------- Global High Yield Portfolio $221,622 7/1/06 $ (223,747) $ (2,125) - --------------------------------------------------------------------------------------------
21 Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- TRUSTEES, OFFICERS AND SERVICE PROVIDERS - -------------------------------------------------------------------------------- Trustees Officers John F. Cogan, Jr., Chairman John F. Cogan, Jr., President David R. Bock Osbert M. Hood, Executive Vice President Mary K. Bush Vincent Nave, Treasurer Margaret B.W. Graham Dorothy E. Bourassa, Secretary Thomas J. Perna Marguerite A. Piret John Winthrop Investment Adviser and Administrator Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.pioneerinvestments.com. This information is also available on the Securities and Exchange Commission's web site at http://www.sec.gov. 22 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 24 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 25 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 Before investing, consider the product's investment objectives, features, risks, charges and expenses and the investment objectives, risks, charges and expenses of the underlying portfolios available in the product. Contact your advisor or Pioneer Investments for a prospectus containing this information. Please read it carefully. 19645-00-0806 ITEM 2. CODE OF ETHICS. (a) Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so. The registrant has adopted, as of the end of the period covered by this report, a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer and controller. (b) For purposes of this Item, the term "code of ethics" means written standards that are reasonably designed to deter wrongdoing and to promote: (1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; (3) Compliance with applicable governmental laws, rules, and regulations; (4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (5) Accountability for adherence to the code. (c) The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item. The registrant has made no amendments to the code of ethics during the period covered by this report. (d) If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver. Not applicable. (e) If the registrant intends to satisfy the disclosure requirement under paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from, a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item by posting such information on its Internet website, disclose the registrant's Internet address and such intention. Not applicable. (f) The registrant must: (1) File with the Commission, pursuant to Item 10(a), a copy of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as an exhibit to its annual report on this Form N-CSR; (2) Post the text of such code of ethics on its Internet website and disclose, in its most recent report on this Form N-CSR, its Internet address and the fact that it has posted such code of ethics on its Internet website; or (3) Undertake in its most recent report on this Form N-CSR to provide to any person without charge, upon request, a copy of such code of ethics and explain the manner in which such request may be made. See Item 10(2) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a) (1) Disclose that the registrant's board of trustees has determined that the registrant either: (i) Has at least one audit committee financial expert serving on its audit committee; or (ii) Does not have an audit committee financial expert serving on its audit committee. The registrant's Board of Trustees has determined that the registrant has at least one audit committee financial expert. (2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is "independent." In order to be considered "independent" for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of trustees, or any other board committee: (i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) Be an "interested person" of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)). Ms. Marguerite A. Piret, an independent trustee, is such an audit committee financial expert. (3) If the registrant provides the disclosure required by paragraph (a)(1) (ii) of this Item, it must explain why it does not have an audit committee financial expert. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. N/A (b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A (c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A (d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A (e) (1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. PIONEER FUNDS APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES PROVIDED BY THE INDEPENDENT AUDITOR SECTION I - POLICY PURPOSE AND APPLICABILITY The Pioneer Funds recognize the importance of maintaining the independence of their outside auditors. Maintaining independence is a shared responsibility involving Pioneer Investment Management, Inc ("PIM"), the audit committee and the independent auditors. The Funds recognize that a Fund's independent auditors: 1) possess knowledge of the Funds, 2) are able to incorporate certain services into the scope of the audit, thereby avoiding redundant work, cost and disruption of Fund personnel and processes, and 3) have expertise that has value to the Funds. As a result, there are situations where it is desirable to use the Fund's independent auditors for services in addition to the annual audit and where the potential for conflicts of interests are minimal. Consequently, this policy, which is intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and procedures to be followed by the Funds when retaining the independent audit firm to perform audit, audit-related tax and other services under those circumstances, while also maintaining independence. Approval of a service in accordance with this policy for a Fund shall also constitute approval for any other Fund whose pre-approval is required pursuant to Rule 210.2-01(c)(7)(ii). In addition to the procedures set forth in this policy, any non-audit services that may be provided consistently with Rule 210.2-01 may be approved by the Audit Committee itself and any pre-approval that may be waived in accordance with Rule 210.2-01(c)(7)(i)(C) is hereby waived. Selection of a Fund's independent auditors and their compensation shall be determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY - ---------------- -------------------------------- ------------------------------------------------- SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES CATEGORY - ---------------- -------------------------------- ------------------------------------------------- I. AUDIT Services that are directly o Accounting research assistance SERVICES related to performing the o SEC consultation, registration independent audit of the Funds statements, and reporting o Tax accrual related matters o Implementation of new accounting standards o Compliance letters (e.g. rating agency letters) o Regulatory reviews and assistance regarding financial matters o Semi-annual reviews (if requested) o Comfort letters for closed end offerings - ---------------- -------------------------------- ------------------------------------------------- II. Services which are not o AICPA attest and agreed-upon procedures AUDIT-RELATED prohibited under Rule o Technology control assessments SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments and are related extensions of o Enterprise security architecture the audit services support the assessment audit, or use the knowledge/expertise gained from the audit procedures as a foundation to complete the project. In most cases, if the Audit-Related Services are not performed by the Audit firm, the scope of the Audit Services would likely increase. The Services are typically well-defined and governed by accounting professional standards (AICPA, SEC, etc.) - ---------------- -------------------------------- ------------------------------------------------- ------------------------------------- ------------------------------------ AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY ------------------------------------- ------------------------------------ o "One-time" pre-approval o A summary of all such for the audit period for all services and related fees pre-approved specific service reported at each regularly subcategories. Approval of the scheduled Audit Committee independent auditors as meeting. auditors for a Fund shall constitute pre approval for these services. ------------------------------------- ------------------------------------ o "One-time" pre-approval o A summary of all such for the fund fiscal year within services and related fees a specified dollar limit (including comparison to for all pre-approved specified dollar limits) specific service subcategories reported quarterly. o Specific approval is needed to exceed the pre-approved dollar limit for these services (see general Audit Committee approval policy below for details on obtaining specific approvals) o Specific approval is needed to use the Fund's auditors for Audit-Related Services not denoted as "pre-approved", or to add a specific service subcategory as "pre-approved" ------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED - ----------------------- --------------------------- ----------------------------------------------- SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES DESCRIPTION - ----------------------- --------------------------- ----------------------------------------------- III. TAX SERVICES Services which are not o Tax planning and support prohibited by the Rule, o Tax controversy assistance if an officer of the Fund o Tax compliance, tax returns, excise determines that using the tax returns and support Fund's auditor to provide o Tax opinions these services creates significant synergy in the form of efficiency, minimized disruption, or the ability to maintain a desired level of confidentiality. - ----------------------- --------------------------- ----------------------------------------------- - ------------------------------------- ------------------------- AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY - ------------------------------------- ------------------------- - ------------------------------------- ------------------------- o "One-time" pre-approval o A summary of for the fund fiscal year all such services and within a specified dollar limit related fees (including comparison to specified dollar limits) reported quarterly. o Specific approval is needed to exceed the pre-approved dollar limits for these services (see general Audit Committee approval policy below for details on obtaining specific approvals) o Specific approval is needed to use the Fund's auditors for tax services not denoted as pre-approved, or to add a specific service subcategory as "pre-approved" - ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED - ----------------------- --------------------------- ----------------------------------------------- SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES DESCRIPTION - ----------------------- --------------------------- ----------------------------------------------- IV. OTHER SERVICES Services which are not o Business Risk Management support prohibited by the Rule, o Other control and regulatory A. SYNERGISTIC, if an officer of the Fund compliance projects UNIQUE QUALIFICATIONS determines that using the Fund's auditor to provide these services creates significant synergy in the form of efficiency, minimized disruption, the ability to maintain a desired level of confidentiality, or where the Fund's auditors posses unique or superior qualifications to provide these services, resulting in superior value and results for the Fund. - ----------------------- --------------------------- ----------------------------------------------- - --------------------------------------- ------------------------ AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY - ------------------------------------- -------------------------- o "One-time" pre-approval o A summary of for the fund fiscal year within all such services and a specified dollar limit related fees (including comparison to specified dollar limits) reported quarterly. o Specific approval is needed to exceed the pre-approved dollar limits for these services (see general Audit Committee approval policy below for details on obtaining specific approvals) o Specific approval is needed to use the Fund's auditors for "Synergistic" or "Unique Qualifications" Other Services not denoted as pre-approved to the left, or to add a specific service subcategory as "pre-approved" - ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED - ----------------------- ------------------------- ----------------------------------------------- SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES DESCRIPTION - ----------------------- ------------------------- ----------------------------------------------- PROHIBITED SERVICES Services which result 1. Bookkeeping or other services in the auditors losing related to the accounting records or independence status financial statements of the audit under the Rule. client* 2. Financial information systems design and implementation* 3. Appraisal or valuation services, fairness* opinions, or contribution-in-kind reports 4. Actuarial services (i.e., setting actuarial reserves versus actuarial audit work)* 5. Internal audit outsourcing services* 6. Management functions or human resources 7. Broker or dealer, investment advisor, or investment banking services 8. Legal services and expert services unrelated to the audit 9. Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible - ----------------------- ------------------------- ----------------------------------------------- - ------------------------------------------- ------------------------------ AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY - ------------------------------------------- ------------------------------ o These services are not to be o A summary of all performed with the exception of the(*) services and related services that may be permitted fees reported at each if they would not be subject to audit regularly scheduled procedures at the audit client (as Audit Committee meeting defined in rule 2-01(f)(4)) level will serve as continual the firm providing the service. confirmation that has not provided any restricted services. - ------------------------------------------- ------------------------------
- -------------------------------------------------------------------------------- GENERAL AUDIT COMMITTEE APPROVAL POLICY: o For all projects, the officers of the Funds and the Fund's auditors will each make an assessment to determine that any proposed projects will not impair independence. o Potential services will be classified into the four non-restricted service categories and the "Approval of Audit, Audit-Related, Tax and Other Services" Policy above will be applied. Any services outside the specific pre-approved service subcategories set forth above must be specifically approved by the Audit Committee. o At least quarterly, the Audit Committee shall review a report summarizing the services by service category, including fees, provided by the Audit firm as set forth in the above policy. - -------------------------------------------------------------------------------- (2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. N/A (f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. N/A (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. N/A (h) Disclose whether the registrant's audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. The Fund's independent auditor, Ernst & Young LLP ("E&Y"), has advised the Audit Committee of the Fund's Board of Trustees that E&Ys Spanish affiliate (E&Y Spain) performed certain non-audit work for Pioneer Global Investments Limited ("PGIL"), an affiliate of the Funds investment adviser. The services involved the receipt and disbursement of monies transferred to E&Y Spain by PGIL in payment of individual payroll and related income tax withholdings due on returns prepared by E&Y Spain for certain PGIL employees located in Spain from February 2001 to October 2005. E&Y became auditors of the Fund in May 2002. These payroll and tax services were discontinued in November 2005. The annual fee received by E&Y Spain for all such services totaled approximately 9,000 Euro per year. E&Y has informed the Audit Committee that based on its internal reviews and the de minimus nature of the services provided and fees received, E&Y does not believe its independence with respect to the Fund has been impaired or that it is disqualified from acting as independent auditors to the Fund. N/A Item 5. Audit Committee of Listed Registrants (a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17 CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrants audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state. N/A (b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption from the listing standards for audit committees. N/A Item 6. Schedule of Investments. File Schedule I Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in 210.12- 12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form. Included in Item 1 ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company's investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company's investment adviser, or any other third party, that the company uses, or that are used on the company's behalf, to determine how to vote proxies relating to portfolio securities. Not applicable to open-end management investment companies. Item 8. Portfolio Managers of Closed-End Management Investment Companies. (a) If the registrant is a closed-end management investment company that is filing an annual report on this Form N-CSR,provide the following information: (1) State the name, title, and length of service of the person or persons employed by or associated with the registrant or an investment adviser of the registrant who are primarily responsible for the day-to-day management of the registrants portfolio (Portfolio Manager). Also state each Portfolio Managers business experience during the past 5 years. Not applicable to open-end management investment companies. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. (a) If the registrant is a closed-end management investment company, in the following tabular format, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any affiliated purchaser, as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrants equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose all purchases covered by this Item, including purchases that do not satisfy the conditions of the safe harbor of Rule 10b-18 under the Exchange Act (17 CFR 240.10b-18), made in the period covered by the report. Provide disclosures covering repurchases made on a monthly basis. For example, if the reporting period began on January 16 and ended on July 15, the chart would show repurchases for the months from January 16 through February 15, February 16 through March 15, March 16 through April 15, April 16 through May 15, May 16 through June 15, and June 16 through July 15. Not applicable to open-end management investment companies. Item 10. Submission of Matters to a Vote of Security Holders. Describe any material changes to the procedures by which shareholders may recommend nominees to the registrants board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrants board of directors since the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in its definitive proxy statement, or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) Disclose the conclusions of the registrant's principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, about the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR 270.30a-2(c))) based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph. The registrant's principal executive officer and principal financial officer have concluded, that the registrant's disclosure controls and procedures are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) Disclose whether or not there were significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 12. EXHIBITS. File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. (b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2). Filed herewith. SIGNATURES [See General Instruction F] Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Pioneer Variable Contracts Trust By (Signature and Title)* /s/ John F. Cogan, Jr. John F. Cogan, Jr, President Date August 31, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ John F. Cogan, Jr. John F. Cogan, Jr., President Date August 31, 2006 By (Signature and Title)* /s/ Vincent Nave Vincent Nave, Treasurer Date August 31, 2006 * Print the name and title of each signing officer under his or her signature. EX-99 2 cert.txt CERTIFICATIONS -------------- I, John F. Cogan, Jr., certify that: 1. I have reviewed this report on Form N-CSR of Pioneer Variable Contracts Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 31, 2006 /s/ John F. Cogan, Jr. John F. Cogan, Jr. President CERTIFICATIONS -------------- I, Vincent Nave, certify that: 1. I have reviewed this report on Form N-CSR of Pioneer Variable Contracts Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 31, 2006 /s/ Vincent Nave Vincent Nave Treasurer SECTION 906 CERTIFICATION Pursuant to 18 U.S.C. ss. 1350, the undersigned officer of Pioneer Variable Contracts Trust (the "Trust"), hereby certifies, to the best of his knowledge, that the Fund's Report on Form N-CSR for the period ended June 30, 2006 (the "Report") fully complies with the requirements of Section 13 (a) or 15 (d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. Dated: August 31, 2006 /s/ John F. Cogan, Jr. John F. Cogan, Jr. President This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or a separate disclosure document. A signed original of this written statement required by section 906 has been provided to the Fund and will be retained by the Fund and furnished to the SEC or its staff upon request. SECTION 906 CERTIFICATION Pursuant to 18 U.S.C. ss. 1350, the undersigned officer of Pioneer Variable Contracts Trust (the "Trust"), hereby certifies, to the best of his knowledge, that the Fund's Report on Form N-CSR for the period ended June 30, 2006 (the "Report") fully complies with the requirements of Section 13 (a) or 15 (d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. Dated: August 31, 2006 /s/ Vincent Nave Vincent Nave Treasurer This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or a separate disclosure document. A signed original of this written statement required by section 906 has been provided to the Fund and will be retained by the Fund and furnished to the SEC or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----