-----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, E0n4S1RfSbB1FSx1N7xxiWHj7QaU2CuoCsGnQXLs6ogvM2Hs1sU7gOCWrnk1VRoI sjRIGclipnXDtW+Y1L890A== 0001257959-04-000002.txt : 20040901 0001257959-04-000002.hdr.sgml : 20040901 20040901111825 ACCESSION NUMBER: 0001257959-04-000002 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040901 DATE AS OF CHANGE: 20040901 EFFECTIVENESS DATE: 20040901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER VARIABLE CONTRACTS TRUST /MA/ CENTRAL INDEX KEY: 0000930709 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08786 FILM NUMBER: 041010023 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 N-CSR 1 ncsr.txt OMB APPROVAL OMB Number: 3235-0570 Expires: November 30, 2005 Estimated average burden hours per response..... 5.0 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-08786 Pioneer Variable Contracts Trust (Exact name of registrant as specified in charter) 60 State Street, Boston, MA 02109 (Address of principal executive offices) (ZIP code) Dorothy E. Bourassa, Pioneer Investment Management, Inc., 60 State Street, Boston, MA 02109 (Name and address of agent for service) Registrant's telephone number, including area code: (617) 742-7825 Date of fiscal year end: December 31 Date of reporting period: January 1, 2004 through June 30, 2004 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1.REPORTS TO SHAREOWNERS. [Pioneer Investments Logo] PIONEER VARIABLE CONTRACTS TRUST Pioneer Variable Contracts Trust -- Class I Shares Pioneer Emerging Markets VCT Portfolio Pioneer Europe VCT Portfolio Pioneer International Value VCT Portfolio Pioneer Small Cap Value VCT Portfolio Pioneer Small Company VCT Portfolio Pioneer Mid Cap Value VCT Portfolio Pioneer Growth Shares VCT Portfolio Pioneer Real Estate Shares VCT Portfolio Pioneer Fund VCT Portfolio Pioneer Equity Income VCT Portfolio SEMIANNUAL REPORT Pioneer Balanced VCT Portfolio June 30, 2004 Pioneer High Yield VCT Portfolio Pioneer Strategic Income VCT Portfolio Pioneer America Income VCT Portfolio Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents Letter to Shareowners 1 Pioneer Emerging Markets VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Pioneer Europe VCT Portfolio Portfolio and Performance Update 4 Portfolio Management Discussion 5 Pioneer International Value VCT Portfolio Portfolio and Performance Update 6 Portfolio Management Discussion 7 Pioneer Small Cap Value VCT Portfolio Portfolio and Performance Update 8 Portfolio Management Discussion 9 Pioneer Small Company VCT Portfolio Portfolio and Performance Update 10 Portfolio Management Discussion 11 Pioneer Mid Cap Value VCT Portfolio Portfolio and Performance Update 12 Portfolio Management Discussion 13 Pioneer Growth Shares VCT Portfolio Portfolio and Performance Update 14 Portfolio Management Discussion 15 Pioneer Real Estate Shares VCT Portfolio Portfolio and Performance Update 16 Portfolio Management Discussion 17 Pioneer Fund VCT Portfolio Portfolio and Performance Update 18 Portfolio Management Discussion 19 Pioneer Equity Income VCT Portfolio Portfolio and Performance Update 20 Portfolio Management Discussion 21 Pioneer Balanced VCT Portfolio Portfolio and Performance Update 22 Portfolio Management Discussion 23 Pioneer High Yield VCT Portfolio Portfolio and Performance Update 24 Portfolio Management Discussion 25 Pioneer Strategic Income VCT Portfolio Portfolio and Performance Update 26 Portfolio Management Discussion 27 Pioneer America Income VCT Portfolio Portfolio and Performance Update 28 Portfolio Management Discussion 29 Pioneer Money Market VCT Portfolio Portfolio and Performance Update 30 Schedules of Investments Pioneer Emerging Markets VCT Portfolio 31 Pioneer Europe VCT Portfolio 37 Pioneer International Value VCT Portfolio 40 Pioneer Small Cap Value VCT Portfolio 43 Pioneer Small Company VCT Portfolio 47 Pioneer Mid Cap Value VCT Portfolio 51 Pioneer Growth Shares VCT Portfolio 54 Pioneer Real Estate Shares VCT Portfolio 57 Pioneer Fund VCT Portfolio 58 Pioneer Equity Income VCT Portfolio 62 Pioneer Balanced VCT Portfolio 65 Pioneer High Yield VCT Portfolio 72 Pioneer Strategic Income VCT Portfolio 78 Pioneer America Income VCT Portfolio 88 Pioneer Money Market VCT Portfolio 90 Financial Statements 92 Notes to Financial Statements 116
PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- LETTER TO SHAREOWNERS 6/30/04 - -------------------------------------------------------------------------------- Dear Shareowner, U.S. equity markets traced a jagged course through the first half of the year, ending on June 30 only slightly ahead of where they started. Mid-sized and small-cap indices scored modest gains, while indicators that track large-cap stocks showed even smaller changes. For bond investors, Treasury issues wound up the period with higher yields and lower prices than at year-end. The same was true of corporate issues, whose prices gave ground in the face of rising interest rates, while high-yield bonds, outstanding performers over recent quarters, also cooled off. Although the economic expansion continued to move ahead, investors were preoccupied with factors that might have undesirable impacts on the economy and the markets. For one thing, the threat of terrorism is never far from our minds. For another, the jump in oil prices, attributed to turmoil in the Mideast and vast demand from China and other developing nations, was a major factor. The cost of gas or oil for heating our homes, and gasoline for our cars is a critical component in household budgets. Industry, too, requires energy, and in many cases petroleum is an essential raw material. The "jobless" recovery became a job-generating machine for a few months, followed by a brief slump and a partial rebound. But strong boosts in employment quickly triggered fears of economic overheating; too much demand for goods and services, the reasons for aggressive corporate hiring, might trigger inflation. That would lead to higher interest rates that could choke off the recovery by causing consumers and businesses to hold back on outlays. In fact, on June 30, the Federal Reserve Board raised short-term interest rates by one-quarter percentage point, the first hike in four years. While there may be further increases, they probably will be gradual; the Federal Reserve Board would like to keep the expansion intact while keeping inflation at bay. And even after the Fed's June move, short-term rates remain near the lowest levels many of us have seen. U.S. businesses, which have done massive amounts of cost-cutting in recent years, can readily accommodate somewhat higher borrowing costs. In addition, the federal income tax cuts that have helped bolster growth over the past several quarters remain in place. The possibility of higher interest rates and the economy's direction could have important implications for the way your portfolio is balanced, so an appointment with your professional financial advisor may well be in order. As always, we appreciate your continued confidence in Pioneer. Respectfully, /s/ Osbert M. Hood Osbert M. Hood President Pioneer Investment Management, Inc. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 1 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] International Common Stocks 62.1% Depositary Receipts for International Stocks 25.7% U.S. Common Stocks 5.5% Temporary Cash Investment 4.1% International Preferred Stocks 2.6%
Geographical Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF PIE CHART] South Korea 22.6% Taiwan 9.7% Brazil 9.4% South Africa 7.1% Mexico 6.8% India 6.3% Russia 4.6% Thailand 4.1% Malaysia 4.0% Turkey 3.7% Chile 3.2% Indonesia 2.2% Hungary 2.0% Israel 1.9% Singapore 1.9% Poland 1.9% Peru 1.5% People's Republic of China 1.4% Philippines 1.4% United Kingdom 1.0% Egypt 1.0% Other (individually less than 1%) 2.3%
Five Largest Holdings (As a percentage of equity holdings) 1. Samsung Electronics Co. 4.09% 2. Telefonos de Mexico SA 3.11 3. Petrobras Brasileiro SA (A.D.R.) 2.53 4. Anglo American Plc 2.25 5. Alumax, Inc. 2.09
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $16.37 $17.37
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.1496 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Emerging Markets VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) Emerging Markets Free Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer MSCI Emerging Emerging Markets Markets VCT Portfolio Free Index 10/98 10000 10000 10490 10675 18750 17766 12/00 12337 12330 11450 12037 12/02 11312 11315 17903 17682 6/04 17019 17540
The MSCI Emerging Markets Free Index is an unmanaged, capitalization-weighted measure of 679 securities trading in 26 emerging markets; it reflects only those securities available to foreign investors. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 9.83% (10/30/98) 5 Years 3.81% 1 Year 30.30%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - ------------------------------------------------------------------------------- For the six months ended June 30, 2004, Pioneer Emerging Markets VCT Portfolio's Class I shares delivered a total return at net asset value of -4.94%. Over the same time period, the MSCI Emerging Markets Free Index had a total return of - -0.78%. In the following discussion, Mark Madden, portfolio manager of the Pioneer Emerging Markets VCT Portfolio, addresses the factors affecting the Portfolio's performance and the outlook for the emerging markets. Q: What factors influenced the performance of emerging markets in the six months ended June 30, 2004? A: A combination of accelerating economic growth, attractive stock valuations, positive economic reforms, strong commodity prices and low interest rates led to strong returns in emerging markets from March 2003 to early April 2004. However, beginning in mid-April 2004, emerging markets experienced declines due to a number of factors. First, interest rates started to climb higher as investors anticipated a U.S. Federal Reserve change in monetary policy. Investors sought safe-haven investments while withdrawing funds from emerging markets and other higher-risk asset classes. Second, the Chinese government's efforts to slow its overheating economy led to declines in Chinese stocks and stocks throughout Asia. Third, rising oil and energy prices were perceived to pose a threat to global growth while increasing the risk of inflation. Over the last six months, the total return for the Portfolio was below that of the benchmark MSCI Emerging Markets Free Index. One area that contributed to the Portfolio's underperformance was a sell-off of Brazil's stock market due to the country's reliance on external debt and concerns for higher rates. We remain positive on Brazil's outlook, however, and we believe investors do not adequately recognize the improvements that have been made in the economy in recent years. Brazil now has both a large fiscal surplus and a current account surplus; domestic real interest rates are the lowest in more than a decade; and there is substantial pent-up domestic demand that should drive an acceleration of economic growth. Q: What is your investment strategy? A: Our investment process is driven by rigorous research that focuses on companies with strong long-term growth prospects and proven management ability that sell at a discount to our estimation of fair value. We look for companies that are well positioned in countries and industries with favorable long-term trends and growth potential. We manage risk through diversification among various countries, sectors and companies while emphasizing stocks that are attractively valued. Q: Where are you finding attractive opportunities in emerging markets? A: As for countries, we currently favor Brazil, Thailand and Turkey. In all three markets we see very attractive stock valuations and improved economic prospects. Recent volatility has provided an opportunity, in our opinion, to add to positions at attractive prices. The Portfolio long maintained an overweight in India, but we recently reduced that position to slightly above the index weight following the recent elections. In a surprising outcome, Sonia Gandhi and the Congress party coalition soundly defeated the incumbent National Democratic Alliance (NDA) party, which had been credited with the progress seen in the Indian economy over the last few years. Investors became concerned that the new administration may not have the same emphasis on economic reforms necessary for future growth. We are more cautious on our outlook for India until we see the policies of the new administration. As for sectors, we like the energy and consumer staples sectors. Energy stocks are enjoying increasing profitability due to tight supply and strong demand, and we expect this to continue in the medium term. Consumer spending is picking up in many countries, and we expect the attractively valued stocks in the consumer staples sector to benefit from this trend. We are less optimistic on the technology sector, where we do not believe stronger demand can be sustained. Technology profit margins continue to be under pressure, and a weaker dollar may further erode profit margins of emerging markets firms that export most of their production to the United States. Q: What is your outlook? A: In our last annual report, we wrote that we were optimistic on the prospects for emerging markets over the next several years although we did expect some correction in the coming year. Emerging markets have been correcting over the last two months, and we expect this volatility may continue in the near term. However, the basis for our longer term optimism remains in place. Stock valuations in emerging markets are less expensive than in developed markets, while economic growth rates of developing countries are higher than those of developed markets. In addition, many companies in emerging markets are gaining global market share by delivering quality products and services at very competitive prices. The main risk to these investments relates to the potential for global growth to falter. On the other hand, if growth is too strong, inflation may accelerate, leading to higher interest rates and lower stock valuations. We believe that the markets are already beginning to price in these risks, and an opportunity is developing to acquire stocks with strong long-term prospects at attractive prices. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Investing in emerging markets carries its own set of risks, including but not limited to, currency fluctuations, and social and economic instability. However, we feel confident that the long-term prospects invite serious consideration. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - ------------------------------------------------------------------------------- Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF PIE CHART] Financials 29.3% Health Care 11.0% Energy 10.7% Telecommunication Services 10.1% Consumer Staples 8.5% Industrials 8.4% Materials 7.4% Consumer Discretionary 6.7% Information Technology 4.9% Utilities 3.0%
Geographical Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF PIE CHART] United Kingdom 29.6% France 23.6% Switzerland 13.6% Germany 9.4% Italy 6.1% Netherlands 5.8% Spain 4.2% Ireland 2.8% Belgium 2.0% Sweden 1.9% Finland 1.0%
Five Largest Holdings (As a percentage of equity holdings) 1. BP Amoco Plc 4.53% 2. Vodafone Group Plc 4.08 3. Total SA 3.28 4. Nestle SA (Registered Shares) 3.09 5. Eni S.p.A. 2.84
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - ------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - ------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $9.10 $9.05
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.0709 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Europe VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) Europe Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer MSCI Europe Europe VCT Portfolio Index 10/98 10000 10000 10600 10992 13618 12741 12/00 11104 11671 8587 9349 12/02 6955 7629 9269 10570 6/04 9393 10891
The MSCI Europe Index is an unmanaged, capitalization-weighted index of the 15 European country indices included in the MSCI EAFE (Europe, Australasia, Far East) Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ------------------------------------------------------------- Net Asset Value - ------------------------------------------------------------- Life-of-Class -1.10% (10/30/98) 5 Years -2.07% 1 Year 23.76%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 4 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- European stocks posted modest gains during the six months ended June 30, 2004. During this time, we saw signs of renewed interest in and a rotation back toward higher-quality investments. However, the pace of economic recovery is being tempered by higher oil prices and expectations of rising interest rates. In the following interview, Stan Pearson, a member of the Portfolio's management team, discusses the over-arching factors facing investors during the reporting period and his efforts to position the Portfolio for positive growth. Q: Was the economic environment favorable for the Portfolio's investment strategy? A: The economic environment was generally favorable for European stocks. Stock price valuations are fair and supported by strong dividend yields. Growth across Europe is more moderate than outside the region, and this fact is discounted in stock prices. The strength of the euro eased a bit during the six months, but it continues to be a risk for European exporters. For the six months ended June 30, 2004, the Portfolio's Class I shares rose 1.33% at net asset value. In comparison, the Morgan Stanley Capital International (MSCI) Europe Index posted a return of 3.04% for the same period. Q: What investments hurt performance during the six months? A: Several factors contributed to the Portfolio's underperformance. First, mobile phone and network manufacturer Nokia (Finland) surprised the market with two profit warnings and disappointing results. Secondly, unlike the benchmark, the Portfolio didn't own pharmaceutical Aventis, which rose sharply after a takeover bid from Sanofi. The Portfolio did hold Sanofi (France), but investors penalized the company for its decision to bid for Aventis. We think this situation is temporary and will hold on to Sanofi, because we believe the merger will create appreciation potential. Elsewhere in the pharmaceutical sector, investments in GlaxoSmithKline (United Kingdom) underperformed when the company released disappointing first quarter results. The company was recovering in the final months of the reporting period. Finally, while our decision to overweight investments in the capital goods sector proved successful, our stock selection was a bit disappointing. Swedish engineering companies Sandvik, Atlas Copco and SKF had absolute positive performance but underperformed other companies in the capital goods sector that rallied more strongly on optimism about restructuring programs. Q: What investments helped performance during the six months? A: One of the more positive contributors to performance was Zurich Financial (Switzerland), which we purchased during the reporting period. This company, which is benefiting from an improving outlook for the insurance sector, had an attractive valuation at the time of purchase and outperformed both the sector and the broader equity market. In the energy sector, we sold investments in Royal Dutch Petroleum (Holland) and Shell Transport & Trading (United Kingdom) and reinvested the proceeds in BP Amoco (United Kingdom) -- a decision that proved successful. BP is benefiting from its substantial production growth thanks to past investments. Furthermore, the company is carrying a lot of cash, which it may use to increase returns to its shareholders through dividends or share buy-back programs. Food giant Nestle (Switzerland) appreciated strongly as a result of market share growth and rising profit margins. European small-sized companies outperformed during the six months. An overweight position in the capital goods sector made a positive contribution. EADS (France), the maker of the Airbus, was particularly strong in the second quarter. The company is benefiting from signs of recovery in the commercial aerospace sector earlier than expected. In the utilities sector, E.ON (Germany) benefited from higher electricity prices and strong cash flow. We are optimistic that the company may return some of its extra cash to investors through a special dividend or share buy backs. In the pharmaceuticals sector, Schering (Germany) did well in the second quarter, thanks to investors' positive reaction to its plans to increase its profit margins and for a new cancer product it is developing with Novartis (Switzerland). Q: Given current market conditions in European markets, how are you positioning the Portfolio? A: We continue to emphasize investments in the capital goods sector, because we think it will benefit from increasing levels of capital expenditure, as global demand increases and companies become more confident. We're limiting positions in the technology hardware and software sector, because we believe stock prices of many of these companies are inflated and already reflecting future growth. In the telecommunications sector, we've uncovered interesting companies but prefer operators with a high level of exposure to the European mobile market, which continues to generate attractive growth. Q: What is your outlook? A: We think European equities are poised to continue to perform well versus other asset classes. The global economic recovery is well underway, led by the strong U.S. economy. The European economy continues to demonstrate a less robust pace of economic growth, but stock price valuations in Europe's equity markets remain attractive and fully reflect the moderate pace of growth in the region. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. International investing may involve special risks, including differences in accounting and currency, as well as economic and political instability. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 5 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - ------------------------------------------------------------------------------- Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF A PIE CHART] Financials 25.0% Consumer Discretionary 13.8% Industrials 12.0% Telecommunication Services 9.6% Consumer Staples 9.4% Materials 7.9% Energy 6.8% Health Care 6.6% Information Technology 6.4% Utilities 2.5%
Geographical Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF A PIE CHART] Japan 26.4% United Kingdom 21.4% France 14.6% Switzerland 8.5% Germany 5.7% Netherlands 4.6% Italy 4.2% Spain 3.0% South Korea 2.1% Brazil 1.1% Turkey 1.1% Finland 1.0% Belgium 1.0% Russia 1.0% Other (individually less than 1%) 4.3%
Five Largest Holdings (As a percentage of equity holdings) 1. BP Amoco Plc 3.17% 2. Vodafone Group Plc 2.76 3. Total SA 2.33 4. Mitsubishi Tokyo Financial Group, Inc. 2.26 5. Toyota Motor Co. 2.23
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $10.36 $10.06
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.0542 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer International Value VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) All Country World Free (ACWF) ex. U.S. Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer MSCI International AC Value Wld VCT Portfolio Fr USA+ 3/95 10000 10000 11053 10960 12/96 11998 11691 12581 11929 12/98 12163 13655 17561 17877 12/00 13609 15177 10378 12218 12/02 8996 10425 11701 14740 6/04 12113 15346
+ Index comparison begins on 2/28/95. The MSCI ACWF ex. U.S. Index is composed of 46 markets - 21 developed countries and 25 emerging countries. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - ------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ----------------------------------------------------------- Net Asset Value - ----------------------------------------------------------- Life-of-Class 2.06% (3/1/95) 5 Years -1.38% 1 Year 26.70%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 6 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - ------------------------------------------------------------------------------- With the global recovery well under way, the six months ended June 30, 2004, proved to be a positive environment for international stocks. As Stefano Pregnolato, a member of the Portfolio's management team, highlights in this report, different industries and companies within those sectors are benefiting to a greater degree than others as the recovery solidifies. Q: How did the Portfolio perform during the first half of fiscal 2004? A: The market environment was generally favorable for international stocks. Low interest rates, improving corporate fundamentals and consumer demand helped drive stock prices higher. For the six months ended June 30, 2004, the Portfolio's Class I shares rose 3.52% at net asset value. In comparison, the Morgan Stanley Capital International (MSCI) All Country World Free Index excluding the United States grew 4.10% for the same period. A handful of stocks contributed to the Portfolio's underperformance relative to the benchmark -- most notably Nokia (Finland), which is encountering strong competition in the communications equipment sector. Q: What strategies or investments hurt performance most during the six months under review? A: Information technology was the biggest disappointment for the reporting period. Even though the Portfolio's exposure to this sector was just below that of the benchmark, our decision to maintain a large exposure to Nokia (Finland) hurt performance. Nokia announced that profits later this year might not be as robust as originally thought. While the Portfolio's exposure to telecommunication services was in line with that of the benchmark, it largely consisted of Vodafone Group (United Kingdom) -- one of the Portfolio's largest holdings on June 30. Vodafone delivered positive performance for the six months, but underperformed the sector overall. The stock came under pressure in late May, when Vodafone announced that forecasted earnings might be less than previously anticipated. The Portfolio's greater-than-benchmark exposure to health care investments did well but not as well as those constituting the benchmark. Finally, investments in consumer staples did well, but the Portfolio's underweighted position, relative to its benchmark, limited its participation in the rally of those stocks. Q: What strategies or investments helped performance most during the six months under review? A: The momentum for global economic growth shifted to Asia during the first quarter of 2004, particularly to Japan, where its resurging economy and reform efforts are being well received by investors. During the spring, we increased investments there. By June 30, the Portfolio's exposure to Japan was higher than that of the benchmark at 25.98% of total equity assets. The increase was very positive for the Portfolio. In addition, the Japanese market is less correlated to the U.S. economy than that of Europe or the rest of Asia -- creating a valuable diversifying effect for the Portfolio. The sector allocation strategy also played a significant part in performance. We'd chosen to keep the Portfolio's exposure to energy stocks just below that of the benchmark, but our selection of companies, most specifically ENI (Italy), significantly outperformed those constituting the benchmark. Similarly, investments in utility holdings were below that of the benchmark, but they outperformed those in the benchmark and represented some of the strongest performers for the six-month period. With the increased global economic activity, consumer-related companies also outperformed during the six months ended June 30. Consumer discretionary companies led this group. Effective stock selection and our decision to overweight investments in this sector helped the Portfolio tremendously. Finally, we deemphasized the materials sector relative to the benchmark on account of our view that near-term fundamentals were weak. This strategy proved to be the right decision. Q: Europe still represents the majority of the Portfolio's holdings. How are these investments faring? A: European stocks generally moved in line with the benchmark. Stock price valuations are fair and supported by strong dividend yields. Growth across Europe is more moderate than outside the region, and that fact is discounted in stock prices. The strength of the euro eased a bit during the six months, but it continues to be a risk for European exporters. Q: What is your outlook for the balance of the fiscal year? A: We are cautious about the equity markets in an environment of rising interest rates. However, we see some opportunity in Japan as the signs of growth begin to build after essentially two decades of recession. We also see opportunities in key emerging markets where stronger balance sheets, domestic growth and political reform should provide the basis for good returns -- notably Brazil, Russia and Turkey. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. International investing may involve special risks, including differences in accounting and currency, as well as economic and political instability. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 7 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - ------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF A PIE CHART] U.S. Common Stocks 87.0% Temporary Cash Investment 6.3% Depositary Receipts for International Stocks 4.0% Closed End Mutual Funds 1.3% Exchange Traded Fund 0.8% International Common Stocks 0.6%
Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF A PIE CHART] Financials 23.7% Industrials 21.3% Consumer Discretionary 13.1% Materials 8.8% Information Technology 8.5% Health Care 7.9% Energy 7.0% Utilities 5.2% Consumer Staples 3.4% Telecommunication Services 1.1%
Five Largest Holdings (As a percentage of equity holdings) 1. Nu Skin Enterprises, Inc. 2.17% 2. Massey Energy Co. 1.79 3. Pediatrix Medical Group, Inc. 1.74 4. Insight Enterprises, Inc. 1.70 5. Wabtec Corp. 1.63
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - ------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - ------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $13.50 $12.50
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- ------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Small Cap Value VCT Portfolio at net asset value, compared to that of the Russell 2000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
Pioneer Russell Small Cap 2000 Value Value VCT Portfolio Index 11/01 10000 10000 12/01 10574 10612 12/02 8979 9400 12/03 12160 13727 12/04 13133 14802
Index comparison begins 11/30/01. The Russell 2000 Value Index is a measure of the performance of the value-oriented stocks in the Russell 2000 Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - ------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ------------------------------------------------------------ Net Asset Value - ------------------------------------------------------------ Life-of-Class 12.04% (11/9/01) 1 Year 30.31%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 8 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 In the following discussion, portfolio manager David Adams and assistant portfolio manager Jack McPherson review their investment strategies and the performance of Pioneer Small Cap Value VCT Portfolio. Q: How did the Portfolio perform over this period? A. For the six months ended June 30, 2004, Pioneer Small Cap Value VCT Portfolio returned 8.00% at net asset value. These results were in line with the 7.83% return on the Russell 2000 Value Index, the Portfolio's benchmark, for the same period. Q: What were conditions like over the first half of the year, and how did you respond? A. The U.S. economic recovery continued to take hold over the early months of the year. But as global demand drove up prices for key commodities, inflationary pressures led the Federal Reserve Board to raise short-term interest rates at its June meeting. Anticipation of higher rates had been a damper on the markets for several weeks prior to the Fed's move. The Portfolio's positive results over the period reflected our commitment to our established discipline. In contrast to last year when speculative issues were market leaders, the kind of companies we invest in -- better-quality issues with strong financial characteristics and good earnings prospects -- have been in favor for much of 2004. Q: Which sectors or stocks helped performance the most? A. Our overweight position in energy-related companies compared to our benchmark was the biggest positive over this period. Massey Energy benefited as global demand pushed up the price of Appalachian coal. The weak U.S. dollar also made domestic coal more competitive in foreign markets. In energy services, Maverick Tube saw orders for its oil well casings increase as drilling activity grew in response to higher energy prices. Unit Corporation benefited from higher prices at its own wells, as well as from increased activity in its equipment leasing business. Stelmar Shipping is experiencing firm pricing for its fleet of double-hulled tankers as existing tanker capacity is unable to meet the demands of an expanding world economy. Q: Which of your other decisions had a positive impact? A. In the financial sector, we found good value among commercial banks whose business customers tend to increase borrowings as business conditions improve. Shares of Texas Capital Bancshares and Cardinal Financial both rose; those regional banks are well positioned to capture market share if customers seek local alternatives in the wake of the J.P. Morgan-BankOne merger. Advanta, which supplies credit cards for small businesses, was a strong contributor, and Selective Insurance gained, thanks to favorable claims experience and higher premiums. Among industrial firms, we bought Wabtac, a maker of parts for rail cars, at a low point in its business cycle. Shares have moved higher as the expanding economy absorbs excess freight capacity and new cars are being built. In health care, Pediatrix Medical Group saw continued good results from its hospital-based neonatology services. Shares of Cross Country Healthcare gained as investors anticipated renewed demand for temporary nursing staff at hospitals seeking to fill vacancies following a period of cutbacks. Software makers Borland and SPSS were sluggish performers. Investors also grew cautious toward Rewards Network as it worked to implement a new business plan. Lower gold prices hurt results at Iamgold, which is also attempting to acquire another firm while being targeted as a merger partner. Q: What is your outlook for the upcoming months? A. Most businesses sectors are doing well in the economic recovery, but an apparent slowdown in job creation and a wave of cautious earnings forecasts may hint at a slower pace of expansion. Inflation, higher interest rates and world tensions may also give investors reasons to defer commitments, at least until the presidential election is decided. Against that background, good, attractively valued companies continue to emerge, creating opportunities for our value-oriented investment style. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Small-capitalization stocks may be subject to greater short-term price fluctuations than securities of larger companies. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 9 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - ------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF A PIE CHART] U.S. Common Stocks 88.7% Temporary Cash Investment 7.2% Depositary Receipts for International Stocks 3.0% International Common Stocks 1.1%
Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF A PIE CHART] Financials 22.9% Industrials 16.5% Information Technology 13.6% Consumer Discretionary 12.2% Health Care 12.1% Energy 7.4% Materials 6.5% Consumer Staples 5.1% Telecommunication Services 2.8% Utilities 0.9%
Five Largest Holdings (As a percentage of equity holdings) 1. Advanta Corp. (Class B) 2.37% 2. Alliance Atlantis Communications, Inc. 1.80 3. Forest Oil Corp. 1.76 4. Corn Products International, Inc. 1.75 5. Nu Skin Enterprises Inc. 1.74
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - ------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - ------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $12.15 $11.44
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- ------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Small Company VCT Portfolio at net asset value, compared to that of the Russell 2000 Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer Small Russell Company 2000 VCT Portfolio Index 1/01 10000 10000 12/01 10498 9741 12/02 8739 7747 12/03 10951 11407 6/04 11630 12177
Index comparison begins 1/31/01. The Russell 2000 Index is an unmanaged measure of the 2,000 smallest stocks, based on capitalization, in the Russell 3000 Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - ------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ------------------------------------------------------------ Net Asset Value - ------------------------------------------------------------ Life-of-Class 5.82% (1/19/01) 1 Year 24.23%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 10 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - ------------------------------------------------------------------------------- In the following discussion, portfolio manager David Adams and assistant portfolio manager Jack McPherson review their investment strategies and the performance of Pioneer Small Company VCT Portfolio. Q: How did Pioneer Small Company VCT Portfolio perform over this period? A. For the six months ended June 30, 2004, the Portfolio returned 6.21% at net asset value. This result slightly trailed the Portfolio's benchmark, the Russell 2000 Index, which returned 6.76% over the same period. Q: Please describe the background for small-company stocks over this period. A. Stocks, led by small-cap issues, moved higher early in the year on the basis of solid earnings gains and encouraging job creation in many sectors of the economy. But investors began to retrench in the spring as demand for goods and services pushed prices higher. The expectation that the Federal Reserve Board would raise short-term rates in order to forestall inflationary trends became a reality near the end of the period. Troubling developments overseas and high energy prices also kept investors on the sidelines. Q: Which stocks or sectors influenced performance favorably? A. Good stock selection in consumer staples and financial services bolstered returns. NuSkin Enterprises continues to record impressive sales gains in Asia; Chinese consumers especially have embraced NuSkin's line of diet, health and beauty products. Shares of Chattem, which markets Gold Bond and Icy Hot among other brands, moved higher following resolution of pending legal issues. Alliance Atlantis, a Canadian cable operator and producer of the CSI television programs, rose as investors took a favorable view of management's restructuring efforts. Alliance also holds movie distribution rights for the Lord of the Rings series and the political documentary Fahrenheit 911. Wabtac, which fabricates components for rail cars, saw new orders increase in response to rising freight volumes. A pickup in air freight and security services aided the Brinks Company; the company also made progress in dealing with liabilities left over from its coal-mining days, when it was known as Pittston. Anticipating possible interest-rate hikes, we avoided thrifts and other rate-sensitive financial issues. Instead, we favored commercial banks whose business customers seemed likely to increase their borrowings as economic conditions improve. California-based City National and Texas Capital Bankshares both contributed positively to results. The acquisition of Staten Island Bank by Independence Community Bank also added to returns. For Advanta, the improving economy meant stepped up demand from its small business clients for credit cards and other business services, while Selective Insurance Group, a property and casualty insurer, benefited from increased premiums and a favorable claims experience. In technology, the buyout of American Management Systems by CGI made an important contribution. Q: Which holdings had a negative impact over the period? A. Disappointing earnings pressured shares of Power Integrations, which makes semiconductors for electronic devices, including chargers for cell phones and DC/AC converters. We believe the trend to miniaturization will eventually boost demand for the company's products. Elsewhere, First Healthgroup, a managed care company, fell victim to aggressive pricing on the part of competitors. Unifi, which makes synthetic yarns for textiles, fell sharply when it was unable to finalize a proposed manufacturing venture in China. Difficult times for the airlines have hurt AAR, which manufactures parts and components for aircraft, and its shares fell. Princeton Review, a provider of preparatory courses for college entrance and other exams, also declined, following a weak earnings report. Q: What is your current outlook? A. The Federal Reserve Board raised interest rates in June, but if the economy idles for a time an aggressive series of increases seems unlikely. In the meantime, equity valuations may already reflect the impact of higher rates. That circumstance has led to a number of attractive investment opportunities among small-company stocks that we are analyzing as candidates for investment. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Small-capitalization stocks may be subject to greater short-term price fluctuations than securities of larger companies. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 11 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - ------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF A PIE CHART] U.S. Common Stocks 93.0% Temporary Cash Investment 6.0% Depositary Receipts for International Stocks 1.0%
Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF A PIE CHART] Financials 21.7% Consumer Discretionary 15.6% Industrials 12.6% Information Technology 12.6% Health Care 9.6% Materials 8.5% Energy 6.6% Utilities 6.5% Consumer Staples 6.3%
Five Largest Holdings (As a percentage of equity holdings) 1. Foot Locker, Inc. 2.58% 2. Mattel, Inc. 2.29 3. W.W. Grainger, Inc. 2.26 4. Safeway, Inc. 2.14 5. CIGNA Corp. 2.13
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - ------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - ------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $21.99 $20.47
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.080 $ - $ 0.2095
- ------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Mid Cap Value VCT Portfolio at net asset value, compared to that of the Russell Midcap Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
Russell Pioneer Midcap Mid Cap Value Value Index VCT Portfolio 3/95 10000 10000 12263 11819 12/96 14748 13596 19812 16952 12/98 20820 16271 20799 18407 12/00 24789 21721 25369 23130 12/02 22920 20537 31643 28234 6/04 33910 30733
Index comparison begins 2/28/95. The Russell Midcap Value Index measures the performance of the value-oriented stocks in the Russell Midcap Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - ------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- ------------------------------------------------------------ Net Asset Value - ------------------------------------------------------------ Life-of-Class 12.66% (3/1/95) 5 Years 10.11% 1 Year 32.23%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 12 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - ------------------------------------------------------------------------------- Despite interim volatility, stocks tended to gain over the first six months of 2004, riding on the tide of a strengthening economy and generally rising corporate profitability. In the following interview, Rod Wright discusses the market environment and portfolio strategies during the six months ended June 30, 2004. Mr. Wright is responsible for day-to-day portfolio supervision of Pioneer Mid Cap Value VCT Portfolio. Q: How did the Portfolio perform? A: The Portfolio performed well. For six months ended June 30, 2004, the Portfolio had a total return of 8.85% at net asset value, while the Russell Midcap Value Index returned 7.17%. Q: What were the principal factors that affected performance? A: Despite a succession of fears that caused short-term market reversals, stocks generally rose during the six months as evidence accumulated that the economy was strengthening and that corporate earnings were increasing. The rally that had driven the market for most of 2003 continued in early 2004 until March, when market interest rates spiked up on fears about the effects of rising oil prices, the possibility of increasing inflationary pressure and the likelihood that the Federal Reserve would tighten monetary policy. Adding to the uncertainty was the anxiety over the continuing violence in Iraq. In the final weeks of the period, however, the market rebounded again in anticipation of good news about corporate earnings and the widening expectation that the Federal Reserve would act gradually in raising short-term rates, helping to sustain the economic recovery. Q: What types of investments helped Portfolio performance? A: Security selection was the primary factor, as stocks across the industry spectrum contributed to performance. Stocks in the health care, financial services, telecommunications and industrial sectors did well, while stocks in basic materials, consumer staples and consumer discretionary sectors did less well. The top individual contributor was Charter One Financial, which was taken over by Royal Bank of Scotland, at a substantial premium to its valuation. Several other performance leaders were formerly out-of-favor companies whose stock prices began appreciating as their earnings and business prospects began to improve. They included: NCR, the technology conglomerate that began turning around its business in time to benefit from an increase in corporate capital spending; and Reliant Energy, an independent power producer and energy merchant whose stock gained as a result of a corporate restructuring and the sale of undervalued assets. The Portfolio also had success with stocks such as Becton Dickinson, the medical supplies company, which benefited from rising earnings and the introduction of new products, and Providian, a credit-card issuer whose prospects began to improve under a restructuring plan implemented by new management. Q: Were there any disappointments? A: We had a few. Investment Technology Group, a company specializing in electronic trading operations, declined as it faced increased competition in the financial markets. However, we continued to hold the stock because of the value of its assets. We have sold our stake in another disappointment, Seagate Technology, a manufacturer of disc drives, which became the victim of industry overcapacity. Similarly, we also eliminated positions in two disappointing mining stocks, Freeport-McMoRan and Newmont Mining, both of which declined as the price of gold weakened. Q: What is your investment outlook? A: We think that the market trends will continue to be choppy, as a variety of factors will weigh on investors' minds. However, the outlook for corporate earnings is generally positive and companies are generating a great deal of free cash flow. We intend to remain focused on our core discipline, concentrating on investments in quality companies with reasonable stock valuations. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Mid-capitalization stocks may be subject to greater short-term price fluctuations than securities of larger companies. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 13 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - ------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - ------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Common Stocks 91.8% Depositary Receipts for International Stocks 8.2%
Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF PIE CHART] Information Technology 30.2% Health Care 22.9% Consumer Discretionary 14.5% Industrials 10.1% Financials 8.6% Consumer Staples 7.6% Materials 3.5% Telecommunication Services 1.6% Energy 1.0%
Five Largest Holdings (As a percentage of equity holdings) 1. Microsoft Corp. 5.50% 2. Intel Corp. 4.41 3. Sandisk Corp. 3.05 4. Bristol-Myers Squibb Co. 3.02 5. Samsung Electronics Co., Ltd. 2.84
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $12.10 $12.22
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Growth Shares VCT Portfolio at net asset value, compared to that of the Russell 1000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer Growth Russell Shares 1000 VCT Portfolio Index 10/97 10000 10000 10227 10646 12/98 13561 13522 14637 16351 12/00 13484 15079 10962 13202 12/02 7157 10343 8971 13436 6/04 8883 13883
The Russell 1000 Growth Index contains those Russell 1000 securities with greater-than-average growth orientation. Companies in this index tend to exhibit higher price-to-book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values than the Value universe. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ---------------------------------------------------------- Net Asset Value - ---------------------------------------------------------- Life-of-Class -1.76% (10/31/97) 5 Years -9.91% 1 Year 9.90%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 14 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- The U.S. economy continued to grow during the first half of 2004, but the general investment environment for equities began turning slightly negative as rising corporate profit trends began to weaken, consumer spending was not as strong as expected, and markets began anticipating a tighter monetary policy from the Federal Reserve. In the following interview, Christopher Galizio discusses the factors that affected the performance of Pioneer Growth VCT Shares Portfolio during the six-month period ended June 30, 2004. Mr. Galizio is a member of the Portfolio's management team. Q: How did the Portfolio perform during the first half of 2004? A: For the six-month period ended June 30, 2004, the Growth Shares Portfolio Class I had a total return of -0.98% at net asset value. For the same period, the Russell 1000 Growth Index returned 2.74%. We believe the Portfolio's underperformance was due to the overweight position in technology, particularly semi-conductor companies, early in the period. Q: What was the general investment environment like during the period? A: The overall market sentiment appeared to be turning negative late in the six-month period. The stock market surge that that had begun in March 2003 appeared to lose some energy. Several major corporations, including the retail and semi-conductor industries, began to report earnings disappointments, and we saw some weakening in profit trends, notably in the consumer and technology sectors. Consumer spending trends, in particular, appeared weak as over-extended consumers finally began to retrench from their high-spending patterns. As stock market investors anticipated the June 30 announcement by the Federal Reserve Board that it would begin to tighten monetary policy by raising short-term interest rates, the share prices of some consumer-oriented financial institutions began to fade. Industrial stocks, however, tended to outperform the overall market. Q: What were your principal strategies during the period? A: We restructured the Portfolio during the period, focusing on large-cap companies that we believed offered long-term value, above-average revenue growth, strong returns on capital and reasonable valuations in relation to their earnings potential. This strategy led to a reduced emphasis on the semi-conductor industry and increased weightings in the software, consumer discretionary and financial services areas. We reduced our semi-conductor holdings, eliminating positions in Applied Materials, Cypress Semiconductor, Texas Instruments and Maxim Technology. We did add Taiwan Semiconductor, a major manufacturer with an attractive stock valuation. Overall, however, semiconductor stocks went from an overweight to an underweight position relative to the benchmark S&P 500. The reduced weightings in technology tended to support performance. Conversely, we increased the Portfolio's emphasis on software companies, adding companies such as Macrovision, which has developed a technology to protect DVDs, CDs and other disc-based products from piracy, as well as Take-Two Interactive, the developer of video games, including Grand Theft Auto --the most successful game in history, with a new version soon to be introduced. We also added Fair Isaac, which has developed software to help credit card companies analyze the credit-worthiness of applicants. Fair Isaac tended to detract from performance late in the six-month period as it reported disappointing earnings, but we continued to hold it because of its attractive valuation. We moved from an underweight to an overweight in the consumer discretionary sector, taking advantage of attractive valuations of Disney, whose media and theme park properties have improved earnings outlooks, and Viacom, the owner of the CBS and MTV television networks among other properties. Among retailers, we sold our Wal-Mart position before the stock fell hard, investing in Target, Kohl's and Ross Stores. In addition, we increased the emphasis on financial services stocks, focusing on insurance companies with excellent valuations that were not as vulnerable to interest-rate increases as banks and other lenders. We continued to de-emphasize consumer staples, although we added Altria (the former Philip Morris), which offered a high dividend yield and an attractive stock price that we believed was the result of overly pessimistic market evaluations of the company's tobacco liability. In addition, we invested in First Data, the leader in processing of credit card transactions and owner of the Western Union system, and Accenture, an information technology services consulting firm. Q: What were some of the investments that influenced performance? A: Among newer holdings, Macrovision rose significantly during the period as its revenue grew faster than had been expected. Sepracor, a pharmaceutical company and a new holding, also advanced on positive news of a drug under development. Zimmer Holdings, a world leader in orthopedic products, including hip and knee replacements, was another health care position that did very well. The timely sale of Wal-Mart also supported performance. The overweight position in the semiconductor industry early during the six-month period held back performance, as valuations in that group fell hard. Corinthian Colleges, operator of adult vocational educational colleges and programs, was another detractor, as the SEC began an investigation of its financial records. However, we took advantage of the price decline to add to the position in Corinthian because of its goods long-term fundamentals. Lexar and Sandisk, two manufacturers of flash memories for cameras and cell phones, also fell on disappointing sales. Freeport-McMoRan, a leader in the copper mining industry and a strong support for performance in 2003, also declined both because of problems at one of its mines and because of fears of an economic slowdown in China, an important importer of copper. We increased our investment in the company because of its attractive price. We also believed it experienced some short-term production problems that would be resolved. Q: What is your investment outlook? A: We are cautions about the near-term opportunities in the domestic stock market, as stock valuations appear relatively expensive and the Federal Reserve Board has moved to a less accommodating monetary policy. The home refinancing boom of the past two years may hurt the future earnings of banks, while the technology industry faces a number of challenges, from pricing pressure on its products to calls to change the way many companies have treated stock options in their accounting. Health care stocks, however, appear to be more reasonably valued. Given this outlook, we are paying very strict attention to our analysis and selection of individual companies. We also have somewhat reduced our exposure to the domestic stock market with investments in Europe and the emerging markets. We have, for example, increased our position in Vodafone, the world's largest wireless communications service company, and we have added small holdings from Korea, Taiwan and Israel. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 15 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Common Stocks 100.0%
Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF PIE CHART] Office 17.4% Apartment 16.8% Regional Mall 15.0% Industrial 12.7% Shopping Center 10.4% Hotel 8.7% Diversified 8.5% Self Storage 4.1% Cash 3.0% Factory Outlet 2.1% Manufactured Homes 1.0% Health Care 0.3%
Five Largest Holdings (As a percentage of equity holdings) 1. Simon DeBartolo Group, Inc. 6.00% 2. Boston Properties, Inc. 5.02 3. Equity Residential Property Trust 4.36 4. ProLogis Trust 3.97 5. Catellus Development Corp. 3.91
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $19.55 $18.57
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.400 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Real Estate Shares VCT Portfolio at net asset value, compared to that of the Wilshire Real Estate Securities Index. Portfolio returns are based on net asset value and do not reflect applicable insurance fees and surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer Wilshire Real Estate Real Estate Shares Securities VCT Portfolio Index+ 3/95 10000 10000 11696 11322 12/96 15875 15497 19235 18565 12/98 15629 15330 14977 14841 12/00 19397 19403 20911 21431 12/02 21440 21983 28890 30133 6/04 31028 32226
+ Index comparison begins on 2/28/95. The Wilshire Real Estate Securities Index is a market-capitalization weighted measure of the performance of real estate investment trusts (equity and hybrid) and real estate operating companies. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ------------------------------------------------------ Net Asset Value - ------------------------------------------------------ Life-of-Class 12.89% (3/1/95) 5 Years 13.58% 1 Year 28.90%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 16 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- Fear of higher interest rates, rising oil prices and the ongoing turmoil in Iraq contributed to volatile markets for the six months ended June 30, which made up the first half or your Portfolio's fiscal year. In this report, Mathew Troxell, a member of the Portfolio's investment management team, discusses the sector's positive returns amidst the shifting economic landscape and his expectations for 2004. Q: Was the market and economic environment favorable for the Portfolio's investment strategy? A: Real estate stocks, like most asset classes, experienced great volatility during the reporting period. With evidence suggesting that the U.S. economy was on its way to recovery, the real estate market rose strongly during the first quarter of 2004. However, in early April, the jobs report for March was surprisingly strong and sparked a sell-off in the bond market. Bond investors feared that the economy might be growing too fast and would ignite inflation. Interest rates began to rise, pushing bond prices down. Prices of real estate stocks also fell sharply even though historically they have exhibited a low correlation to bond prices. Rising oil prices and political uncertainty in Iraq further heightened investor concerns. During May and June, real estate investment trusts began to recover and picked up enough positive momentum to regain much of the ground lost in April -- ending the six months with relatively strong performance gains. For the six months ended June 30, 2004, the Portfolio's Class I shares rose 7.4% at net asset value. In comparison, the Wilshire Real Estate Securities Index increased 6.96% for the same period. Q: What investments helped performance during the six months? A: Several holdings contributed positively to the Portfolio's returns. AvalonBay Communities, one of the Portfolio's largest holdings, is an apartment/multi-family real estate investment trust (REIT) that has benefited from the expectation of improving fundamentals for apartments. Job growth has been very positive for household formations, especially for young adults who are leaving home for the first time. This demographic group has the highest propensity to rent rather than buy. This stronger renter demand is giving apartment REIT managers, such as AvalonBay, greater pricing flexibility. In addition, rising interest rates should contribute to higher renter demand, because buying a home becomes a more expensive option. In the lodging sector, Starwood Hotels and Resorts performed well, particularly in the final two months of the reporting period. Starwood, as well as the sector in general, are benefiting from a recovery in lodging demand, which is directly correlated to the improving economy. Catellus Development, a real estate management and development company, holds a portfolio of high-quality predominately industrial properties generating strong cash flow. This REIT's positive performance was driven, in part, by management's decision to convert to REIT status early in 2004. The heightened investor interest helped it to outperform the benchmark during the six months. Q: What investments hurt performance during the six months? A: We believe that Simon Property Group is a solid company, but after consistently outperforming the real estate market during the multi-year rally through the first quarter of 2004, it, along with other retail names, lagged in the final months of the reporting period. Following the market correction this spring, it began to recover. However, when management announced in late June that it was acquiring Chelsea Property Group (also held by the Portfolio), investors reacted negatively. We view the proposed merger very positively, because we think Chelsea Property Group, which owns factory outlet shopping centers in Japan as well as in the United States, would add international diversity and a new retail focus to Simon's current portfolio. Following disappointing performance last year, Apartment Investment and Management continued to lag the benchmark. This REIT, which owns a diverse portfolio of multi-family apartment complexes, suffered more than its peers as apartment fundamentals proved challenging last year and experienced lower-than-expected fee income and higher-than-expected apartment-turnover-related expenses last year -- resulting in a reduced dividend. Even with the greater promise for improving fundamentals, we reduced the position this spring, because we tempered our view of its total return potential. Q: What is your outlook for the balance of 2004? A: We think that the various property types making up the real estate market are generally experiencing improving fundamentals. While real estate earnings typically lag an improvement in fundamentals, hotel and apartment landlords can respond fairly quickly. Should economic growth continue, however, we believe retail landlords will begin to lose the relative advantage they have previously enjoyed. We believe that it will fall to astute stock selection to separate the wheat from the chafe. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Real estate investments may be subject to special risks, including risks related to general and local economic conditions and risks related to an individual property. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 17 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Common Stocks 94.7% Depositary Receipts for International Stocks 3.5% International Common Stocks 1.8%
Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF PIE CHART] Financials 17.1% Information Technology 13.9% Consumer Discretionary 13.0% Health Care 12.5% Industrials 12.3% Consumer Staples 11.9% Energy 8.2% Materials 5.7% Telecommunication Services 3.3% Utilities 2.1%
Five Largest Holdings (As a percentage of equity holdings) 1. ChevronTexaco Corp. 2.17% 2. Exxon Mobil Corp. 2.11 3. McGraw-Hill Co., Inc. 1.93 4. Target Corp. 1.85 5. SBC Communications, Inc. 1.71
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $18.98 $18.70
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.100 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Fund VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer S&P Fund 500 VCT Portfolio Index 10/97 10000 10000 10543 10643 12/98 13296 13686 15411 16565 12/00 15600 15060 13908 13275 12/02 11261 10342 13936 13306 6/04 14220 13764
The S&P 500 Index is an unmanaged measure of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ---------------------------------------------------- Net Asset Value - ---------------------------------------------------- Life-of-Class 5.42% (10/31/97) 5 Years -0.70% 1 Year 17.84%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 18 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In the following discussion, portfolio manager John Carey, reviews the investment environment and the performance of Pioneer Fund VCT Portfolio over the six months ended June 30, 2004. Q: How did the Portfolio perform over the first six months of 2004? A: Pioneer Fund VCT Portfolio recorded a positive total return of 2.04% at net asset value in the six months ended June 30, 2004. The Standard & Poor's 500 Index showed a total return of 3.44% over the same period. Investors appeared to be "rotating" out of more highly priced stocks and into shares more moderately priced, with dividends and steadier earnings outlooks. Q: Please discuss the Portfolio's performance versus the S&P 500 Index. A: Our underperformance versus the S&P was attributable mainly to our stock holdings in four sectors: information technology, materials, industrials and telecommunications services. Our strongest positive contributors were our investments in consumer discretionary, consumer staples and health care. Taking first the negative contributors, our technology holdings showed an overall decline of 1.59% versus the S&P sector gain of 0.44%. The main culprits were our positions in Texas Instruments, Novellus Systems, Synopsys and Nokia. After analyzing the different situations, we retained shares in Texas Instruments and Nokia, but liquidated our positions in Novellus and Synopsys. With regard to materials, where again we showed a negative return (3.80%) versus a slight positive return (0.71%) for the S&P sector, the largest factor was our position in Rio Tinto. In the case of the materials, we believe that the fundamentals are strong for the group looking out at least over the next couple of years and that it was mainly "profit taking" behind the weak share prices. Perhaps, too, there was some concern about a potential slow-down in the Chinese economy, which has been a prime user of many raw materials as that country rapidly industrializes. Following our evaluation of the "pros and cons," we retained Rio Tinto, a prominent worldwide mining company, as well as our shares of other companies in the sector. Industrials presented a mixed picture, with our investments rising 5.13% versus an increase for the sector of 7.42%. We had very good performance from our railroad holding Norfolk Southern, but our capital-goods stocks were more sluggish. Finally, in telecomm services, we did not own AT&T Wireless, which received a premium take-over bid, but instead owned BellSouth and SBC Communications, the companies in the joint venture, Cingular, that made the bid. BellSouth and SBC both declined as investors worried that they "overpaid." On the bright side, we had some nice gains from stocks in consumer discretionary, consumer staples and health care. They were, respectively, John Wiley & Sons, publisher of scientific and technical books and journals and also owner of the "For Dummies" imprint; Colgate-Palmolive, major brand in toothpaste; and Becton Dickinson, provider of medical supplies including disposable syringes. Q: What changes have you have made to the Portfolio so far this year? A: We were fairly active during the six months, adding 18 positions and eliminating 18. The combined effect of securities transactions and market fluctuations produced overall increases for our weightings in the energy, consumer discretionary, consumer staples, health care and financials sectors; overall decreases for our weightings in industrials and information technology; and no meaningful change for our weightings in materials, telecommunications services and utilities. In energy, we initiated positions in Apache, British Petroleum, Pioneer Natural Resources and Occidental Petroleum and sold positions in Transocean, Royal Dutch Petroleum, and Shell Transport & Trading. We believed that Transocean was fairly valued, and in the cases of Royal Dutch and the allied Shell Transport we had developed reservations about management in the wake of significant downward revisions in oil and gas reserves estimates. On the other hand, we thought that prospects were positive for the companies we added and that the larger number of holdings would provide the portfolio with more diversification. In consumer discretionary we invested in three companies we thought were poised to do better with the stronger economy, Ford Motor, Liz Claiborne, and Walt Disney, and sold two stocks that had been longer-term disappointments, Dow Jones and Eastman Kodak. We also added Clorox, formulator of bleaches and other household cleansers, and Estee Lauder, cosmetics manufacturer, in consumer staples. Our health care additions were among our most significant and included equipment makers Guidant and St. Jude Medical, distributor Cardinal Health, and generic-drug companies Barr Pharmaceuticals and Mylan Laboratories. One of our purchases in financials proved to be particularly well timed, as SouthTrust, a regional bank headquartered in Birmingham, Alabama, received a generous acquisition offer from another bank, Wachovia, not long after we had bought it. Another entry we made to the portfolio was U.S. Bancorp, based in Minneapolis, Minnesota. In other sectors, we bought, in materials, Ecolab, supplier of industrial and institutional cleaning chemicals, and, in information technology, Apple Computer, survivor, against all odds, in the personal-computer business as well as innovative producer of the very hot iPod digital-music player. Along with the seven names already mentioned in energy and consumer discretionary and (above) in information technology, we deleted the following: Boeing, Lockheed Martin, Robert Half, Union Pacific, Medco Health Solutions, Bank of America, Electronics Data Systems, BMC Software, Cisco Systems, QUALCOMM and Altera. Q: What is your outlook on the stock market and economy for the remainder of 2004? A: At the midpoint of 2004, the market appears in disarray. Truth be told, interest rates have not really moved very much at all, but there appears great anxiety about greater moves to come. Inflation is not a current problem, yet the high oil and raw-materials prices, as well as the prospect of rising wages with growth in employment, provide the worriers a reason to focus on the risk of inflation. Corporate earnings are generally very strong and also strongly up from last year, but the expressed concern is with respect to slowing of the impressive comparisons. The market to us remains attractive, even if more moderately attractive than it was in early 2003 when prices were much lower and the economy was still just poised for its rebound rather than underway with the rebound as it is currently. We see especially good values, however, among the good companies with good long-term records in which we like to invest on your behalf and which were relatively neglected by investors up until recently. Betting which way the market might go on a short-term basis has never seemed to us like a particularly fruitful endeavor. So our intention is, as always, to stay invested over the coming months, and years, and to stay invested in the solid kinds of companies we always aim to own in your Portfolio. Thank you for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 19 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Common Stocks 94.2% Temporary Cash Investment 4.4% Convertible Preferred Stocks 1.3% Convertible Corporate Bonds 0.1%
Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF PIE CHART] Financials 22.4% Utilities 16.1% Energy 12.0% Consumer Discretionary 10.9% Industrials 9.3% Health Care 7.5% Consumer Staples 7.1% Telecommunication Services 6.9% Materials 5.3% Information Technology 2.5%
Five Largest Holdings (As a percentage of equity holdings) 1. ChevronTexaco Corp. 4.15% 2. ConocoPhillips 3.93 3. PACCAR, Inc. 3.78 4. Exxon Mobil Corp. 3.21 5. Charter One Financial, Inc. 3.07
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $18.62 $18.09
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.180 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Equity Income VCT Portfolio at net asset value, compared to that of the Russell 1000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer Russell Equity 1000 Income Value VCT Portfolio Index 3/95 10000 10000 12025 12632 12/96 13852 15366 18732 20773 12/98 22816 24021 23092 25787 12/00 26522 27597 24673 26054 12/02 20770 22010 25466 28620 6/04 26470 29745
Index comparison begins 2/28/95. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ---------------------------------------------------- Net Asset Value - ---------------------------------------------------- Life-of-Class 11.31% (3/1/95) 5 Years 1.54% 1 Year 17.83%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 20 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In the following discussion, portfolio manager John Carey reviews the performance of Pioneer Equity Income VCT Portfolio over the six months ended June 30, 2004. Q: How did the portfolio fare over the past six months? A: Stock prices generally showed gains during the period. The Russell 1000 Value Index rose by 3.94%, and Pioneer Equity Income VCT Portfolio rose by exactly the same amount, 3.94% at net asset value. After the market of 2003, when the prices of many highly cyclical stocks moved dramatically, the first six months of 2004 saw investors return to steadier companies. Information technology, which had been the strongest performing sector in 2003 with the sharp recovery of many deeply depressed stocks, was one of the weakest areas of the market through June of this year. On the other hand, consumer staples, energy, and industrials all performed above the benchmark average as investors looked more favorably on companies with substantial earnings and also dividends. While financials actually underperformed the benchmark Russell 1000 Value Index, our Portfolio experienced the largest contribution to total return from our investments there. Two of our holdings, Charter One Financial and South Trust, received take-over bids from other banks at substantial premiums to their current share prices (and also to our average cost on the shares), producing sharp gains in the market value of those positions. We also did not own any shares of the lackluster performer Citigroup, a major component of the Russell index. Offsetting results came from our weightings and stock selection in telecommunications services and utilities. In telecomm, our AT&T stock declined as investors worried about mounting price competition amid slower growth. Further affecting our relative performance in that sector was our lack of ownership of AT&T Wireless, the cellular provider operating independently of its former parent since late 2001. That company received an acquisition offer from Cingular, a joint venture between two companies that we did own, BellSouth and SBC Communications. The stocks of those companies fell on concerns about the acquisition price, while stock in AT&T Wireless rose in recognition of the premium price to be paid. With regard to our holdings in the utilities sector, we have continued to favor the strong utilities with well-supported and consistent dividend-paying records. It so happened that some of the best-performing utility stocks during the period were the so-called turnaround stories, some of which had even sharply reduced or eliminated their dividends. We shall stick with our long-term strategy and emphasis on financial strength and business stability. Q: What changes did you make to the Portfolio in the first half of the period? A: Overall we added seven positions and liquidated nine. With the high oil prices and positive outlook for energy, we thought it reasonable to enlarge our exposure somewhat in that sector and added Occidental Petroleum. A specialist in coatings and other chemical products, Valspar shows good earnings potential as the economy improves. J. C. Penney has re-focused on its department stores after negotiating the sale of its sagging drugstore operation, and the results show it. Clorox, is benefiting from better management. Ameren and Equitable Resources were two additions in utilities, and U. S. Bancorp is a strong regional bank headquartered in Minneapolis. Little bespeaks quality and reliability better than a long dividend-paying record, and here is how our new holdings compare in that regard: Occidental Petroleum, payments every year since 1975; Valspar, each year since 1964; J. C. Penney, continuous payments starting in 1922; Clorox, without interruption since 1968; Ameren and Equitable Resources, since 1906 and 1950, respectively; and U. S. Bancorp, through its predecessor companies, an unbroken record going back all the way to the year of the Battle of Gettysburg, 1863. The list of names leaving the Portfolio in the period included Deere, Illinois Tool Works, Norfolk Southern, Tribune, Biomet, Bank of America, Merrill Lynch, Equity Office Properties, and Electronic Data Systems. Q: What is your outlook on the stock market and the economy for the remainder of 2004? A: At the midpoint of 2004, the market appears in disarray. Truth be told, interest rates have not really moved very much at all, but there appears great anxiety about greater moves to come. Inflation is not a current problem, yet the high oil prices provide the worriers a reason to focus on the risk of inflation. Corporate earnings are generally very strong and also strongly up from last year, but the expressed concern is with respect to slowing of the wonderful comparisons. And so it goes as well when it comes to discussion of international events and corporate-governance issues and much else: the glass is half empty, not half full, as the common expression goes. From our point of view, the market remains quite attractive, and especially the good companies with good records. Betting which way the market might go on a short-term basis has never seemed to us like a particularly fruitful endeavor. So our intention is to stay invested over the coming months, and to stay invested in the solid kinds of companies we always aim to own. Thank you for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 21 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Common Stocks 65.0% U.S. Government Securities 21.6% U.S. Corporate Bonds 13.0% Asset Backed Securities 0.4%
Sector Distribution (As a percentage of long-term holdings) [TABULAR REPRESENTATION OF PIE CHART] Government 20.9% Consumer Staples 17.1% Financials 12.2% Information Technology 11.8% Consumer Discretionary 10.3% Health Care 9.3% Industrials 7.3% Energy 6.0% Materials 3.5% Telecommunication Services 1.1% Utilities 0.5%
Five Largest Holdings (As a percentage of equity holdings) 1. Berkshire Hathaway, Inc. (Class B) 3.50% 2. First Data Corp. 3.35 3. Microsoft Corp. 3.29 4. Pfizer, Inc. 3.21 5. Northrop Grumman Corp. 3.21
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $14.18 $14.04
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.130 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Balanced VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index and the Lehman Brothers Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
Lehman Pioneer S&P Aggregate Balanced 500 Bond VCT Portfolio Index Index+ 3/95 10000 10000 10000 11847 12533 11279 12/96 13536 15406 11686 15920 20543 12817 12/98 16341 26417 13929 16754 31974 13812 12/00 17668 29068 15418 17268 25623 16720 12/02 15496 19961 18435 18085 25684 19192 6/04 18434 26567 19221
+ Index comparison begins 2/28/95. The S&P 500 Index is an unmanaged measure of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market. The Lehman Brothers Aggregate Bond Index is a widely recognized market value-weighted measure of government and corporate securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-based securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ------------------------------------------------------- Net Asset Value - ------------------------------------------------------- Life-of-Class 6.99% (3/1/95) 5 Years 1.87% 1 Year 9.04%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 22 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 In the following interview, Timothy Mulrenan, who is responsible for the equity portfolio of Pioneer Balanced VCT Portfolio, and Richard Schlanger, who is responsible for the Portfolio's fixed income investments, discuss the markets and their investment strategies during the six months ended June 30, 2004. Q: How did the Portfolio perform during the first six months of 2004? A: Pioneer Balanced VCT Portfolio had a total return of 1.93% at net asset value during the six months ended June 30, 2004. The Portfolio's benchmarks, the S&P 500 and the Lehman Brothers Aggregate Bond Index returned 3.44% and 0.15%, respectively. Q: What were the factors that affected performance? A: The domestic equity market produced generally positive returns for the six months, but those returns masked the underlying volatility and tensions between conflicting influences. Supporting equity valuations were an expanding economy and robust corporate profits. The competing negative factors included the spike in market interest rates midway through the six months, as well as uncertainty brought on by concerns over issues such as energy prices, stability in Iraq and presidential election-year politics. In the fixed income markets, interest rates rose, with shorter-maturity rates rising more than longer-term rates. The price losses brought on by higher rates as well as the flattening of the yield curve -- or difference between short-term and long-term yields -- resulted in volatility in the bond market. The key factor was the widely anticipated announcement by the Federal Reserve Board on the final day of the period to begin tightening monetary policy by starting to raise the influential overnight lending rate -- the Fed Funds rate. The initial hike was from 1.00% to 1.25%, but the expectation was that the Fed would raise rates further in the months to come in an effort to guard against inflationary pressures. Q: What were your principal strategies during the period? A: On June 30, about 64% of assets were invested in stocks -- about the same percentage as at the start of the period. The remaining assets were invested in fixed income assets, including corporate bonds, government securities, and mortgage-backed securities, with a small allocation in foreign bonds and less than 2% in cash. We trimmed our energy position to take profits and to reduce our vulnerability to the area during a time when we expected increased price volatility. We remained overweighted in energy stocks, however, and are positive about the sector's longer-term fundamentals. We modestly increased the Fund's health care holdings, adding medical device company Guidant and pharmaceutical company Eli Lilly. We thought Guidant's stock price had become compellingly attractive after it fell because of an announcement about a delay in a new product introduction. We like Eli Lilly because it has well-developed research and development activities that should produce a flow of new products. In addition, we initiated a position in Liz Claiborne, the apparel company. We think it is attractive because of its strong distribution during a time when the industry is beginning to gain greater control over pricing. We substantially reduced our holdings in two stocks that had performed very well -- software company Symantec and auto insurance company Progressive. We also eliminated our position in Devon Energy, an exploration and production company, because of our concerns about its internal cost structure. In the fixed income allocation, we raised overall quality, with average credit quality moving from A+ to AA-. Interest-rate sensitivity -- as measured by duration -- was about even with that of the benchmark Lehman Brothers Aggregate Bond Index, although it declined slightly during the six months to about 4.3 years. We increased our exposure to mortgage-backed securities from 40.3% of fixed income assets to 48.0%. Mortgages tend to be less vulnerable to declining prices than Treasuries and other government securities in a rising interest-rate environment. We reduced our exposure to corporates, taking profits when their yield advantage over Treasuries began to narrow. At the end of the period, 26.3% of the fixed income portfolio was invested in industrial and utility bonds, compared to 31.4% at the start of the period. At the same time, we also reduced our banking and financial services bond holdings from over Treasuries than existing issues available on the secondary market. When we invested in Treasury bonds, we tended to hold TIPS, or inflation-protected Treasuries, although we sold them near the end of the period when the Federal Reserve made it clear it intended to control inflationary pressures. Q: What types of investments had the greatest influence on performance? A: Among our equity investments, our emphasis on consumer staples companies helped considerably as stock investors began to recognize the value of higher-quality, stable growth companies that had been overlooked in the rally of 2003. Holdings such as Gillette, PepsiCo and Wrigley performed very well. Our technology positions also contributed to performance, led by Symantec, whose share price went up 27% during the six months. Detracting from performance, however, was security selection in the consumer discretionary sector. Family Dollar Stores had disappointing earnings, which may have been related to higher gasoline prices and the adverse effect on their largely lower-income customers, but we still favored the company and continued to hold it at the end of the period. Newmont Mining, which had been a strong contributor to Fund performance prior to the period, fell 20% during the period in response to slumping gold prices. However, we still believe the company is attractive and continue to hold a position in it. In the fixed income portfolio, our overweight position in mortgages helped substantially, as did our exposure to corporate bonds -- both high yield and investment-grade. Performance was held back, however, by our concentration in intermediate-term securities, as short- and intermediate-term interest rates rose more than the rates on long-term bonds during the six months Q: What is your investment outlook? A: We believe the June 30 announcement by the U.S. Federal Reserve that it was starting to raise short-term rates is the start of a long process of interest-rate hikes that is likely to continue at least through the end of 2005. We anticipate moving to a barbell strategy over time with respect to maturity allocations, concentrating on both short-term securities and long-term bonds while de-emphasizing intermediate-term bonds that we think are most vulnerable in the present environment. We believe the equity market will continue to be choppy, with no major trends either up or down in stock price averages. The outlooks for gross domestic product (GDP) and for corporate earnings both are favorable, although the rate of corporate profit growth may slow somewhat. The big question that will be on investors' minds will be what happens to interest rates. In addition, uncertainty about geopolitical events and the outcome of the presidential election will influence investor psychology. We think the most likely scenario is that the major stock averages will show moderate growth over the next several months. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 23 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment in securities) [TABULAR REPRESENTATION OF PIE CHART] U.S. Corporate Bonds 57.7% Convertible Corporate Bonds 35.4% Temporary Cash Investment 4.1% Convertible Preferred Stocks 2.8%
Maturity Distribution (As a percentage of total investment in securities) [TABULAR REPRESENTATION OF PIE CHART] 0-1 years 2.5% 1-3 years 16.6% 3-4 years 18.6% 4-6 years 44.9% 6-8 years 10.4% 8+ years 7.0%
Five Largest Holdings (As a percentage of long-term holdings) 1. Bowater, Inc., 6.5%, 6/15/13 3.71% 2. CMS Energy Corp., 7.75%, 8/1/10 2.97 3. Freeport-Mc Corp., 5.5% (144A) 2.87 4. Forest City Enterprises, 7.625%, 6/1/15 2.83 5. Meristar Hospitality Corp., 9.125%, 1/15/11 2.69
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $11.12 $11.45
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.3137 $ - $ 0.047
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch (ML) High Yield Master II Index and of the ML Index of Convertible Bonds (Speculative Quality). Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
ML Pioneer ML Convertible High High Bonds Yield Yield Speculative VCT Portfolio Master II+ Quality 5/00 10000 10000 10000 12/00 10623 9770 8424 12387 10207 7882 12/02 12211 10013 7744 16215 12830 10529 6/04 16254 13006 11090
+ Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a broad-based measure of the performance of the non-investment grade U.S. domestic bond market. The ML Index of Convertible Bonds (Speculative Quality) is a market-capitalization weighted index including mandatory and non-mandatory domestic corporate convertible securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ------------------------------------------------------------- Net Asset Value - ------------------------------------------------------------- Life-of-Class 11.82% (5/1/00) 1 Year 9.80%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 24 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 High-yield bonds offered slightly positive returns during the first half of 2004. In the following report, portfolio manager Margaret Patel describes the market backdrop and why the Portfolio slightly underperformed its benchmark index. Q: How did the Portfolio perform? A: During the six months ended June 30, 2004, the Portfolio's Class I shares had a total return based on net asset value of 0.25%. By comparison, the Merrill Lynch High Yield Master II Index returned 1.36%. The 30-day SEC yield on June 30, 2004, was 3.88%. Q: What was the environment like for the high-yield market during the first six months of 2004? A: Rising interest rates significantly dampened returns for all segments of the fixed-income market. Signs of a strengthening economy and the increased possibility of sustained inflationary pressures caused market yields to rise in anticipation of an increase in short-term interest rates by the Federal Reserve Board. That hike came to pass on the last day of the period. Bond prices move in the opposite direction of interest rates and within such an environment Treasury bonds suffered the worst relative price declines. Steady economic growth helped high-yield bonds perform better than Treasuries, but high-yield bonds still suffered price declines due to rising market yields. Lower-quality securities outperformed higher-quality issues during the period, as investors became more comfortable taking on riskier investments within a strengthening economy. Q: Why did the Portfolio's performance slightly lag that of the Merrill Lynch High Yield Master II Index? A. The Portfolio had a higher overall credit quality than the index during a period when lower-rated bonds led the market. We favored higher-quality securities because we felt that they offered better value and risk profiles. We also increased the Portfolio's economic sensitivity during the period, including adding investments in the basic materials sector. Companies in this sector had performed well due to torrid demand from China. However, during the period the Chinese government took steps to slow economic growth to reduce inflationary pressures from building. Investors, in turn, became concerned that the moves would soften demand for basic materials, and so these investments suffered. Finally, the Portfolio's allocation to convertible securities -- about 40% at the end of the period -- also dampened performance somewhat. Convertibles underperformed generic high-yield bonds because of declines in the underlying stock prices, particularly in two of our areas of focus -- basic materials and technology. Q: Which investments proved to be some of the top performers during the fiscal year? Which disappointed? A: Two energy holdings, Tom Brown and Nuevo Energy, offered significant price appreciation when they were each acquired by investment-grade companies. Convertible bonds issued by Kaydon -- which manufactures ball bearings, hydraulic gear and filters for the aerospace, electronics and heavy construction industries -- rose in concert with the underlying stock price due to an improving business outlook. Real estate firm LNR Properties continued to perform well despite the risk that higher interest rates might hurt its business. On the down side, three commodity-based companies -- Freeport Mac MoRan, Coeur d'Alene Mining and Graftech, underperformed because of fears that slower growth in the U.S. and China would reduce demand for basic materials. Q: What is your outlook? A: The Fed's rate hike at the end of the period was widely expected, and the Board indicated its willingness to implement any further rate increases in a slow, measured manner. The U.S. economy remains relatively healthy, so we believe that the overall outlook for corporate earnings should be positive. It is possible that Treasury yields could continue to rise during the rest of 2004, but we feel that the extent of any such increases should be relatively muted. Within such an environment, high-yield bonds could continue to attract investors who are more comfortable taking on more risk within a healthy economy and who are looking for more attractive yields than either those offered in the Treasury or other lower-yielding segments of the fixed-income markets. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio invests in below investment-grade securities, which may be more volatile and subject to greater price fluctuations than investment-grade securities. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 25 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Corporate Bonds 55.6% U.S. Government Securities 21.4% Foreign Government Bonds 12.8% Convertible Corporate Bonds 3.1% Asset Backed Securities 2.7% Temporary Cash Investment 1.9% Municipal Bonds 1.2% Sovereign Issue 0.8% Supranational Bonds 0.5%
Maturity Distribution (As a percentage of total investment portfolio) TABULAR REPRESENTATION OF PIE CHART] 0-1 years 4.7% 1-3 years 23.2% 3-4 years 20.9% 4-6 years 31.0% 6-8 years 14.6% 8+ years 5.6%
Five Largest Holdings (As a percentage of long-term holdings) 1. Norwegian Government, 6.75%, 1/15/07 1.78% 2. Government of France, 3.0%, 7/25/09 1.62 3. Government National Mortgage Association II, 6.0%, 11/20/33 1.53 4. Federal Home Loan Mortgage Corp., 6.0%, 6/1/17 1.45 5. Swedish Government, 5.5%, 10/8/12 1.40
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $10.56 $11.01
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.3241 $ - $ 0.1616
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Strategic Income VCT Portfolio at net asset value, compared to that of the Lehman Brothers U.S. Universal Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer Lehman Strategic U.S. Income Universal VCT Portfolio Index+ 7/99 10000 10000 10070 10136 12/00 10525 11234 11251 12144 12/02 12458 13338 15104 14117 6/04 15152 14140
+ Index comparison begins July 31, 1999. The Lehman Brothers U.S. Universal Index is the union of the U.S. Aggregate Index, the U.S. High Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, the non-ERISA portion of the CMBS Index and the CMBS High Yield Index. Municipal debt, private placements and non-dollar-denominated issues are excluded from the Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ----------------------------------------------------- Net Asset Value - ----------------------------------------------------- Life-of-Class 8.79% (7/29/99) 1 Year 6.51%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 26 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 Domestic high-yield corporate bonds and mortgage-backed securities provided the best relative returns during the first six months of 2004, a period marked by rapid rises in interest rates as evidence of a strengthening economy became more pervasive. Higher-rated bonds tended to lose value as market interest rates rose. In international trading, the U.S. dollar strengthened, limiting the returns from foreign investment-grade bonds while the prices of emerging market debt declined after strong gains earlier. The following is an interview with Kenneth J. Taubes, who discusses the factors that influenced the Portfolio's performance during the six-month period. Mr. Taubes, head of Pioneer's Fixed Income Group, oversees the team responsible for daily management of the Portfolio. Q: How did the Portfolio perform during the six months ended June 30, 2004? A: The Portfolio performed reasonably well in a challenging environment. During the six-month period, the Portfolio's Class I shares had a total return of 0.32%, while the Lehman U.S. Universal Bond Index returned 0.17%. The 30-day Standardized SEC Yield for the Portfolio's Class I Shares on June 30, 2004, was 6.13%. Q: What were the factors that affected performance? A: The Portfolio's ability to diversify across several different fixed-income classes worked to its advantage during a period in which rising interest rates tended to undermine the values of higher-quality domestic bonds and a strengthening dollar tended to hurt the values of investments in foreign-denominated securities. The Portfolio's positive performance and slight edge over the U.S. Universal Bond Index came despite exposure to two poorly performing areas that are not significantly represented in the index: foreign investment-grade securities and emerging markets. Throughout the six months, our emphasis on the domestic high-yield corporate bonds helped performance substantially, as this was the best-performing part of the bond market. High-yield bonds, as represented by the Merrill Lynch High Yield Master II Index, returned 1.36% during the period, while most higher quality domestic fixed-income classes had negative returns. In our domestic investment-grade positions, we also focused on the best-performing area, mortgage-backed securities, which benefited from the lessening of fears of prepayments and diminishing interest-rate volatility. We de-emphasized Treasuries, the area most vulnerable to rising interest rates, and the Treasury securities we did own tended to be inflation-protected securities that outperformed standard Treasuries. While emerging markets were down more than 6% during the six months, we focused our holdings on corporate issuers whose longer-term prospects remained good. Although we reduced its position, the Portfolio remained overweighted in non-dollar currencies during the period, and this held back performance as the U.S. dollar strengthened. In particular, our investments in the currencies of growth-oriented economies such as Australia and Canada did poorly, as these currencies weakened even more than the euro and other currencies tied to economies with less growth. At the end of the six months, 37% of assets were invested in high-yield corporates, the largest emphasis of any asset class. Mortgage-backed securities accounted for 21% of assets, while emerging market debt represented about 16% of Portfolio assets and international investment-grade bonds accounted for another 16%. Investment-grade corporate bonds represented just 9% of Portfolio assets, and the Treasury position at the end of the six months was less than 1%. Average credit quality on June 30 was BBB-. Q: What changes did you make in the Portfolio during the six months? A: We continued our emphasis on domestic high-yield corporate bonds. We expect the economy to continue to expand, helping strengthen the financial health of high-yield issuers, many of which are starting to enjoy greater pricing power over their products. Also, high-yield bonds can remain less sensitive to the negative price impacts of rising interest rates because of their yield advantage over higher quality securities. In spite of the strength of the U.S. dollar during the period, we thought the long-term trend of the dollar continued to be one of weakening versus other currencies. As a result, we maintained investments in growth-oriented countries such as Australia, Canada, Sweden and Norway. Q: What types of individual investments had the greatest influence on performance? A: Several high-yield holdings helped substantially. The bonds of Metro PCS, a wireless telecommunications provider in several metropolitan areas, including in Georgia and California, rose substantially in price on the news that the company intended to proceed with an initial public stock offering. Bonds issued by Corning, which restructured its business to focus on the production of the material used for flat-screen television, did very well, as did securities of several hotel companies, whose earnings increased as the economy improved and business travel improved. Among the better-performers in the Portfolio were bonds issued by the Hilton, Starwood and John Q. Hammond hotel chains. While emerging market debt tended to detract from performance, the bonds of Brazilian brewer AMBEV gained after the announcement of plans for its acquisition by the European firm Interbrew. Disappointments included the bonds of Primus Telecommunications, a multi-national telecommunications service provider based in the United States. While its earnings were positive, the bonds fell because of investor skepticism about the sector. The bonds of Brazilian steel company CSN also detracted from performance in the general decline in emerging markets, despite strong company fundamentals. Q: What is your outlook for the bond market? A: With an outlook for continuing economic expansion, we expect that short-term interest rates are likely to rise further in the coming months. The Federal Reserve began to raise the Fed Funds Rate, the most influential short-term rate, on June 30. The Fed has signaled it plans to raise rates gradually, but to continue to be accommodative and encourage growth, a policy likely to keep interest rates low by historical standards. Market rates on longer-term bonds, which rose in the months leading up to the June 30 announcement, probably are priced appropriately for current conditions, but pressure should continue for the rates of shorter-term and intermediate-term bonds to rise. The financial health of domestic corporations should continue to improve. More companies report they have gained additional pricing power, which should help them strengthen their balance sheets. At the same time, the weaker dollar has improved the competitiveness of many industries in world markets. In our domestic portfolio, we expect to continue to focus on high-yield corporate bonds and mortgage-backed securities and position the Portfolio to mute the impact of rising interest rates of short- and intermediate-term securities with a relatively short duration. While foreign currencies fell during the most recent six months, we believe the U.S. dollar may weaken in the coming months, particularly if the Federal Reserve maintains its commitment to an accommodative monetary policy. We have emphasized the Australian and Canadian currencies and also hold investments in growth-oriented European economies, such as Sweden and Norway. After several years of avoiding the yen, we also have initiated a small position in the Japanese currency to benefit from expanding global growth. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. International investing may involve special risks, including differences in accounting and currency as well as economic and political instability. 27 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Government & Agency Obligations 90.7% Temporary Cash Investment 6.9% Collateralized Mortgage Obligations 1.8% U.S. Corporate Bonds 0.6%
Maturity Distribution (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] 0-1 years 3.8% 1-3 years 42.4% 3-4 years 26.4% 4-6 years 18.3% 6-8 years 0.5% 8+ years 8.6%
Five Largest Holdings (As a percentage of equity holdings) 1. U.S. Treasury Notes, 6.5%, 2/15/10 13.05% 2. U.S. Treasury Notes, 6.25%, 8/15/23 5.05 3. Federal Home Loan Mortgage Corp., 6.0%, 3/1/33 3.47 4. U.S. Treasury Notes, 6.375%, 8/15/27 2.57 5. Federal Home Loan Mortgage Corp., 6.0%, 5/1/34 2.52
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $10.03 $10.35
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.3374 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer America Income VCT Portfolio at net asset value, compared to that of the Lehman Brothers Fixed-Rate Mortgage-Backed Securities Index and of Lehman Brothers Government Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer Lehman Lehman America Government Fixed Rate Income Bond Mortgage VCT Portfolio Index+ Index+ 3/95 10000 10000 10000 10574 11302 11098 12/96 10712 11615 11693 11616 12727 12802 12/98 12563 13981 13694 12246 13667 13947 12/00 13686 15477 15505 14573 16598 16779 12/02 16076 18506 18246 16368 18943 18802 6/04 16393 18920 18948
+ Index comparisons begin 2/28/95. The Lehman Brothers Fixed-Rate Mortgage-Backed Securities Index is an unmanaged index including 15- and 30-year fixed rate securities backed by pools of the Government National Mortgage Association, Federal Home Loan Mortgage Corporation and Federal National Mortgage Association. The Lehman Brothers Government Bond Index is an unmanaged performance measure of U.S. Treasury debt, all publicly issued debt of U.S. government agencies and quasi-federal corporations of corporate debt guaranteed by the U.S. government. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ---------------------------------------------------- Net Asset Value - ---------------------------------------------------- Life-of-Class 5.43% (3/1/95) 5 Years 6.02% 1 Year 0.07%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 28 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In an improving economy, uncertainty about rising interest rates dominated market sentiment. As a result, the yields on fixed-income securities declined and then rose, as investors tried to determine when the Federal Reserve would raise interest rates and by how much. In this volatile environment, Pioneer America Income VCT Portfolio delivered a relatively high level of income to shareholders. In the following interview, Richard Schlanger, a member of the Pioneer fixed-income team, discusses the factors that affected the fixed-income market and the Portfolio over the past six months. Q: How did the Portfolio perform during the six-month period ended June 30, 2004? A: For the six-month period ended June 30, 2004, Class I shares of Pioneer America Income VCT Portfolio produced a total return of 0.15% at net asset value. The Portfolio outperformed the Lehman Brothers Government Bond Index which returned -0.13% for the same period. It underperformed the Lehman Brothers Fixed-Rate Mortgage-Backed Index, which returned 0.77%. At the end of the period, the 30-day SEC yield for Class A shares was 3.20%. Q: What was the investment environment like during the period? A: For the first three months of 2004, concerns about geopolitical issues and the "jobless" economic recovery kept interest rates at 45-year lows. When we moved into the second calendar quarter of 2004, however, the employment picture changed dramatically. Several hundred thousand jobs were added to the economy in April and May, leading to concerns about the pace of Federal Reserve tightening, accelerating inflation and higher interest rates. In this environment, market rates rose, causing the yield curve to flatten. (The yield curve shows the relationship between bond yields and maturity lengths.) Normally, the yield curve is positively sloped with yields on long-term bonds exceeding those on short-term bonds. The yield curve flattens when yields on short-term bonds rise more than those on long-term bonds. This was the case during the period. As interest rates rose, bond yields went up and prices declined. Q: What investment strategies contributed to performance? A: About 65% of net assets were diversified in mortgage-backed securities issued by Government Sponsored Enterprises, such as the Government National Mortgage Association (Ginnie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae). (Ginnie Mae securities are backed by the full faith and credit of the government. A full faith and credit backing applies to underlying Portfolio securities not to Portfolio shares.) Because mortgages outperformed Treasury securities, the Portfolio's overweight in the sector relative to the benchmark was the biggest aid to total return. In the volatile interest-rate environment, we were concerned about the prepayment risk that is associated with mortgage-backed securities. When interest rates decline, homeowners often "prepay" their existing mortgages and refinance their homes at a lower rate. Significant prepayment activity can result in declining yields and share prices in portfolios with investments in mortgages. To mitigate this risk, we selected mortgages with lower weighted average coupon rates that we believe are less likely to be prepaid. Q: What investment strategies detracted from performance? A: A little more than 31% of the Portfolio was invested in Treasury and agency securities with predominently short- and intermediate-term maturities. As yields on securities in these maturity ranges moved higher, their prices declined. As a result, the Portfolio's exposure to bonds in the middle of the yield curve held back results. Q: What is your outlook over the next several months? A: We believe the economy is on a sustained path for improvement and are concerned that the seeds for higher inflation are being planted. The Federal Reserve raised interest rates by 0.25% on June 30 and is likely to continue doing so at a measured pace over the next two years. As interest rates move higher, we will consider using a barbell strategy in managing the Treasury portion of the Portfolio. This means we may sell some of our intermediate-term holdings and add securities in the one-to-two-year range and in the 20 plus-year range. With this approach, the Portfolio should benefit from the higher yields that long-term bonds provide and from the relative price stability of short-term securities. We will also seek mortgage-backed securities that are selling at a discount and that can provide the Portfolio with relatively high yields as well as the potential for price appreciation. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 29 Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO AND PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Short-term interest rates remained at 46-year lows during the first half of 2004, although the U.S. Federal Reserve Board finally signaled a shift in its accommodative monetary policy on June 30 when it raised the key Fed Funds Rate from 1.00% to 1.25%. Throughout the six months, Pioneer Money Market VCT Portfolio maintained a $1 share price and provided modest current income consistent with the low yields available in the money market. The Portfolio invests exclusively in high-quality money market instruments issued by the U.S. government and domestic corporations and banks. All issues have the highest ratings from the two leading nationally recognized ratings organizations: A1 by Standard & Poor's Investors Services and P1 by Moody's Investor Services. (Ratings apply to underlying securities, not Fund shares.) In the following discussion, Andrew D. Feltus reviews the investment environment and the strategies that affected the Portfolio over the six months ended June 30, 2004. Mr. Feltus is a member of Pioneer's Fixed Income Group, which is responsible for the daily management of the Portfolio. Q: How did the Portfolio perform during the first half of 2004? A: For the six months ended June 30, 2004, Pioneer Money Market VCT Portfolio had a total return of 0.25% at net asset value. On June 30, 2004, the Portfolio's seven-day effective yield was 0.91%. Q: What factors affected Portfolio performance? A: Short-term interest rates remained at historically low levels over the past six months. It was a period, however, in which evidence steadily accumulated that the U.S. economy was recovering briskly. Growth Domestic Product (GDP), for example, grew by an annual rate of 3.9% for the first three months. The nation's industrial production increased by 5.6% since June 30, 2004, and the economy added 1.4 million new jobs during the same 12 months. Evidence of the economy's vibrancy became more persuasive during the six months, especially after the Department of Labor released an unexpectedly strong new-jobs report for March. Market interest rates began rising and expectations grew that the Federal Reserve Board would finally shift from its accommodative monetary policy and begin raising short-term interest rates. The Fed confirmed those expectations on the final day of the six-month period when it raised the influential Fed Funds Rate by one-quarter of one percent and signaled that it was likely to raise the rate further in subsequent months to head-off inflationary threats. Q: Given this environment, what strategies did you pursue? A: We held to our quality orientation in managing the Portfolio. While the effective duration was 71 days on June 30, 2004, we expected to shorten duration aggressively as the Federal Reserve began to raise rates. A shorter-duration should give the Portfolio greater ability to invest in new, higher-yielding securities as rates start to rise. Q: What is your investment outlook? A: We anticipate that while the Federal Reserve will continue to stimulate continued economic growth, it is likely to raise short-term rates further for the remainder of 2004 and at least the beginning of 2005. Given this outlook, we expect to maintain a shorter duration to give us the flexibility to capture additional yield as rates rise. However, we also expect to take a more barbelled approach, with concentrations both in very short, one-to-two month securities and in one-year maturities, where higher yields are available. We also intend to consider opportunities to invest in floating-rate notes, where we believe we can take advantage of higher yields without assuming more risk. Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $1.00 $1.00
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.0025 $ - $ -
- -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ------------------------------------------------------- Net Asset Value - ------------------------------------------------------- Life-of-Class 3.59% (3/1/95) 5 Years 2.68% 1 Year 0.46%
All total returns shown assume reinvestment of distributions at net asset value. * Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. Past performance does not guarantee future results. Returns and principal values fluctuate so that your investment, when redeemed, may be worth more or less than its original cost. The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 30 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCKS - 2.6% Materials - 0.3% Diversified Metals & Mining - 0.3% 259,000 Caemi Mineracao E Metalurgia SA* $ 99,034 ----------- Total Materials $ 99,034 ----------- Capital Goods - 0.1% Industrial Conglomerates - 0.1% 1,855 GS Holdings Corp.* $ 16,639 3,445 LG Corp. 30,901 ----------- $ 47,540 ----------- Total Capital Goods $ 47,540 ----------- Banks - 0.7% Diversified Banks - 0.7% 2,541,700 Banco Itau Holding Financeira $ 235,144 ----------- Total Banks $ 235,144 ----------- Telecommunication Services - 1.5% Integrated Telecommunication Services - 0.7% 14,401 Tele Norte Leste Participacoes (A.D.R.) $ 183,325 ----------- Wireless Telecommunication Services - 0.8% 10,900 Telesp Celular Participacoes (A.D.R.)* $ 85,894 5,800 Telemig Celular Participacoes (A.D.R.) 171,100 ----------- $ 256,994 ----------- Total Telecommunication Services $ 440,319 ----------- TOTAL PREFERRED STOCKS (Cost $663,334) $ 822,037 ----------- COMMON STOCKS - 92.5% Energy - 10.3% Integrated Oil & Gas - 6.2% 225,000 CNOOC, Ltd. $ 95,517 5,480 Lukoil Holding (A.D.R.) 574,030 30,900 Petrobras Brasileiro SA (A.D.R.) 778,680 13,500 Surgutneftegaz (A.D.R.) (b)* 442,125 15,644,450 Tupras-Turkiye Petrol Rafinerileri AS 102,718 ----------- $ 1,993,070 ----------- Oil & Gas Equipment And Services - 0.4% 3,000 Samchully Co., Ltd. $ 143,240 ----------- Oil & Gas Exploration & Production - 2.0% 183,600 China Petroleum & Chemical $ 67,671 6,100 Mol Magyar Olaj 243,471 179,000 Panva Gas Holdings, Ltd.* 77,535 67,000 PTT Public Co., Ltd. 252,428 ----------- $ 641,105 ----------- Shares Value Oil & Gas Refining Marketing & Transportation - 1.7% 983,500 Petron Corp. $ 53,590 7,400 Polski Koncern Nafto (G.D.R.) 116,980 7,500 S-OIL Corp.* 313,146 2,120 TelecomAsia Corp. Public Co., Ltd. 69,430 ----------- $ 553,146 ----------- Total Energy $ 3,330,561 ----------- Materials - 14.7% Aluminum - 0.1% 12,000 Catcher Technology Co., Ltd. $ 38,556 ----------- Commodity Chemicals - 1.5% 3,869 Daelim Industrial Co. $ 121,643 11,300 Reliance Industries, Ltd. (144A)* 226,848 12,010,000 Ultrapar Participacoes SA 128,312 ----------- $ 476,803 ----------- Construction Materials - 1.1% 5,150 Asia Cement Co., Ltd. $ 115,063 29,013,250 Akcansa Cimento AS 58,636 40,422 Lafarge Malayan Cement* 8,679 14,400 Siam City Cement Co., Ltd. 74,686 12,000 Siam Cement Co., Ltd. 71,872 2,932 Suez Cement Co. (G.D.R.)* 24,042 ----------- $ 352,978 ----------- Diversified Chemicals - 0.7% 200 Israel Chemicals, Ltd. $ 386 2,600 LG Chemicals, Ltd. 88,515 258,360 Sinopac Holdings Co. 135,772 ----------- $ 224,673 ----------- Diversified Metals & Mining - 3.0% 11,400 Anglo American Plc $ 238,032 4,900 Antofagasta Plc 83,845 3,800 Companhia Vale do Rio Doce (A.D.R.) 148,580 3,900 Industrias Penoles SA 13,936 17,200 KGHM Polska Miedz SA* 131,684 4,100 Norilsk Nickel 226,013 127,000 Yanzhou Coal Mining (Class H) 139,864 ----------- $ 981,954 ----------- Gold - 0.4% 25,500 IAMGOLD Corp. (b) $ 142,290 ----------- Paper Products - 0.2% 2,370 Aracruz Cellulose SA (A.D.R.)* $ 77,404 -----------
The accompanying notes are an integral part of these financial statements. 31 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Precious Metals & Minerals - 4.5% 33,200 Anglo American Plc $ 694,786 1,750 Anglogold, Ltd. 55,955 8,600 Anglogold, Ltd. (A.D.R.)(b) 276,576 20,400 Compania de Minas Buenaventura SA 450,840 ----------- $ 1,478,157 ----------- Specialty Chemicals - 0.9% 85,501 Formosa Plastic Corp.* $ 121,327 135,055 Nan Ya Plastics Corp. 178,645 ----------- $ 299,972 ----------- Steel - 2.1% 231,106 China Steel Corp., Ltd. $ 219,413 7,700 Pohang Iron & Steel Co., Ltd. (A.D.R.)* 258,027 16,800 Remgro, Ltd. 205,595 ----------- $ 683,035 ----------- Total Materials $ 4,755,822 ----------- Capital Goods - 4.1% Building Products - 0.8% 12,500 Daewoo Heavy Industries & Machinery, Ltd. $ 151,670 2,530 Hanil Cement Co., Ltd. 97,062 ----------- $ 248,732 ----------- Construction, Farm Machinery & Heavy Trucks - 0.2% 17,700 Punjab Tractors, Ltd.* $ 78,632 ----------- Construction & Engineering - 1.2% 240,000 CTCI Corp. $ 119,451 2,386,626 Enka Insaat VE Sanayi AS 49,004 7,900 Kyeryong Construction Industrial Co., Ltd. 72,767 9,600 LG Construction, Ltd. 158,825 ----------- $ 400,047 ----------- Electrical Components & Equipment - 0.6% 14,900 Bharat Heavy Electricals (Demat Shares) $ 162,829 7,512 Crompton Greaves, Ltd.* 21,267 ----------- $ 184,096 ----------- Industrial Conglomerates - 0.4% 3,675 GS Holdings Corp.* $ 54,673 6,825 LG Corp. 101,535 ----------- $ 156,208 ----------- Metal Fabricators - 0.3% 5,470 Korea Zinc Co. $ 90,913 ----------- Industrial Machinery - 0.6% 187,000 Yungtay Engineering Co., Ltd. $ 99,949 12,200 Daewoo Heavy Industries & Machinery, Ltd.* 82,391 ----------- $ 182,340 ----------- Total Capital Goods $ 1,340,968 ----------- Shares Value Commercial Services & Supplies - 0.5% Diversified Commercial Services - 0.5% 17,656 Bidvest Group, Ltd. $ 150,339 ----------- Total Commercial Services & Supplies $ 150,339 ----------- Transportation - 1.3% Air Freight & Couriers - 0.2% 153,400 Singapore Post, Ltd. $ 78,675 ----------- Airlines - 0.3% 6,600 Korean Air* $ 86,183 ----------- Marine - 0.6% 11,880 Hyundai Merchant Marine Co.* $ 89,610 19,800 Samsung Heavy Industries Co., Ltd. 89,244 ----------- $ 178,854 ----------- Railroads - 0.2% 23,000 Malaysia International Shipping $ 72,759 ----------- Total Transportation $ 416,471 ----------- Automobiles & Components - 4.0% Auto Parts & Equipment - 1.0% 27,900 Dongyang Mechatronics Corp. $ 75,207 3,000 Hyundai Mobis 133,766 28,600 Jardine Cycle & Carriage, Ltd. 106,742 ----------- $ 315,715 ----------- Automobile Manufacturers - 3.0% 12,800 Edaran Otomobile Nasional $ 31,865 5,230 Hyundai Heavy Industries 125,045 5,900 Hyundai Motor Co., Ltd. 228,102 7,100 Kia Motors 60,968 42,818,482 Koc Holdings AS* 193,285 143,653 PT Astra International 84,365 106,100 Sime Darby 155,008 13,999 Tata Motors 115,901 ----------- $ 994,539 ----------- Total Automobiles & Components $ 1,310,254 ----------- Consumer Durables & Apparel - 1.0% Footwear - 0.2% 346,700 Symphony Holdings, Ltd. $ 59,888 ----------- Homebuilding - 0.5% 563,500 Ayala Land, Inc. $ 58,368 67,000 Corporacion GEO, SA de CV* 88,361 ----------- $ 146,729 ----------- Leisure Products - 0.3% 104,200 Berjaya Sports Toto $ 104,254 ----------- Total Consumer Durables & Apparel $ 310,871 -----------
32 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Hotels, Restaurants & Leisure - 0.3% Hotels, Resorts & Cruise Lines - 0.2% 9,200 Indian Hotels Co., Ltd. $ 70,251 ----------- Restaurants - 0.1% 63,700 Jollibee Foods Corp. $ 27,425 ----------- Total Hotels, Restaurants & Leisure $ 97,676 ----------- Media - 2.3% Broadcasting & Cable TV - 1.1% 33,500 ABS-CBN Broadcasting Corp.* $ 13,499 107,000 BEC World Public Co., Ltd. 47,119 370,903 Media Prima* 152,240 289,300 United Broadcasting Corp., Plc* 140,138 ----------- $ 352,996 ----------- Movies & Entertainment - 0.9% 322,800 Grammy Entertainment Plc $ 120,828 57,700 Zee Telefilms, Ltd. 158,449 ----------- $ 279,277 ----------- Publishing - 0.3% 41,650 Singapore Press Holdings $ 100,952 ----------- Total Media $ 733,225 ----------- Retailing - 0.3% Department Stores - 0.0% 7,300 Robinson Department Store Plc.* $ 704 ----------- General Merchandise Stores - 0.3% 20,400 Jaya Jusco Stores $ 59,148 1,300 LG Home Shopping 53,083 ----------- $ 112,231 ----------- Total Retailing $ 112,935 ----------- Food & Drug Retailing - 2.9% Food Distributors - 0.7% 10,500 Compania Cervecerias Unidas SA $ 224,490 ----------- Food Retail - 2.2% 12,000 Brasil Distributor Pao Acu (A.D.R.) $ 207,600 3,780 CJ Corp. 205,247 5,700 Distribucion y Servicio D&A SA 86,640 256,700 Metro Cash & Carry, Ltd.* 100,037 8,827,000 Migros Turk T.A.S. 42,837 199,800 PT Indofood Sukses Makmur Tbk 14,936 5,000 Tiger Brands, Ltd. 73,882 ----------- $ 731,179 ----------- Total Food & Drug Retailing $ 955,669 ----------- Food, Beverage & Tobacco - 5.1% Agricultural Products - 0.4% 25,000 Makhteshim-Agan Industries, Ltd. $ 116,485 ----------- Shares Value Distillers & Vintners - 1.4% 3,575,700 Andalou efes Biracilik VE $ 41,675 12,500 Companhia de Bebidas PR (A.D.R.) 250,875 62,600 Grupo Modelo SA de CV 157,488 ----------- $ 450,038 ----------- Packaged Foods & Meats - 0.2% 71,017 Rainbow Chicken, Ltd. $ 61,981 ----------- Soft Drinks - 1.4% 2,100 Coca-Cola, S.A. de C.V. (A.D.R.)* $ 46,599 14,200 Embotelladora Andina SA (A.D.R.) 171,962 3,700 Fomento Economico Mexicano SA de CV 169,608 140,600 Sermsuk Public Co., Ltd. 83,313 ----------- $ 471,482 ----------- Tobacco - 1.7% 13,700 British American Tobacco (Malaysia) Bhd $ 182,161 6,200 Korea Tobacco* 143,187 100 Philip Morris CR AS* 61,114 52,100 PT Gudang Garam Public Co., Ltd. 76,116 186,500 PT Hanjaya Mandala Sampoerna Tbk 101,487 ----------- $ 564,065 ----------- Total Food, Beverage & Tobacco $ 1,664,051 ----------- Household & Personal Products - 0.8% Household Products - 0.7% 23,183,610 Arcelik A.S.* $ 114,832 3,600 LG Household & Health Care, Ltd. 102,977 ----------- $ 217,809 ----------- Personal Products - 0.1% 2,350 Natura Cosmeticos SA* $ 37,915 ----------- Total Household & Personal Products $ 255,724 ----------- Health Care Equipment & Services - 1.5% Health Care Distributors - 1.5% 7,130 Teva Pharmaceutical Industries, Ltd. $ 479,778 ----------- Total Health Care Equipment & Services $ 479,778 ----------- Pharmaceuticals & Biotechnology - 1.4% Pharmaceuticals - 1.4% 17,200 Aurobindo Pharma, Ltd. $ 122,108 3,300 Biocon, Ltd.* 36,004 1,275 Gideon Richter (G.D.R.) 129,576 6,000 Lupin, Ltd.* 82,931 110,200 PT Tempo Scan Pacific 82,073 ----------- $ 452,692 ----------- Total Pharmaceuticals & Biotechnology $ 452,692 -----------
The accompanying notes are an integral part of these financial statements. 33 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Banks - 8.2% Diversified Banks - 8.2% 24,612,250 Akbank T.A.S. $ 90,447 2,222 Banco Bradesco SA 102,101 3,303 Banco Santiago 88,190 29,835 Canara Bank, Ltd. 78,518 217,960 Chinatrust Financial Holding Co., Ltd. 243,915 107,600 Commerce Asset Holdings 137,786 25,400 Commercial International Bank 95,566 7,100 Hana Bank 150,917 23,775 Hong Leong Bank* 30,273 54,700 Kasikornbank* 69,767 1,900 Kookmin Bank* 59,383 900 Kookmin Bank (A.D.R.) (b)* 28,242 58,700 Malayan Banking Bhd 156,218 162,700 Metropolitan Bank & Trust Co. 78,354 9,500 MISR International 30,400 342,300 National Finance Public Co., Ltd. 123,354 4,300 OTP Bank Rt* 88,099 407,500 PT Bank Central Asia Tbk 81,393 2,136,076 PT Lippo Bank* 113,095 37,656 Public Bank Bhd (Foreign) 65,541 59,100 Siam Commercial Bank Plc (Foreign) 67,026 24,400 Standard Bank Group, Ltd. 171,042 13,600 State Bank of India 127,540 40,130,800 Turkiye Garanti Bankasi AS* 119,578 39,834,952 Turkiye Is Bankasi (Isbank) 144,998 5,700 Uniao de Bancos Brasileiros SA (G.D.R.) (144A) 112,689 ----------- $ 2,654,432 ----------- Total Banks $ 2,654,432 ----------- Diversified Financials - 4.3% Investment Banking & Brokerage - 0.2% 203,600 O.S.K. Holdings $ 83,715 ----------- Diversified Financial Services - 4.1% 3,955,000 Alarko Holding AS* $ 77,279 457,700 Bank Mandiri 57,371 408,344 China Development Financial 209,894 42,000 Citic Pacific, Ltd. 103,317 78,300 FirstRand, Ltd. 130,264 137,000 Fubon Group 119,826 37,217,239 Haci Omer Sabanci Holding AS* 110,331 118,200 Kiatnakin Finance Plc 104,826 109,000 MCL Ladn, Ltd. 87,633 32,066 RMB Holdings, Ltd. 85,768 76,900 Sanlam, Ltd. 110,688 632,700 SM Prime Holdings 68,868 78,300 TISCO Finance Public Co., Ltd. 52,200 ----------- $ 1,318,265 ----------- Total Diversified Financials $ 1,401,980 ----------- Shares Value Insurance - 1.0% Multi-Line Insurance - 0.6% 2,800 Samsung Fire & Marine Insurance $ 179,648 ----------- Property & Casualty Insurance - 0.4% 7,900 Cathay Financial Holding Co., Ltd. (G.D.R.) (144A)* $ 141,489 ----------- Total Insurance $ 321,137 ----------- Real Estate - 0.4% Real Estate Management & Development - 0.4% 98,200 Marco Polo Developments, Ltd. $ 116,009 ----------- Total Real Estate $ 116,009 ----------- Software & Services - 0.9% Application Software - 0.9% 1,583 Infosys Technologies, Ltd. $ 190,400 14,200 Satyam Computer Services* 94,455 ----------- $ 284,855 ----------- Total Software & Services $ 284,855 ----------- Technology Hardware & Equipment - 6.9% Semiconductors - 1.7% 43,800 Hon Hai Precision Industry $ 163,461 268,605 Taiwan Semiconductor Manufacturing Co. 388,889 ----------- $ 552,350 ----------- Communications Equipment - 1.0% 1,500 China Unicom (A.D.R.)* $ 11,850 12,140 Empresa Nacional De Telecom 68,663 8,000 Matav Rt (A.D.R.)* 162,480 3,100 Samsung Electro Mechanics Co., Ltd.* 88,337 ----------- $ 331,330 ----------- Computer Hardware - 0.4% 109,160 Compal Electronics $ 118,972 ----------- Computer Storage & Peripherals - 0.5% 107,000 Asia Vital Components $ 123,329 16,400 Quanta Computer, Inc. 34,960 ----------- $ 158,289 ----------- Electronic Equipment & Instruments - 3.2% 28,000 Anpec Electronics Corp. $ 34,886 53,375 Asustek Computer, Inc. 121,959 32,150 Elec & Eltek International Co., Ltd. 90,105 4,050 LG Electronics, Inc. 193,745 6,400 Mtekvision Co., Ltd.* 201,726 12,000 Novatek Microelectronics, Ltd. 39,802 10,000 Richtek Technology Corp.* 29,120 8,000 Samsung Corp.* 98,270 770 Samsung Display Devices* 81,495 154,900 Varitronix International, Ltd. 153,116 ----------- $ 1,044,224 -----------
34 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Office Electronics - 0.1% 5,700 Baiksan OPC Co. $ 49,660 ----------- Total Technology Hardware & Equipment $ 2,254,825 ----------- Semiconductors - 4.4% 3,030 Samsung Electronics $ 1,261,174 240,621 United Microelectronics Corp., Ltd.* 180,003 ----------- $ 1,441,177 ----------- Total Semiconductors $ 1,441,177 ----------- Telecommunication Services - 12.7% Integrated Telecommunication Services - 7.3% 6,400 Brasil Telecom Participacoes SA $ 196,480 4,900 Compania de Telephonos de Chile SA ADR 59,731 16,800 KT Corp.(b)* 303,072 29,587 Mahanagar Telephone Nigam, Ltd. 214,506 29,900 Mahanagar Telephone 85,917 11,900 SPT Telecom AS* 145,977 3,440 Telekomunik Indonesia SP (A.D.R.)* 53,492 28,800 Telefonos de Mexico SA 958,176 79,500 Telekomunikacja Polska SA 330,002 ----------- $ 2,347,353 ----------- Wireless Telecommunication Services - 5.4% 27,200 Advanced Service Co., Ltd. (Foreign) $ 59,224 17,700 Alumax, Inc. 643,749 18,800 Bharti Televentures* 55,843 6,600 Korea Telecom Freetel Co. 114,992 13,300 Mobinil-Egyptian Mobile Services 160,177 24,337 SK Telecom Co., Ltd. (b)* 510,834 146,000 Taiwan Cellular Corp. 139,305 22,400 Venfin, Ltd. 72,617 ----------- $ 1,756,741 ----------- Total Telecommunication Services $ 4,104,094 ----------- Utilities - 3.2% Electric Utilities - 2.3% 156,700 Empresa Nacional de Electricid SA $ 64,502 1,992,335 Enersis SA* 235,543 14,600 Korea Electric Power Corp.* 235,684 216,400 Manila Electric Co.* 116,189 4,360 Unified Energy System (G.D.R.) 115,494 ----------- $ 767,412 ----------- Shares Value Gas Utilities - 0.6% 2,300 Gazprom (A.D.R.) (b) $ 67,017 4,200 Korea Gas Corp.* 121,811 ----------- $ 188,828 ----------- Water Utilities - 0.3% 8,500 Cia Saneamento Basic de Estado de Sao Paulo (b)* $ 92,905 ----------- Total Utilities $ 1,049,145 ----------- TOTAL COMMON STOCKS (Cost $24,410,123) $29,994,690 ----------- RIGHTS/WARRANTS - 0.0% Commercial Services & Supplies - 0.0% Diversified Commercial Services - 0.0% 1,580 Bidbee Group, Ltd., 12/8/06* $ 1,494 ----------- Total Commercial Services & Supplies $ 1,494 ----------- Telecommunication Services - 0.0% Integrated Telecommunication Services - 0.0% 32,210 True Corp., Plc* $ -- ----------- Total Telecommunication Services $ -- ----------- TOTAL RIGHTS/WARRANTS (Cost $9,539) $ 1,494 ----------- TEMPORARY CASH INVESTMENT - 4.1% Security Lending Collateral - 4.1% 1,335,560 Securities Lending Investment Fund, 1.29% $ 1,335,560 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,335,560) $ 1,335,560 ----------- TOTAL INVESTMENT IN SECURITIES - 99.2% (Cost $26,418,556)(a)(b) $32,153,781 ----------- OTHER ASSETS AND LIABILITIES - 0.8% $ 271,080 ----------- TOTAL NET ASSETS - 100.0% $32,424,861 ===========
The accompanying notes are an integral part of these financial statements. 35 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- (A.D.R) American Depositary Receipt (G.D.R.) Global Depositary Receipt * Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $481,026 or 1.5% of net assets. (a) Distributions of investments by country of issue, as a percentage of total equity holdings (excluding temporary cash investments) is as follows: South Korea 22.6% Taiwan 9.7% Brazil 9.4% South Africa 7.1% Mexico 6.8% India 6.3% Russia 4.6% Thailand 4.1% Malaysia 4.0% Turkey 3.7% Chile 3.2% Indonesia 2.2% Hungary 2.0% Israel 1.9% Singapore 1.9% Poland 1.9% Peru 1.5% People's Republic of China 1.4% Philippines 1.4% United Kingdom 1.0% Egypt 1.0% Other (individually less than 1%) 2.3% ------ 100.0% ======
(b) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 7,125 Anglogold, Ltd. (A.D.R.) $ 226,718 8,060 Cia Saneamento Basic de Estado de Sao Paulo* 84,952 155 Gazprom (A.D.R.) 4,301 24,225 IAMGOLD Corp. 129,846 500 Kookmin Bank (A.D.R.)* 15,690 15,905 KT Corp.* 285,495 5,635 SK Telecom Co., Ltd.* 118,504 12,705 Surgutneftegaz (A.D.R.)* 398,937 ---------- Total $1,264,443 ==========
36 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCK - 1.2% Automobiles & Components - 1.2% Automobile Manufacturers - 1.2% 250 Porsche AG $ 168,171 ----------- Total Automobiles & Components $ 168,171 ----------- TOTAL PREFERRED STOCK (Cost $83,104) $ 168,171 ----------- COMMON STOCKS - 96.7% Energy - 10.4% Integrated Oil & Gas - 7.2% 72,851 BP Amoco Plc $ 646,674 20,351 Eni S.p.A. 405,664 ----------- $ 1,052,338 ----------- Oil & Gas Refining Marketing & Transportation - 3.2% 2,446 Total SA $ 468,764 ----------- Total Energy $ 1,521,102 ----------- Materials - 7.1% Commodity Chemicals - 1.2% 3,611 BASF India, Ltd. $ 194,454 ----------- Construction Materials - 4.4% 9,648 CRH Plc $ 204,756 1,610 Italcementi S.p.A.* 21,639 3,384 Lafarge SA 303,469 1,070 Vinci SA 108,236 ----------- $ 638,100 ----------- Diversified Metals & Mining - 1.5% 5,596 Rio Tinto Plc $ 135,150 2,544 Sandvik AB 87,158 ----------- $ 222,308 ----------- Total Materials $ 1,054,862 ----------- Capital Goods - 6.9% Aerospace & Defense - 1.7% 37,685 Bae Systems $ 150,674 3,195 European Aeronautic Defence 89,543 ----------- $ 240,217 ----------- Construction & Engineering - 2.6% 11,469 ACS, Actividades de Construccion y Servicios, SA $ 193,903 3,804 Compagnie de Saint Gobain 190,868 ----------- $ 384,771 ----------- Electrical Components & Equipment - 1.4% 3,012 Schneider Electric SA $ 206,592 ----------- Shares Value Industrial Machinery - 1.2% 1,976 Atlas Copco AB $ 73,630 2,843 AB SKF 104,848 ----------- $ 178,478 ----------- Total Capital Goods $ 1,010,058 ----------- Commercial Services & Supplies - 1.3% Diversified Commercial Services - 1.3% 8,308 TNT Post Group NV $ 190,718 ----------- Total Commercial Services & Supplies $ 190,718 ----------- Automobiles & Components - 1.0% Auto Parts & Equipment - 1.0% 2,594 Compagnie Generale des Etablissements Michelin $ 144,247 ----------- Total Automobiles & Components $ 144,247 ----------- Hotels, Restaurants & Leisure - 1.6% Restaurants - 1.6% 17,111 Compass Group Plc $ 104,877 8,438 Gus Plc 130,372 ----------- $ 235,249 ----------- Total Hotels, Restaurants & Leisure $ 235,249 ----------- Media - 2.8% Advertising - 0.6% 2,942 Publicis SA $ 87,652 ----------- Publishing - 2.2% 7,545 Elsevier NV $ 106,401 7,505 Vivendi Universal* 209,672 ----------- $ 316,073 ----------- Total Media $ 403,725 ----------- Food & Drug Retailing - 5.9% Drug Retail - 0.6% 6,888 Boots Co., Plc* $ 86,141 ----------- Food Retail - 5.3% 13,588 Koninklijke Ahold NV* $ 107,363 1,649 Nestle SA (Registered Shares) 441,222 45,427 Tesco Plc 220,619 ----------- $ 769,204 ----------- Total Food & Drug Retailing $ 855,345 ----------- Food, Beverage & Tobacco - 2.5% Tobacco - 2.5% 2,313 Altadis SA* $ 71,759 18,370 British American Tobacco Plc 285,962 ----------- $ 357,721 ----------- Total Food, Beverage & Tobacco $ 357,721 -----------
The accompanying notes are an integral part of these financial statements. 37 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Health Care Equipment & Services - 0.9% Health Care Distributors - 0.9% 2,279 Celesio AG $ 136,601 ----------- Total Health Care Equipment & Services $ 136,601 ----------- Pharmaceuticals & Biotechnology - 9.9% Pharmaceuticals - 9.9% 7,494 AstraZeneca Plc $ 337,721 13,196 GlaxoSmithKline Plc 269,229 3,103 Novartis 137,485 3,123 Roche Holdings AG 310,402 4,338 Sanofi-Synthelabo SA 275,980 1,796 Schering AG 106,369 ----------- $ 1,437,186 ----------- Total Pharmaceuticals & Biotechnology $ 1,437,186 ----------- Banks - 14.6% Diversified Banks - 14.6% 8,696 Allied Irish Banks Plc $ 134,767 10,567 Banco Bilbao Vizcaya Argentaria, SA 141,941 32,459 Barclays Plc 278,005 5,468 BNP Paribas SA 338,177 6,739 Credit Agricole SA 164,819 7,061 CS Group* 252,092 4,600 Depfa Bank Plc 67,090 4,223 Dexia 70,228 23,715 HSBC Holding Plc 355,583 11,268 Royal Bank of Scotland Group Plc 326,779 ----------- $ 2,129,481 ----------- Total Banks $ 2,129,481 ----------- Diversified Financials - 8.6% Asset Management & Custody Banks - 0.5% 2,630 Man Group Plc* $ 68,365 ----------- Diversified Financial Services - 8.1% 3,406 Deutsche Boerse AG $ 173,841 6,390 ING Groep NV 152,033 1,735 Lagardere S.C.A. 109,014 3,616 Societe Generale 309,152 1,489 Swiss Re 97,134 4,893 UBS AG 346,529 ----------- $ 1,187,703 ----------- Total Diversified Financials $ 1,256,068 ----------- Shares Value Insurance - 5.5% Life & Health Insurance - 0.8% 4,009 Assicurazioni Generali $ 108,714 ----------- Multi-Line Insurance - 4.0% 10,463 AXA SA $ 232,122 2,217 Zurich Financial Services* 351,799 ----------- $ 583,921 ----------- Reinsurance - 0.7% 3,097 Hannover Rueckversicheru $ 104,114 ----------- Total Insurance $ 796,749 ----------- Software & Services - 0.6% IT Consulting & Other Services - 0.6% 1,364 Atos Origin* $ 88,246 ----------- Total Software & Services $ 88,246 ----------- Technology Hardware & Equipment - 4.2% Semiconductors - 1.3% 6,783 Philips Electronics NV $ 184,096 ----------- Communications Equipment - 1.0% 10,079 Nokia Oyj $ 146,254 ----------- Computer Hardware - 0.8% 38,933 Dixons Group Plc $ 116,952 ----------- Electronic Equipment & Instruments - 1.1% 2,201 Siemens AG $ 159,583 ----------- Total Technology Hardware & Equipment $ 606,885 ----------- Telecommunication Services - 9.9% Alternate Carriers - 0.9% 4,989 France Telecom SA $ 130,883 ----------- Integrated Telecommunication Services - 5.0% 7,122 Belgacom SA* $ 217,656 25,747 Telecom Italia Mobile S.p.A. 146,594 59,202 Telecom Italia S.p.A. 184,922 12,569 Telefonica SA 186,877 ----------- $ 736,049 ----------- Wireless Telecommunication Services - 4.0% 263,946 Vodafone Group Plc $ 582,271 ----------- Total Telecommunication Services $ 1,449,203 -----------
38 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Utilities - 3.0% Electric Utilities - 3.0% 4,077 E.On AG $ 295,674 17,458 National Grid Transco Plc 136,027 ----------- $ 431,701 ----------- Total Utilities $ 431,701 ----------- TOTAL COMMON STOCKS (Cost $11,851,998) $14,105,147 ----------- TOTAL INVESTMENT IN SECURITIES - 97.9% (Cost $11,935,102)(a) $14,273,318 ----------- OTHER ASSETS AND LIABILITIES - 2.1% $ 311,386 ----------- TOTAL NET ASSETS - 100.0% $14,584,704 ===========
* Non-income producing security. (a) Distributions of investments by country of issue, as a percentage of total equity holdings (excluding temporary cash investments) is as follows: United Kingdom 29.6% France 23.6 Switzerland 13.6 Germany 9.4 Italy 6.1 Netherlands 5.8 Spain 4.2 Ireland 2.8 Belgium 2.0 Sweden 1.9 Finland 1.0 ------ 100.0% ======
The accompanying notes are an integral part of these financial statements. 39 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCKS - 0.5% Telecommunication Services - 0.5% Integrated Telecommunication Services - 0.5% 10,100 Tele Norte Leste Participacoes (A.D.R) $ 128,573 ----------- Total Telecommunication Services $ 128,573 ----------- TOTAL PREFERRED STOCKS (Cost $121,829) $ 128,573 ----------- COMMON STOCKS - 98.1% Energy - 6.8% Integrated Oil & Gas - 4.5% 84,110 BP Amoco Plc $ 746,617 16,000 Eni S.p.A. 318,934 ----------- $ 1,065,551 ----------- Oil & Gas Refining Marketing & Transportation - 2.3% 2,870 Total SA $ 550,021 ----------- Total Energy $ 1,615,572 ----------- Materials - 7.8% Commodity Chemicals - 1.0% 4,200 BASF India, Ltd. $ 226,172 ----------- Construction Materials - 2.2% 3,800 CRH Plc $ 80,693 6,200 Italcementi S.p.A.* 83,330 1,600 Lafarge BR 143,501 2,180 Vinci SA 220,516 ----------- $ 528,040 ----------- Diversified Metals & Mining - 2.2% 3,850 Freeport-McMoRan Copper & Gold, Inc. (Class B) $ 127,628 2,100 Norilsk Nickel 115,763 6,090 Rio Tinto Plc 147,081 4,000 Sandvik AB 137,040 ----------- $ 527,512 ----------- Specialty Chemicals - 1.6% 23,400 Hitachi Chemical Company, Ltd. $ 388,026 ----------- Steel - 0.8% 23,102 Broken Hill Proprietary Co., Ltd. $ 202,242 ----------- Total Materials $ 1,871,992 ----------- Capital Goods - 9.2% Aerospace & Defense - 0.7% 5,700 European Aeronautic Defence $ 159,747 ----------- Construction & Engineering - 3.2% 13,449 Actividades de Construccion y Servicios, SA $ 227,379 4,000 Compagnie de Saint Gobain (a) 200,702 93,000 Kajima Corp. 347,050 ----------- $ 775,131 ----------- Shares Value Electrical Components & Equipment - 4.5% 86,000 Mitsubishi Electric Corp.* $ 427,269 7,900 NEC Electronics Corp (a)* 492,426 2,400 Schneider Electric SA 164,615 ----------- $ 1,084,310 ----------- Industrial Machinery - 0.8% 25,100 Scottish Power Plc $ 182,184 ----------- Total Capital Goods $ 2,201,372 ----------- Commercial Services & Supplies - 0.8% Diversified Commercial Services - 0.8% 8,100 TNT Post Group N.V. $ 185,943 ----------- Total Commercial Services & Supplies $ 185,943 ----------- Transportation - 1.8% Railroads - 1.8% 78 East Japan Railway Co. $ 440,064 ----------- Total Transportation $ 440,064 ----------- Automobiles & Components - 4.1% Auto Parts & Equipment - 0.3% 1,500 Compagnie Generale des Etablissements Michelin $ 83,412 ----------- Automobile Manufacturers - 3.8% 3,000 Bayerische Motoren Werke AG $ 133,429 6,360 Hyundai Motor Co, Ltd. 124,680 27,216,000 Koc Holding AS* 122,855 12,900 Toyota Motor Co. 526,110 ----------- $ 907,074 ----------- Total Automobiles & Components $ 990,486 ----------- Consumer Durables & Apparel - 2.1% Homebuilding - 2.1% 59,000 Sekisui Chemical Co., Ltd. $ 501,648 ----------- Total Consumer Durables & Apparel $ 501,648 ----------- Hotels, Restaurants & Leisure - 2.4% Casinos & Gaming - 1.6% 8,200 Sammy Corp. $ 393,532 ----------- Restaurants - 0.8% 12,000 GUS Plc $ 185,407 ----------- Total Hotels, Restaurants & Leisure $ 578,939 ----------- Media - 2.1% Advertising - 0.4% 3,000 Publics SA $ 89,380 ----------- Publishing - 1.7% 9,600 Vivendi Universal* $ 268,201 13,700 Reed Elsevier Plc 133,638 ----------- $ 401,839 ----------- Total Media $ 491,219 -----------
40 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Retailing - 2.9% Distributors - 1.4% 34,000 Mitsubishi Corp. $ 332,179 ----------- General Merchandise Stores - 1.5% 6,900 Ryohin Keikaku Co., Ltd. $ 359,149 ----------- Total Retailing $ 691,328 ----------- Food & Drug Retailing - 5.0% Drug Retail - 0.6% 12,200 Boots Co., Plc* $ 152,573 ----------- Food Retail - 4.4% 16,700 Koninklijke Ahold NV* $ 131,951 7,266 Koninklijke Ahold NV (144A)* 57,148 1,890 Nestle SA (Registered Shares) 505,706 74,200 Tesco Plc 360,356 ----------- $ 1,055,161 ----------- Total Food & Drug Retailing $ 1,207,734 ----------- Food, Beverage & Tobacco - 3.1% Tobacco - 3.1% 19,820 British American Tobacco Plc $ 308,534 55 Japan Tobacco, Inc.* 429,378 ----------- $ 737,912 ----------- Total Food, Beverage & Tobacco $ 737,912 ----------- Household & Personal Products - 1.2% Household Products - 1.1% 5,200 Uni-Charm Corp.* $ 260,449 ----------- Personal Products - 0.1% 480 Kose Corp. $ 18,533 ----------- Total Household & Personal Products $ 278,982 ----------- Health Care Equipment & Services - 0.8% Health Care Distributors - 0.4% 1,600 Celesio AG $ 95,902 ----------- Health Care Supplies - 0.4% 560 Nobel Biocare Holding AG $ 87,988 ----------- Total Health Care Equipment & Services $ 183,890 ----------- Pharmaceuticals & Biotechnology - 5.8% Pharmaceuticals - 5.8% 10,432 Astrazeneca Plc $ 470,123 9,590 GlaxoSmithKline Plc 195,658 3,788 Roche Holdings AG 376,498 3,800 Sanofi-Synthelabo SA 241,753 1,670 Schering AG 98,907 ----------- $ 1,382,939 ----------- Total Pharmaceuticals & Biotechnology $ 1,382,939 ----------- Shares Value Banks - 13.2% Diversified Banks - 13.2% 7,400 Allied Irish Banks Plc $ 114,682 44,300 Banca Intesa S.p.A. 173,896 18,600 Banco Bilbao Vizcaya Argentaria SA 249,844 18,325 Barclays Plc 156,950 5,520 BNP Paribas SA (a) 341,393 10,345 Credit Agricole SA 253,013 6,830 CS Group* 243,845 18,000 Development Bank of Singapore, Ltd. 151,460 22,900 HSBC Holding Plc 343,363 2,300 Kookmin Bank (A.D.R.) (a)* 72,174 57 Mitsubishi Tokyo Financial Group, Inc.* 533,456 14,020 Royal Bank of Scotland Group Plc 406,589 6,100 Uniao de Bancos Brasileiros SA (G.D.R.) (144A) 120,597 ----------- $ 3,161,262 ----------- Total Banks $ 3,161,262 ----------- Diversified Financials - 7.0% Consumer Finance - 1.4% 3,100 Aiful Corp. $ 327,006 ----------- Diversified Financial Services - 4.8% 12,400 ING Groep NV $ 295,025 2,000 Lagardere SA 125,665 2,519 Societe Generale 215,363 7,150 UBS AG 506,374 ----------- $ 1,142,427 ----------- Specialized Finance - 0.8% 3,800 Deutsche Boerse AG $ 193,950 ----------- Total Diversified Financials $ 1,663,383 ----------- Insurance - 3.1% Life & Health Insurance - 0.7% 6,100 Assicurazioni Generali $ 165,417 ----------- Multi-Line Insurance - 2.4% 12,500 AXA SA $ 277,313 1,860 Zurich Financial Services* 295,149 ----------- $ 572,462 ----------- Total Insurance $ 737,879 ----------- Real Estate - 1.4% Real Estate Management & Development - 1.4% 27,000 Mitsui Fudosan Co. $ 326,878 ----------- Total Real Estate $ 326,878 ----------- Software & Services - 1.2% IT Consulting & Other Services - 0.9% 1,700 Atos Origin* $ 109,984 27,900 LogicaCMG Plc 93,699 ----------- $ 203,683 -----------
The accompanying notes are an integral part of these financial statements. 41 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Software & Services - 0.3% 6,500 T-Online International AG* $ 74,140 ----------- Total Software & Services $ 277,823 ----------- Technology Hardware & Equipment - 4.0% Semiconductors - 1.1% 9,500 Philips Electronics NV $ 257,838 ----------- Communications Equipment - 1.0% 17,031 Nokia Oyj $ 247,134 ----------- Computer Hardware - 0.5% 42,100 Dixons Group Plc $ 126,465 ----------- Electronic Equipment & Instruments - 1.4% 1,200 Nidec Corp. $ 123,877 2,790 Siemens 202,289 ----------- $ 326,166 ----------- Total Technology Hardware & Equipment $ 957,603 ----------- Semiconductors - 1.2% 450 Samsung Electronics $ 187,303 21,400 United Microelectronics (A.D.R.) (a)* 92,234 ----------- $ 279,537 ----------- Total Semiconductors $ 279,537 ----------- Telecommunication Services - 8.9% Alternate Carriers - 0.7% 6,200 France Telecom $ 162,653 ----------- Integrated Telecommunication Services - 4.0% 7,900 Belgacom SA* $ 241,431 9,500 British Sky Broadcasting Plc 108,058 17,100 Mahanagar Telephone Nigam, Ltd. 123,977 15,630 Telefonica SA 232,388 17,340 Telecom Italia Mobile S.p.A. 98,728 46,486 Telecom Italia S.p.A. 145,203 ----------- $ 949,785 ----------- Wireless Telecommunication Services - 4.2% 1,000 Mobile Telesystems* $ 122,000 5,700 SK Telecom Co., Ltd.* 119,643 4,100 Turkcell Iletism Hizmet (A.D.R.)* 125,870 295,011 Vodafone Group Plc 650,801 ----------- $ 1,018,314 ----------- Total Telecommunication Services $ 2,130,752 ----------- Shares Value Utilities - 2.4% Electric Utilities - 2.4% 4,433 E.On AG $ 321,491 31,100 National Grid Transco Plc 242,321 ----------- $ 563,812 ----------- Total Utilities $ 563,812 ----------- TOTAL COMMON STOCKS (Cost $20,267,040) $23,458,949 ----------- TEMPORARY CASH INVESTMENT - 4.4% Security Lending Collateral - 4.4% 1,038,146 Securities Lending Investment Fund, 1.29% $ 1,038,146 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,038,146) $ 1,038,146 ----------- TOTAL INVESTMENT IN SECURITIES - 103.0% (Cost $21,427,015)(a)(b) $24,625,668 ----------- OTHER ASSETS AND LIABILITIES - (3.0)% $ (709,954) ----------- TOTAL NET ASSETS - 100.0% $23,915,714 ===========
(A.D.R.) American Depositary Receipt (G.D.R.) Global Depositary Receipt * Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $177,745 or 0.7% of net assets. (a) Distributions of investments by country of issue (excluding temporary cash investments), as a percentage of total investment in equity securities, is as follows: Japan 26.4% United Kingdom 21.4 France 14.6 Switzerland 8.5 Germany 5.7 Netherlands 4.6 Italy 4.2 Spain 3.0 South Korea 2.1 Brazil 1.1 Turkey 1.1 Finland 1.0 Belgium 1.0 Russia 1.0 Other (individually less than 1%) 4.3 ------ 100.0% ======
(b) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 4,985 BNP Paribas SA $309,856 3,800 Compagnie de Saint Gobain 190,433 1,825 Kookmin Bank (A.D.R.)* 57,269 5,400 NEC Electronics Corp.* 333,872 20,320 United Microelectronics (A.D.R.)* 86,157 -------- Total $977,587 ========
42 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 86.1% Energy - 6.1% Oil & Gas Drilling - 1.6% 1,100 Atwood Oceanics, Inc.* $ 45,925 19,511 Key Energy Services, Inc.* 184,184 6,550 Todco* 101,329 ----------- $ 331,438 ----------- Oil & Gas Equipment & Services - 1.8% 10,125 Gulfmark Offshore, Inc.* $ 159,770 7,890 Maverick Tube Corp.* 207,191 ----------- $ 366,961 ----------- Oil & Gas Exploration & Production - 2.7% 4,550 Penn Virginia Corp. $ 164,301 9,370 Swift Energy Co.* 206,702 5,994 Unit Corp.* 188,511 ----------- $ 559,514 ----------- Total Energy $ 1,257,913 ----------- Materials - 7.6% Diversified Metals & Mining - 1.6% 11,314 Massey Energy Co. $ 319,168 ----------- Gold - 1.5% 9,150 Glamis Gold, Ltd.* $ 160,400 27,875 IAMGOLD Corp. (a) 155,543 ----------- $ 315,943 ----------- Metal & Glass Containers - 0.7% 3,962 Jarden Corp.* $ 142,592 ----------- Paper Products - 1.9% 12,093 Domtar, Inc. (a) $ 156,483 7,550 Flowserve Corp.* 188,297 3,425 Longview Fibre Co. 50,450 ----------- $ 395,230 ----------- Specialty Chemicals - 0.4% 2,900 Great Lakes Chemical Corp. $ 78,474 ----------- Steel - 1.5% 2,675 Carpenter Technology $ 91,084 21,693 Graftech International, Ltd.* 226,909 ----------- $ 317,993 ----------- Total Materials $ 1,569,400 ----------- Capital Goods - 7.7% Aerospace & Defense - 0.3% 3,450 Intrado, Inc.* $ 55,511 ----------- Construction, Farm Machinery & Heavy Trucks - 1.4% 16,150 Wabtec Corp. $ 291,346 ----------- Shares Value Construction & Engineering - 0.8% 3,795 Granite Construction, Inc. $ 69,183 5,800 Insituform Technologies, Inc.* 94,366 ----------- $ 163,549 ----------- Electrical Components & Equipment - 0.9% 16,004 Power-One, Inc.* $ 175,724 ----------- Industrial Conglomerates - 1.3% 14,760 Cornell Companies, Inc.* $ 200,736 6,021 NN, Inc. 76,527 ----------- $ 277,263 ----------- Industrial Machinery - 2.2% 8,062 Joy Global, Inc. $ 241,376 2,350 Kaydon Corp. 72,686 1,469 Nacco Industries, Inc. 139,555 ----------- $ 453,617 ----------- Trading Companies & Distributors - 0.8% 5,803 Applied Industrial Technologies, Inc. $ 174,786 ----------- Total Capital Goods $ 1,591,796 ----------- Commercial Services & Supplies - 7.1% Data Processing Services - 0.5% 7,725 Gartner Group, Inc.* $ 102,125 ----------- Commercial Printing - 0.8% 3,793 John H. Harland Co. $ 111,325 1,600 Valassis Communications, Inc.* 48,752 ----------- $ 160,077 ----------- Diversified Commercial Services - 4.9% 2,600 Arbitron, Inc.* $ 94,952 13,700 Central Parking Corp. 256,053 4,378 Chemed Corp. 212,333 2,570 FTI Consulting, Inc.* 42,405 10,685 Profit Recovery Group International* 58,447 20,105 Rent-Way, Inc.* 180,945 6,025 Watson Wyatt & Co. Holdings 160,566 ----------- $ 1,005,701 ----------- Employment Services - 0.9% 6,095 Korn/Ferry International* $ 118,060 11,575 On Assignment, Inc.* 68,293 ----------- $ 186,353 ----------- Total Commercial Services & Supplies $ 1,454,256 ----------- Transportation - 3.7% Marine - 0.8% 5,277 Stelmar Shipping Ltd. $ 174,933 ----------- Railroads - 1.2% 9,543 Genesee & Wyoming, Inc.* $ 226,169 -----------
The accompanying notes are an integral part of these financial statements. 43 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Trucking - 1.7% 12,950 Central Freight Lines, Inc.* $ 103,600 2,968 Dollar Thrifty Automotive Group* 81,442 4,375 Forward Air Corp.* 163,620 ----------- $ 348,662 ----------- Total Transportation $ 749,764 ----------- Automobiles & Components - 0.7% Auto Parts & Equipment - 0.7% 7,995 Federal Signal Corp. $ 148,787 ----------- Total Automobiles & Components $ 148,787 ----------- Consumer Durables & Apparel - 2.0% Apparel, Accessories & Luxury Goods - 1.3% 14,593 Charming Shoppes, Inc.* $ 130,315 2,950 Kellwood Co. 128,473 ----------- $ 258,788 ----------- Footwear - 0.7% 6,641 Maxwell Shoe Co., Inc.* $ 154,337 ----------- Total Consumer Durables & Apparel $ 413,125 ----------- Hotels, Restaurants & Leisure - 0.6% Restaurants - 0.6% 7,169 O'Charley's, Inc.* $ 123,235 ----------- Total Hotels, Restaurants & Leisure $ 123,235 ----------- Media - 2.0% Advertising - 1.6% 4,841 EMAK Worldwide, Inc.* $ 60,270 6,344 R.H. Donnelley Corp. +* 277,487 ----------- $ 337,757 ----------- Publishing - 0.4% 5,465 Advanced Marketing Services, Inc. $ 70,553 ----------- Total Media $ 408,310 ----------- Retailing - 6.1% Apparel Retail - 0.7% 3,695 Stage Stores, Inc.* $ 139,154 ----------- Catalog Retail - 1.5% 17,075 Insight Enterprises, Inc.* $ 303,252 ----------- General Merchandise Stores - 0.3% 1,615 Blyth Industries, Inc. $ 55,701 ----------- Specialty Stores - 3.6% 5,275 Claire's Stores, Inc. $ 114,468 5,502 Guitar Center, Inc.* 244,674 16,057 Hancock Fabrics, Inc. 204,727 4,923 School Specialty, Inc.* 178,754 ----------- $ 742,623 ----------- Total Retailing $ 1,240,730 ----------- Shares Value Food & Drug Retailing - 1.1% Food Retail - 1.1% 6,183 Fresh Del Monte Produce, Inc. (a) $ 156,244 4,875 Wild Oats Markets, Inc.* 68,591 ----------- $ 224,835 ----------- Total Food & Drug Retailing $ 224,835 ----------- Household & Personal Products - 1.9% Household Products - 1.9% 15,304 Nu Skin Enterprises, Inc. $ 387,497 ----------- Total Household & Personal Products $ 387,497 ----------- Health Care Equipment & Services - 6.3% Health Care Distributors - 2.3% 3,235 Amerigroup Corp.* $ 159,162 5,525 Chattem, Inc.* 159,507 8,375 Cross Country Healthcares, Inc.* (a) 152,003 ----------- $ 470,672 ----------- Health Care Equipment - 0.1% 600 Analogic Corp. $ 25,458 ----------- Health Care Facilities - 0.7% 1,675 Sunrise Senior Living, Inc. (a)* $ 65,560 2,133 Triad Hospitals, Inc.* 79,412 ----------- $ 144,972 ----------- Health Care Services - 1.9% 4,452 Pediatrix Medical Group, Inc. +* $ 310,972 4,550 Providence Service Corp.* 85,495 ----------- $ 396,467 ----------- Managed Health Care - 1.3% 6,830 PacifiCare Health Systems* $ 264,048 ----------- Total Health Care Equipment & Services $ 1,301,617 ----------- Pharmaceuticals & Biotechnology - 0.5% Biotechnology - 0.5% 14,105 Kendle International, Inc.* $ 109,314 ----------- Total Pharmaceuticals & Biotechnology $ 109,314 ----------- Banks - 6.6% Diversified Banks - 3.0% 9,655 BankAtlantic Bancorp, Inc. $ 178,135 3,231 Banner Corp. 93,893 55 International Bancshares Corp.* 2,230 6,600 Provident Financial Services, Inc. 115,830 13,875 Texas Capital Bancshares, Inc.* 230,325 ----------- $ 620,413 -----------
44 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Regional Banks - 3.2% 5,000 Alliance Bankshares Corp.* $ 75,250 19,325 Cardinal Financial Corp.* 174,891 2,400 City National Corp. 157,680 930 Irwin Financial Corp. 24,552 11,275 Sterling Bancshares, Inc. 159,992 1,280 Whitney Holding Corp. 57,178 ----------- $ 649,543 ----------- Thrifts & Mortgage Finance - 0.4% 7,075 First Niagara Financial Group, Inc. $ 84,900 ----------- Total Banks $ 1,354,856 ----------- Diversified Financials - 5.9% Consumer Finance - 2.8% 6,025 Advanta Corp. $ 132,128 5,778 Advanta Corp. (Class B) 132,432 20,406 Medallion Financial Corp. 162,228 15,100 Rewards Network, Inc. (a)* 135,900 ----------- $ 562,688 ----------- Investment Banking & Brokerage - 2.4% 4,150 A.G. Edwards, Inc. $ 141,225 17,975 Apollo Investment Corp.* 247,516 2,300 Piper Jaffray Co.* 104,029 ----------- $ 492,770 ----------- Specialized Finance - 0.7% 4,068 Financial Federal Corp. (a)* $ 143,438 ----------- Total Diversified Financials $ 1,198,896 ----------- Insurance - 3.5% Life & Health Insurance - 0.4% 3,231 FBL Financial Group, Inc. $ 91,308 ----------- Property & Casualty Insurance - 2.5% 3,175 American Safety Insurance Group, Ltd.* $ 47,657 5,251 IPC Holdings, Ltd. 193,919 11,400 Quanta Capital Holdings (144A)* 122,436 2,375 RLI Corp. 86,688 1,525 Selective Insurance Group, Inc. (a) 60,817 ----------- $ 511,517 ----------- Reinsurance - 0.6% 4,775 Odyssey Re Holdings Corp. (a) $ 114,600 ----------- Total Insurance $ 717,425 ----------- Real Estate - 3.9% Real Estate Management & Development - 0.8% 2,875 Corrections Corp. of America* $ 113,534 1,951 Levitt Corp.* 50,258 ----------- $ 163,792 ----------- Shares Value Real Estate Investment Trusts - 3.1% 3,610 Bedford Property Investors, Inc. $ 105,556 1,528 Entertainment Properties Trust 54,611 3,850 Reckson Associates Realty Corp. 105,721 8,215 Trizec Properties, Inc. 133,576 3,396 Universal Health Realty, Inc. 97,465 6,237 Ventas, Inc. 145,634 ----------- $ 642,563 ----------- Total Real Estate $ 806,355 ----------- Software & Services - 3.6% Application Software - 0.8% 8,779 SPSS, Inc.* $ 157,759 ----------- Data Processing & Outsourced Services - 0.9% 5,078 Lightbridge, Inc.* $ 28,437 11,967 Pegusus Systems, Inc.* 157,127 ----------- $ 185,564 ----------- Internet Software & Services - 0.8% 5,875 Internet Security Systems, Inc.* $ 90,123 6,800 PEC Solutions, Inc.* 81,124 ----------- $ 171,247 ----------- Systems Software - 1.1% 18,375 Borland Software Corp.* $ 156,004 5,275 Netiq Corp.* 69,630 ----------- $ 225,634 ----------- Total Software & Services $ 740,204 ----------- Technology Hardware & Equipment - 2.8% Communications Equipment - 1.0% 31,500 Remec, Inc.* $ 199,080 ----------- Computer Storage & Peripherals - 0.8% 2,575 Applied Films Corp.* $ 74,727 3,400 Electronics For Imaging, Inc.* 96,084 ----------- $ 170,811 ----------- Electronic Equipment & Instruments - 0.6% 8,800 Planar Systems, Inc.* $ 117,832 ----------- Technology Distributors - 0.4% 2,300 Tech Data Corp.* $ 89,999 ----------- Total Technology Hardware & Equipment $ 577,722 ----------- Semiconductors - 1.0% Semiconductor Equipment - 0.7% 2,768 Advanced Energy Industries, Inc.* $ 43,513 2,187 Brooks Automation, Inc.* 44,068 2,745 Photronics, Inc.* 51,990 ----------- $ 139,571 -----------
The accompanying notes are an integral part of these financial statements. 45 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Semiconductors - 0.3% 5,670 HI/FN, Inc. (a)* $ 67,757 ----------- Total Semiconductors $ 207,328 ----------- Telecommunication Services - 0.9% Wireless Telecommunication Services - 0.9% 18,803 Boston Communications Group, Inc.* $ 192,731 ----------- Total Telecommunication Services $ 192,731 ----------- Utilities - 4.5% Gas Utilities - 3.7% 4,175 AGL Resources, Inc. $ 121,284 11,800 NUI Corp. (a) 172,280 4,680 People's Energy Corp. 197,262 9,549 Southwestern Energy Co.* 273,770 ----------- $ 764,596 ----------- Multi-Utilities & Unregulated Power - 0.4% 1,750 Energen Corp. $ 83,983 ----------- Utilities - 0.4% 2,325 UGI Corp. $ 74,633 ----------- Total Utilities $ 923,212 ----------- TOTAL COMMON STOCKS (Cost $14,675,424) $17,699,308 ----------- EXCHANGE TRADED FUND - 0.7% 875 Russell 2000 Exchange Traded Fund $ 150,763 ----------- TOTAL EXCHANGE TRADED FUND (Cost $113,541) $ 150,763 ----------- Shares Value TEMPORARY CASH INVESTMENT - 5.9% Security Lending Collateral - 5.9% 1,202,726 Securities Lending Investment Fund, 1.29% $ 1,202,726 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,202,726) $ 1,202,726 ----------- TOTAL INVESTMENT IN SECURITIES - 92.7% (Cost $15,991,691)(a) $19,052,797 ----------- OTHER ASSETS AND LIABILITIES - 7.3% $ 1,504,180 ----------- TOTAL NET ASSETS - 100.0% $20,556,977 ===========
* Non-income producing security. + At May 31, 2004, the following securities have pledged to cover margin requirements for open futures contracts:
Shares Description Market Value 2,385 Pediatrix Medical Group, Inc.* $166,592 400 R.H. Donnelley Corp.* 17,496
144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $122,436 or 0.6% of net assets. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 3,735 Cross Country Healthcares, Inc.* $ 68,238 10,960 Domtar, Inc. 141,713 2,915 Financial Federal Corp.* 102,258 5,565 Fresh Del Monte Produce, Inc. 139,292 4,720 HI/FN, Inc.* 56,262 26,481 IAMGOLD Corp. 141,938 11,540 NUI Corp. 163,176 3,860 Odyssey Re Holdings Corp. 92,640 12,635 Rewards Network, Inc.* 116,874 1,425 Selective Insurance Group, Inc. 55,889 1,496 Sunrise Senior Living, Inc.* 58,254 ---------- Total $1,136,534 ==========
46 The accompanying notes are an integral part of these financial statements. Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 94.6% Energy - 7.0% Oil & Gas Drilling - 2.9% 925 Atwood Oceanics, Inc.* $ 38,619 2,300 Grant Prideco, Inc.* 42,458 8,550 Key Energy Services, Inc.* 80,710 3,363 Patterson Energy, Inc. 112,358 5,075 Todco* 78,510 ----------- $ 352,655 ----------- Oil & Gas Equipment And Services - 1.1% 2,325 Gulfmark Offshore, Inc.* $ 36,689 3,575 Maverick Tube Corp.* 93,880 ----------- $ 130,569 ----------- Oil & Gas Exploration & Production - 2.2% 7,550 Forest Oil Corp.* $ 206,266 1,828 Spinnaker Exploration Co.* 71,981 ----------- $ 278,247 ----------- Oil & Gas Refining Marketing & Transportation - 0.8% 6,150 Plains Resources, Inc.* $ 104,243 ----------- Total Energy $ 865,714 ----------- Materials - 6.1% Commodity Chemicals - 1.1% 5,800 Airgas, Inc. $ 138,678 ----------- Gold - 0.5% 10,550 IAMGOLD Corp. (a) $ 58,869 ----------- Materials - 0.5% 600 Mega Blocks, Inc.* $ 9,902 2,950 Mega Blocks, Inc. (144A)* 48,681 ----------- $ 58,583 ----------- Metal & Glass Containers - 0.3% 900 Kennametal, Inc. $ 41,220 ----------- Paper Products - 1.1% 7,575 Wausau-Mosinee Paper Corp. $ 131,048 ----------- Precious Metals & Minerals - 1.2% 11,550 Agnico Eagle Mines, Ltd. (a) $ 152,576 ----------- Specialty Chemicals - 0.6% 8,925 Wellman, Inc. $ 72,560 ----------- Steel - 0.8% 10,000 Graftech International, Ltd.* $ 104,600 ----------- Total Materials $ 758,134 ----------- Shares Value Capital Goods - 5.4% Aerospace & Defense - 1.8% 8,450 AAR Corp.* $ 95,908 4,825 MTC Technologies, Inc.* 124,582 ----------- $ 220,490 ----------- Construction, Farm Machinery & Heavy Trucks - 1.4% 9,950 Wabtec Corp. $ 179,498 ----------- Construction & Engineering - 0.2% 1,500 Insituform Technologies, Inc.* $ 24,405 ----------- Electrical Components & Equipment - 2.0% 2,600 Digital Theater Systems, Inc.* $ 67,912 16,425 Power-One, Inc.* 180,347 ----------- $ 248,259 ----------- Total Capital Goods $ 672,652 ----------- Commercial Services & Supplies - 8.8% Data Processing Services - 1.2% 8,100 Gartner Group, Inc.* $ 107,082 1,775 TALX Corp. 43,363 ----------- $ 150,445 ----------- Commercial Printing - 0.8% 3,400 John H. Harland Co. $ 99,790 ----------- Diversified Commercial Services - 4.8% 4,951 The Brinks Co. $ 169,572 2,175 Central Parking Corp. 40,651 7,544 FTI Consulting, Inc.* 124,476 3,775 Regis Corp. 168,327 6,000 Tetra Tech, Inc.* 97,920 ----------- $ 600,946 ----------- Employment Services - 1.4% 2,050 Corinthian Colleges, Inc.* $ 50,717 15,600 The Princeton Review, Inc.* 118,092 ----------- $ 168,809 ----------- Environmental Services - 0.6% 11,250 Newpark Resources, Inc.* $ 69,750 ----------- Total Commercial Services & Supplies $ 1,089,740 ----------- Transportation - 1.3% Trucking - 1.3% 3,000 Dollar Thrifty Automotive Group* $ 82,320 2,200 Forward Air Corp.* 82,280 ----------- $ 164,600 ----------- Total Transportation $ 164,600 -----------
The accompanying notes are an integral part of these financial statements. 47 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Consumer Durables & Apparel - 4.2% Apparel, Accessories & Luxury Goods - 1.1% 15,500 Charming Shoppes, Inc.* $ 138,415 ----------- Housewares & Specialties - 2.1% 8,150 Tupperware Corp. $ 158,355 3,450 Yankee Candle Co.* 100,913 ----------- $ 259,268 ----------- Photographic Products - 0.4% 4,800 Creo Products* $ 42,144 ----------- Textiles - 0.6% 25,886 Unifi, Inc.* $ 75,846 ----------- Total Consumer Durables & Apparel $ 515,673 ----------- Hotels, Restaurants & Leisure - 1.3% Restaurants - 1.3% 2,334 Applebee's International, Inc. $ 53,729 6,325 O'Charley's, Inc.* 108,727 ----------- $ 162,456 ----------- Total Hotels, Restaurants & Leisure $ 162,456 ----------- Media - 2.8% Movies & Entertainment - 1.7% 11,425 Alliance Atlantis Communications, Inc.* $ 210,231 ----------- Publishing - 1.1% 6,750 Journal Register Co.* $ 135,000 ----------- Total Media $ 345,231 ----------- Retailing - 3.3% Apparel Retail - 0.4% 2,175 Genesco, Inc.* $ 51,395 ----------- Catalog Retail - 0.5% 3,400 Insight Enterprises, Inc.* $ 60,384 ----------- General Merchandise Stores - 0.9% 3,975 Tuesday Morning Corp.* $ 115,275 ----------- Specialty Stores - 1.5% 900 Guitar Center, Inc.* $ 40,023 3,825 School Specialty, Inc.* 138,886 ----------- $ 178,909 ----------- Total Retailing $ 405,963 ----------- Food & Drug Retailing - 1.6% Food Distributors - 0.8% 2,214 THe J.M. Smucker Co. $ 101,645 ----------- Food Retail - 0.8% 1,800 Fresh Del Monte Produce, Inc. (a) $ 45,486 3,300 Wild Oats Markets, Inc.* 46,431 ----------- $ 91,917 ----------- Total Food & Drug Retailing $ 193,562 ----------- Shares Value Food, Beverage & Tobacco - 1.7% Agricultural Products - 1.7% 4,395 Corn Products International, Inc. $ 204,587 ----------- Total Food, Beverage & Tobacco $ 204,587 ----------- Household & Personal Products - 1.6% Household Products - 1.6% 8,025 Nu Skin Enterprises, Inc. $ 203,193 ----------- Total Household & Personal Products $ 203,193 ----------- Health Care Equipment & Services - 10.2% Health Care Distributors - 2.4% 6,337 AMN Healthcare Services (a)* $ 96,893 2,625 Chattem, Inc.* 75,784 6,600 Cross Country Healthcares, Inc. (a)* 119,790 ----------- $ 292,467 ----------- Health Care Equipment - 1.1% 4,625 Haemonetics Corp.* $ 137,131 ----------- Health Care Facilities - 2.4% 3,300 Lifepoint Hospitals, Inc.* $ 122,826 2,927 Sunrise Senior Living, Inc. (a)* 114,563 1,200 Universal Health Services, Inc. (Class B) 55,068 ----------- $ 292,457 ----------- Health Care Services - 3.7% 20,875 Hooper Holmes, Inc. $ 119,823 4,496 Parexel International Corp.* 89,021 1,500 Pediatrix Medical Group, Inc.* 104,775 7,625 Providence Service Corp.* 143,274 ----------- $ 456,893 ----------- Managed Health Care - 0.6% 5,100 First Health Group Corp.* $ 79,611 ----------- Total Health Care Equipment & Services $ 1,258,559 ----------- Pharmaceuticals & Biotechnology - 1.3% Biotechnology - 0.4% 4,525 Cubist Pharmaceuticals, Inc.* $ 50,228 ----------- Pharmaceuticals - 0.9% 4,500 Adolor Corp.* $ 57,060 7,300 Alnylam Pharmaceuticals, Inc. (a)* 55,188 ----------- $ 112,248 ----------- Total Pharmaceuticals & Biotechnology $ 162,476 ----------- Banks - 6.9% Diversified Banks - 1.6% 4,400 Provident Financial Services, Inc. $ 77,220 7,200 Texas Capital Bancshares, Inc.* 119,520 ----------- $ 196,740 -----------
48 The accompanying notes are an integral part of these financial statements. Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Regional Banks - 3.2% 400 Alliance Bankshares Corp.* $ 6,020 1,500 City National Corp. 98,550 3,575 Sterling Bancshares, Inc. 50,729 3,000 Virginia Commerce Bancorp, Inc.* 88,530 3,377 Whitney Holding Corp. 150,851 ----------- $ 394,680 ----------- Thrifts & Mortgage Finance - 2.1% 4,500 Commercial Federal Corp. $ 121,950 2,975 Webster Financial Corp. 139,885 ----------- $ 261,835 ----------- Total Banks $ 853,255 ----------- Diversified Financials - 6.9% Consumer Finance - 3.6% 12,103 Advanta Corp. (Class B) $ 277,401 18,597 Rewards Network, Inc. (a)* 167,373 ----------- $ 444,774 ----------- Investment Banking & Brokerage - 0.9% 8,300 Apollo Investment Corp.* $ 114,291 ----------- Multi-Sector Holding - 1.4% 3,600 Leucadia National Corp. $ 178,920 ----------- Diversified Financial Services - 1.0% 2,800 Gabelli Asset Management, Inc. $ 119,000 ----------- Total Diversified Financials $ 856,985 ----------- Insurance - 2.1% Property & Casualty Insurance - 2.1% 1,120 First American Corp. $ 28,997 6,800 Quanta Capital Holdings (144A)* 73,032 3,970 Selective Insurance Group, Inc. 158,324 ----------- $ 260,353 ----------- Total Insurance $ 260,353 ----------- Real Estate - 5.6% Real Estate Investment Trusts - 5.6% 1,800 Camden Property Trust $ 82,440 2,700 Colonial Properties Trust 104,031 3,467 Healthcare Realty Trust, Inc. 129,943 9,107 Innkeepers USA Trust 93,893 4,740 Prentiss Properties Trust 158,885 3,450 Shurgard Storage Centers, Inc. 129,030 ----------- $ 698,222 ----------- Total Real Estate $ 698,222 ----------- Shares Value Software & Services - 5.8% Application Software - 3.7% 1,300 Avid Technology, Inc.* $ 70,941 4,112 Fair Isaac & Co., Inc. 137,259 2,850 Manhattan Associates, Inc.* 88,008 6,650 Mercury Computer Systems, Inc.* 164,920 ----------- $ 461,128 ----------- Home Entertainment Software - 0.9% 11,325 Plato Learning, Inc. (a)* $ 112,231 ----------- Internet Software & Services - 0.5% 5,825 Lionbridge Technologies, Inc.* $ 44,561 1,000 PEC Solutions, Inc.* 11,930 ----------- $ 56,491 ----------- IT Consulting & Other Services - 0.2% 1,500 ManTech International Corp.* $ 28,155 ----------- Systems Software - 0.5% 7,500 Borland Software Corp.* $ 63,675 ----------- Total Software & Services $ 721,680 ----------- Technology Hardware & Equipment - 4.0% Communications Equipment - 0.9% 3,025 Avocent Corp.* $ 111,139 ----------- Computer Storage & Peripherals - 0.6% 2,700 Applied Films Corp.* $ 78,354 ----------- Electronic Equipment & Instruments - 0.6% 5,475 Planar Systems, Inc.* $ 73,310 ----------- Electronic Manufacturing Services - 0.9% 8,450 Plexus Corp.* $ 114,075 ----------- Technology Distributors - 1.0% 3,000 Tech Data Corp.* $ 117,390 ----------- Total Technology Hardware & Equipment $ 494,268 ----------- Semiconductors - 3.1% Semiconductor Equipment - 2.2% 898 Cymer, Inc.* $ 33,621 2,701 DuPont Photomasks, Inc. (a)* 54,911 4,796 Photronics, Inc.* 90,836 2,401 Varian Semiconductor Equipment Associates, Inc.* 92,583 ----------- $ 271,951 ----------- Semiconductors - 0.9% 4,425 Power Integrations, Inc.* $ 110,183 ----------- Total Semiconductors $ 382,134 -----------
The accompanying notes are an integral part of these financial statements. 49 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Telecommunication Services - 2.7% Integrated Telecommunication Services - 2.0% 8,400 Aeroflex, Inc.* $ 120,372 8,284 CT Communications, Inc. 124,674 ----------- $ 245,046 ----------- Wireless Telecommunication Services - 0.7% 8,600 Boston Communications Group, Inc.* $ 88,150 ----------- Total Telecommunication Services $ 333,196 ----------- Utilities - 0.9% Gas Utilities - 0.9% 2,525 People's Energy Corp. $ 106,429 ----------- Total Utilities $ 106,429 ----------- TOTAL COMMON STOCKS (Cost $10,109,655) $11,709,062 ----------- TEMPORARY CASH INVESTMENTS - 7.3% Security Lending Collateral - 7.3% 906,301 Securities Lending Investment Fund, 1.29% $ 906,301 ----------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $906,301) $ 906,301 ----------- TOTAL INVESTMENT IN SECURITIES - 101.9% (Cost $11,015,956)(a) $12,615,363 ----------- OTHER ASSETS AND LIABILITIES - (1.9)% $ (231,973) ----------- TOTAL NET ASSETS - 100.0% $12,383,390 ===========
* Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $121,713 or 1.0% of net assets. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 10,160 Agnico Eagle Mines Ltd. $134,823 6,935 Alnylam Pharmaceuticals, Inc.* 49,239 5,664 AMN Healthcare Services* 86,433 4,797 Cross Country Healthcares, Inc.* 87,641 2,305 DuPont Photomasks, Inc.* 46,169 1,685 Fresh Del Monte Produce, Inc. 42,176 10,497 IAMGOLD Corp. 56,264 9,001 Plato Learning, Inc.* 90,460 16,622 Rewards Network, Inc.* 153,754 2,781 Sunrise Senior Living, Inc.* 108,292 -------- Total $855,251 ========
50 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 97.9% Energy - 6.4% Integrated Oil & Gas - 0.9% 115,840 Occidental Petroleum Corp. $ 5,607,814 ------------ Oil & Gas Drilling - 2.9% 138,315 ENSCO International, Inc. $ 4,024,967 98,730 Nabors Industries, Inc.* 4,464,571 155,930 Transocean Offshore, Inc.* 4,512,612 98,235 Weatherford International, Inc.* 4,418,610 ------------ $ 17,420,760 ------------ Oil & Gas Exploration & Production - 2.0% 82,861 Devon Energy Corp. $ 5,468,826 180,485 Pioneer Natural Resources Co. 6,331,414 ------------ $ 11,800,240 ------------ Oil & Gas Refining Marketing & Transportation - 0.6% 57,785 Sun Company, Inc. $ 3,676,282 ------------ Total Energy $ 38,505,096 ------------ Materials - 8.3% Commodity Chemicals - 1.0% 115,445 Air Products & Chemicals, Inc. $ 6,055,090 ------------ Diversified Chemical - 1.6% 155,120 PPG Industries, Inc. $ 9,693,449 ------------ Diversified Metals & Mining - 2.0% 155,285 Phelps Dodge Corp.* $ 12,036,140 ------------ Metal & Glass Containers - 1.6% 130,210 Ball Corp. $ 9,381,631 ------------ Paper Products - 2.1% 311,267 Flowserve Corp.* $ 7,762,999 164,600 Meadwestvaco Corp. 4,837,594 ------------ $ 12,600,593 ------------ Total Materials $ 49,766,903 ------------ Capital Goods - 6.0% Aerospace & Defense - 0.9% 148,300 United Defense Industries, Inc.* $ 5,190,500 ------------ Electrical Components & Equipment - 1.8% 178,465 American Power Conversion Corp. $ 3,506,837 486,390 Symbol Technologies, Inc. 7,169,389 ------------ $ 10,676,226 ------------ Industrial Conglomerates - 3.3% 222,080 American Standard Companies, Inc.* $ 8,952,045 131,520 ITT Industries, Inc. 10,916,160 ------------ $ 19,868,205 ------------ Total Capital Goods $ 35,734,931 ------------ Shares Value Commercial Services & Supplies - 4.6% Commercial Printing - 2.0% 90,200 John H. Harland Co. $ 2,647,370 294,540 R.R. Donnelly & Sons Co. (a) 9,725,711 ------------ $ 12,373,081 ------------ Diversified Commercial Services - 1.0% 131,010 H & R Block, Inc. $ 6,246,557 ------------ Environmental Services - 1.6% 319,335 Republic Services, Inc. $ 9,241,555 ------------ Total Commercial Services & Supplies $ 27,861,193 ------------ Transportation - 1.7% Airlines - 0.6% 228,310 Southwest Airlines Co. $ 3,828,759 ------------ Railroads - 1.1% 149,120 Canadian National Railway Co. $ 6,500,141 ------------ Total Transportation $ 10,328,900 ------------ Consumer Durables & Apparel - 4.2% Apparel, Accessories & Luxury Goods - 0.9% 297,010 The Limited Brands, Inc. $ 5,554,087 ------------ Housewares & Specialties - 0.5% 105,600 Yankee Candle Co.* $ 3,088,800 ------------ Leisure Products - 2.3% 736,530 Mattel, Inc. $ 13,441,673 ------------ Photographic Products - 0.5% 115,500 Eastman Kodak Co. $ 3,116,190 ------------ Total Consumer Durables & Apparel $ 25,200,750 ------------ Hotels, Restaurants & Leisure - 2.3% Restaurants - 2.3% 148,700 Brinker International, Inc.* $ 5,073,644 230,605 Tricon Global Restaurants, Inc.* 8,583,116 ------------ $ 13,656,760 ------------ Total Hotels, Restaurants & Leisure $ 13,656,760 ------------ Media - 0.8% Movies & Entertainment - 0.8% 271,660 Regal Entertainment Group (a) $ 4,917,046 ------------ Total Media $ 4,917,046 ------------ Retailing - 7.9% Apparel Retail - 2.1% 132,230 Jones Apparel Group, Inc. $ 5,220,440 196,400 Liz Claiborne, Inc. 7,066,472 ------------ $ 12,286,912 ------------ Department Stores - 0.8% 130,200 J.C. Penney Co., Inc. $ 4,916,352 ------------
The accompanying notes are an integral part of these financial statements. 51 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value General Merchandise Stores - 2.0% 238,200 American Greetings Corp.* $ 5,521,476 172,680 Sears, Roebuck and Co. 6,520,397 ------------ $ 12,041,873 ------------ Specialty Stores - 3.0% 620,430 Foot Locker, Inc. $ 15,101,266 195,300 Toys "R" Us, Inc.* 3,111,129 ------------ $ 18,212,395 ------------ Total Retailing $ 47,457,532 ------------ Food & Drug Retailing - 6.2% Drug Retail - 1.5% 211,270 CVS Corp. $ 8,877,565 ------------ Food Retail - 3.4% 280,590 ConAgra, Inc. $ 7,598,377 494,200 Safeway, Inc.* 12,523,028 ------------ $ 20,121,405 ------------ Hypermarkets & Supercenters - 1.3% 313,670 BJ'S Wholesale Club, Inc.* $ 7,841,750 ------------ Total Food & Drug Retailing $ 36,840,720 ------------ Health Care Equipment & Services - 9.4% Health Care Distributors - 0.5% 82,400 Par Pharmaceutical Co., Inc.* $ 2,901,304 ------------ Health Care Equipment - 2.4% 239,400 Apogent Technologies, Inc.* $ 7,660,800 132,205 Becton, Dickinson & Co. 6,848,219 ------------ $ 14,509,019 ------------ Health Care Facilities - 3.3% 557,200 Tenet Healthcare Corp.* $ 7,472,052 330,060 Triad Hospitals, Inc.* 12,288,134 ------------ $ 19,760,186 ------------ Health Care Services - 1.1% 164,630 Laboratory Corp. of America Holdings* $ 6,535,811 ------------ Managed Health Care - 2.1% 181,500 CIGNA Corp. $ 12,489,015 ------------ Total Health Care Equipment & Services $ 56,195,335 ------------ Banks - 9.1% Regional Banks - 5.4% 99,000 City National Corp. $ 6,504,300 140,330 KeyCorp 4,194,464 116,165 Marshall & Ilsley Corp. 4,540,890 99,005 North Fork Bancorporation, Inc. 3,767,140 66,240 SouthTrust Corp. 2,570,774 90,775 TCF Financial Corp. 5,269,489 89,400 Zions Bancorporation 5,493,630 ------------ $ 32,340,687 ------------ Shares Value Thrifts & Mortgage Finance - 3.7% 115,699 Countrywide Financial Corp. $ 8,127,855 115,375 GreenPoint Financial Corp. 4,580,388 222,760 The PMI Group, Inc. 9,694,515 ------------ $ 22,402,758 ------------ Total Banks $ 54,743,445 ------------ Diversified Financials - 6.0% Consumer Finance - 3.1% 671,200 Providian Financial Corp.* $ 9,846,504 16,514 White Mountains Insurance Group, Ltd. 8,422,140 ------------ $ 18,268,644 ------------ Asset Management & Custody Banks - 1.1% 214,590 Federated Investors, Inc. $ 6,510,661 ------------ Investment Banking & Brokerage - 1.8% 190,500 A.G. Edwards, Inc. $ 6,482,715 341,950 Investment Technology Group, Inc.* 4,373,541 ------------ $ 10,856,256 ------------ Total Diversified Financials $ 35,635,561 ------------ Insurance - 6.3% Insurance Brokers - 2.1% 180,710 Platinum Underwriter Holdings, Ltd. (a) $ 5,499,005 187,840 Willis Group Holdings, Ltd. 7,034,608 ------------ $ 12,533,613 ------------ Life & Health Insurance - 0.9% 99,130 Jefferson - Pilot Corp. $ 5,035,804 ------------ Property & Casualty Insurance - 3.3% 104,105 Ambac Financial Group, Inc. $ 7,645,471 278,500 Safeco Corp. 12,254,000 ------------ $ 19,899,471 ------------ Total Insurance $ 37,468,888 ------------ Software & Services - 2.3% Data Processing & Outsourced Services - 2.3% 555,530 The BISYS Group, Inc.* $ 7,810,752 239,929 SunGard Data Systems, Inc.* 6,238,154 ------------ $ 14,048,906 ------------ Total Software & Services $ 14,048,906 ------------ Technology Hardware & Equipment - 9.4% Communications Equipment - 3.2% 296,600 Century Telephone Enterprises, Inc. $ 8,909,864 356,121 Tellabs, Inc.* 3,112,498 230,200 Utstarcom, Inc (a)* 6,963,550 ------------ $ 18,985,912 ------------ Computer Hardware - 1.9% 231,360 NCR Corp.* $ 11,473,142 ------------
52 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Computer Storage & Peripherals - 2.1% 284,600 SanDisk Corp. (a)* $ 6,172,974 214,600 Storage Technology Corp.* 6,223,400 ------------ $ 12,396,374 ------------ Electronic Equipment & Instruments - 2.2% 230,080 W.W. Grainger, Inc. $ 13,229,600 ------------ Total Technology Hardware & Equipment $ 56,085,028 ------------ Semiconductors - 0.6% 260,900 Cypress Semiconductor Corp. (a)* $ 3,702,171 ------------ Total Semiconductors $ 3,702,171 ------------ Utilities - 6.4% Electric Utilities - 4.6% 148,675 Constellation Energy Group $ 5,634,783 140,350 DTE Energy Co. 5,689,789 115,315 Entergy Corp. 6,458,793 347,300 PG&E Corp.* 9,703,562 ------------ $ 27,486,927 ------------ Gas Utilities - 0.1% 16,315 KeySpan Energy Corp. $ 598,761 ------------ Multi-Utilities & Unregulated Power - 1.7% 920,000 Reliant Energy* $ 9,963,600 ------------ Total Utilities $ 38,049,288 ------------ TOTAL COMMON STOCKS (Cost $509,973,009) $586,198,453 ------------ Principal Amount Value TEMPORARY CASH INVESTMENTS - 6.2% Repurchase Agreement - 2.0% $12,100,000 UBS Warburg, Inc. 1.25%, dated 6/30/04, repurchase price of $12,100,000 plus accrued interest on 7/1/04 collateralized by $11,094,000 U.S. Treasury Bill, 7.0%, 7/15/06 $ 12,100,000 ------------ Shares Security Lending Collateral - 4.2% 25,038,825 Securities Lending Investment Fund, 1.29% $ 25,038,825 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $37,138,825) $ 37,138,825 ------------ TOTAL INVESTMENT IN SECURITIES - 104.1% (Cost $547,111,834)(a) $623,337,278 ------------ OTHER ASSETS AND LIABILITIES - (4.1)% $(24,737,403) ------------ TOTAL NET ASSETS - 100.0% $598,599,875 ============
* Non-income producing security. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 105,980 Cypress Semiconductor Corp.* $ 1,462,524 14,695 Platinum Underwriter Holdings Ltd. 445,552 249,900 Regal Entertainment Group 4,510,695 155,000 R.R. Donnelly & Sons Co. 5,128,950 263,720 SanDisk Corp.* 5,909,965 275,023 Utstarcom, Inc* 8,363,449 ----------- Total $25,821,135 ===========
The accompanying notes are an integral part of these financial statements. 53 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 99.6% Energy - 1.0% Integrated Oil & Gas - 1.0% 2,500 ConocoPhillips $ 190,725 4,200 Occidental Petroleum Corp. 203,322 ----------- $ 394,047 ----------- Total Energy $ 394,047 ----------- Materials - 3.5% Diversified Metals & Mining - 3.5% 19,700 Freeport-McMoRan Copper & Gold, Inc. (Class B) $ 653,055 8,900 Phelps Dodge Corp.* 689,839 ----------- $ 1,342,894 ----------- Total Materials $ 1,342,894 ----------- Capital Goods - 6.9% Aerospace & Defense - 1.1% 6,200 L-3 Communications Holdings, Inc. $ 414,160 ----------- Electrical Component & Equipment - 1.3% 15,200 General Electric Co. $ 492,480 ----------- Industrial Conglom - 4.5% 16,900 American Standard Companies, Inc.* $ 681,239 21,400 Tyco International Ltd. 709,196 4,000 United Technologies Corp. 365,920 ----------- $ 1,756,355 ----------- Total Capital Goods $ 2,662,995 ----------- Commercial Services & Supplies - 2.0% Employment Services - 2.0% 31,300 Corinthian Colleges, Inc.* $ 774,362 ----------- Total Commercial Services & Supplies $ 774,362 ----------- Transportation - 1.2% Trucking - 1.2% 5,900 United Parcel Service $ 443,503 ----------- Total Transportation $ 443,503 ----------- Hotels, Restaurants & Leisure - 3.0% Casinos & Gaming - 1.3% 13,400 International Game Technology $ 517,240 ----------- Hotels, Resorts & Cruise Lines - 0.8% 6,400 Carnival Corp. $ 300,800 ----------- Restaurants - 0.9% 9,100 Tricon Global Restaurants, Inc.* $ 338,702 ----------- Total Hotels, Restaurants & Leisure $ 1,156,742 ----------- Shares Value Media - 3.3% Broadcasting & Cable TV - 0.9% 9,300 Clear Channel Communications, Inc. $ 343,635 ----------- Movies & Entertainment - 2.4% 21,300 The Walt Disney Co. $ 542,937 10,400 Viacom, Inc. (Class B) 371,488 ----------- $ 914,425 ----------- Total Media $ 1,258,060 ----------- Retailing - 8.2% Apparel Retail - 2.3% 5,400 Liz Claiborne, Inc. $ 194,292 3,900 Nike, Inc. 295,425 15,200 Ross Stores, Inc. 406,752 ----------- $ 896,469 ----------- Department Stores - 2.1% 7,500 J.C. Penney Co., Inc. $ 283,200 12,300 Kohl's Corp.* 520,044 ----------- $ 803,244 ----------- General Merchandise Stores - 2.4% 9,900 Family Dollar Stores, Inc. $ 301,158 14,700 Target Corp. 624,309 ----------- $ 925,467 ----------- Home Improvement Retail - 1.4% 10,000 Lowe's Companies, Inc. $ 525,500 ----------- Total Retailing $ 3,150,680 ----------- Food & Drug Retailing - 2.1% Drug Retail - 0.6% 5,900 Walgreen Co. $ 213,639 ----------- Food Distributors - 1.5% 8,500 Cardinal Health, Inc. $ 595,425 ----------- Total Food & Drug Retailing $ 809,064 ----------- Food, Beverage & Tobacco - 5.5% Soft Drinks - 3.6% 17,000 The Coca-Cola Co. $ 858,160 9,800 PepsiCo, Inc. 528,024 ----------- $ 1,386,184 ----------- Tobacco - 1.9% 14,500 Altria Group, Inc. $ 725,725 ----------- Total Food, Beverage & Tobacco $ 2,111,909 -----------
54 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Health Care Equipment & Services - 10.8% Health Care Distributors - 5.7% 47,400 Bristol-Myers Squibb Co. $ 1,161,300 6,203 Teva Pharmaceutical Industries, Ltd. 417,400 17,100 Wyeth 618,336 ----------- $ 2,197,036 ----------- Health Care Equipment - 4.3% 16,700 Guidant Corp. $ 933,196 5,400 St. Jude Medical, Inc.* 408,510 3,500 Zimmer Holdings, Inc.* 308,700 ----------- $ 1,650,406 ----------- Managed Health Care - 0.8% 2,800 Wellpoint Health Networks, Inc.* $ 313,628 ----------- Total Health Care Equipment & Services $ 4,161,070 ----------- Pharmaceuticals & Biotechnology - 11.9% Biotechnology - 2.8% 12,758 Amgen, Inc.* $ 696,204 35,400 Cubist Pharmaceuticals, Inc.* 392,940 ----------- $ 1,089,144 ----------- Pharmaceuticals - 9.1% 16,000 Merck & Co., Inc. $ 760,000 27,851 Pfizer, Inc. 954,732 17,200 Sepracor, Inc.* 909,880 23,400 Schering-Plough Corp. 432,432 14,400 Sanofi-Synthelabo SA (A.D.R.)* 460,656 ----------- $ 3,517,700 ----------- Total Pharmaceuticals & Biotechnology $ 4,606,844 ----------- Banks - 2.3% Diversified Banks - 1.1% 4,900 Bank of America Corp. $ 414,638 ----------- Thrifts & Mortgage Finance - 1.2% 7,400 Freddie Mac $ 468,420 ----------- Total Banks $ 883,058 ----------- Diversified Financials - 1.3% Consumer Finance - 0.6% 15,900 Providian Financial Corp.* $ 233,253 ----------- Investment Banking & Brokerage - 0.7% 2,800 Goldman Sachs Group, Inc. $ 263,648 ----------- Total Diversified Financials $ 496,901 ----------- Shares Value Insurance - 5.0% Insurance Brokers - 0.8% 8,200 Willis Group Holdings, Ltd. $ 307,090 ----------- Multi-Line Insurance - 2.4% 13,000 American International Group, Inc. $ 926,640 ----------- Property & Casualty Insurance - 1.8% 9,000 ACE, Ltd. $ 380,520 7,400 Safeco Corp. 325,600 ----------- $ 706,120 ----------- Total Insurance $ 1,939,850 ----------- Software & Services - 11.6% Application Software - 8.4% 9,200 Fair Isaac & Co., Inc. $ 307,096 74,000 Microsoft Corp. 2,113,440 21,500 Macrovision Corp.* 538,145 9,500 Veritas Software Corp.* 263,150 ----------- $ 3,221,831 ----------- Data Processing & Outsourced Services - 1.5% 12,600 First Data Corp. $ 560,952 ----------- Home Entertainment Software - 0.7% 9,300 Take-Two Interactive Software, Inc.* $ 284,952 ----------- IT Consulting & Other Services - 1.0% 14,100 Accenture, Ltd.* $ 387,468 ----------- Total Software & Services $ 4,455,203 ----------- Technology Hardware & Equipment - 13.0% Communications Equipment - 1.8% 16,600 Nokia Corp. (A.D.R.) $ 241,364 15,100 Utstarcom, Inc.* 456,775 ----------- $ 698,139 ----------- Computer Hardware - 4.3% 21,800 Dell, Inc.* $ 780,876 41,600 Hewlett-Packard Co. 877,760 ----------- $ 1,658,636 ----------- Computer Storage & Peripherals - 4.1% 61,800 Lexar Media, Inc.* $ 412,824 53,900 Sandisk Corp.* 1,169,091 ----------- $ 1,581,915 ----------- Electronic Equipment & Instruments - 2.8% 5,300 Samsung Electronics Co., Ltd.* $ 1,091,126 ----------- Total Technology Hardware & Equipment $ 5,029,816 -----------
The accompanying notes are an integral part of these financial statements. 55 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Semiconductors - 5.5% 61,300 Intel Corp. $ 1,691,880 51,100 Taiwan Semiconductor Manufacturing Co. (A.D.R.) 424,641 ----------- $ 2,116,521 ----------- Total Semiconductors $ 2,116,521 ----------- Telecommunication Services - 1.6% Wireless Telecommunication Services - 1.6% 27,100 Vodafone Group Plc (A.D.R.) $ 598,911 ----------- Total Telecommunication Services $ 598,911 ----------- TOTAL COMMON STOCKS (Cost $38,249,059) $38,392,430 ----------- TOTAL INVESTMENT IN SECURITIES - 99.6% (Cost $38,249,059) $38,392,430 ----------- OTHER ASSETS AND LIABILITIES - 0.4% $ 169,200 ----------- TOTAL NET ASSETS - 100.0% $38,561,630 ===========
* Non-income producing security. (A.D.R.) American Depository Receipt 56 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 97.4% Hotels, Restaurants & Leisure - 5.3% Hotels, Resorts & Cruise Lines - 5.3% 75,000 Hilton Hotels Corp.* $ 1,399,500 58,000 Starwood Hotels & Resorts 2,601,300 ----------- $ 4,000,800 ----------- Total Hotels, Restaurants & Leisure $ 4,000,800 ----------- Diversified Financials - 3.0% Diversified Financial Services - 3.0% 77,000 Brookfield Properties Corp. $ 2,213,750 ----------- Total Diversified Financials $ 2,213,750 ----------- Real Estate - 89.1% Real Estate Management & Development - 4.0% 115,500 Catellus Development Corp. $ 2,847,075 8,200 Inland Real Estate Corp.* 106,682 ----------- $ 2,953,757 ----------- Real Estate Investment Trusts - 85.1% 38,500 Apartment Investment & Management Co. $ 1,198,505 46,200 AMB Property Corp. 1,599,906 22,400 Affordable Residential Communities* 371,840 16,500 Alexandria Real Estate Equities, Inc. 936,870 44,000 Arden Realty Group, Inc. 1,294,040 92,500 Archstone Communities Trust 2,713,025 50,000 AvalonBay Communities, Inc.* 2,826,000 73,100 Boston Properties, Inc. 3,660,848 17,500 Chelsea Property Group, Inc. 1,141,350 30,000 Camden Property Trust 1,374,000 10,000 Carramerica Realty Corp. 302,300 61,000 Developers Diversifies Realty Corp. 2,157,570 57,000 Duke Realty Investments, Inc. 1,813,170 79,000 Equity Office Properties Trust 2,148,800 107,000 Equity Residential Property Trust 3,181,110 5,800 First Potomac Realty Trust* 111,186 36,000 Federal Realty Investment Trust 1,497,240 79,500 General Growth Properties, Inc. 2,350,815 25,500 Highwoods Properties, Inc.* 599,250 Shares Value 189,000 Host Marriott Corp.* $ 2,336,040 6,000 Healthcare Realty Trust, Inc. 224,880 2,500 Kilroy Realty Corp. 85,250 53,000 Liberty Property Trust 2,131,130 35,500 The Macerich Co. 1,699,385 11,300 Manufactured Home Communities, Inc. 375,047 9,100 Mills Corp. 424,970 10,500 Corporate Office Properties 260,925 88,000 ProLogis Trust 2,896,960 29,300 Pan Pacific Retail Properties, Inc. 1,480,236 55,000 Prentiss Properties Trust 1,843,600 45,206 Public Storage, Inc. 2,079,928 25,500 PS Business Parks Inc* 1,026,120 48,000 Regency Centers Corp. 2,059,200 35,000 The Rouse Co.* 1,662,500 9,500 iStar Financial, Inc.* 380,000 27,500 Shurgard Storage Centers, Inc. 1,028,500 15,800 Strategic Hotel Capital, Inc.* 232,260 85,000 Simon DeBartolo Group, Inc. 4,370,700 51,000 Taubman Centers, Inc. 1,167,390 37,600 Trizec Properties Inc. 611,376 47,200 United Dominion Realty Trust 933,616 46,000 Vornado Realty Trust 2,627,060 16,500 Western Resources, Inc. 516,120 ----------- $63,731,018 ----------- Total Real Estate $66,684,775 ----------- TOTAL COMMON STOCKS (Cost $55,838,852) $72,899,325 ----------- TOTAL INVESTMENT IN SECURITIES - 97.4% (Cost $55,838,852) $72,899,325 ----------- OTHER ASSETS AND LIABILITIES - 2.6% $ 1,967,974 ----------- TOTAL NET ASSETS - 100.0% $74,867,299 ===========
* Non-income producing security. The accompanying notes are an integral part of these financial statements. 57 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 96.5% Energy - 7.9% Integrated Oil & Gas - 5.9% 16,643 BP Amoco Plc (A.D.R.) $ 891,566 57,921 ChevronTexaco Corp. 5,450,945 24,727 ConocoPhillips 1,886,423 119,280 Exxon Mobil Corp. 5,297,224 36,993 Occidental Petroleum Corp. 1,790,831 ------------ $ 15,316,989 ------------ Oil & Gas Drilling - 0.9% 42,044 Smith International, Inc.* $ 2,344,373 ------------ Oil & Gas Exploration & Production - 1.1% 18,971 Apache Corp. $ 826,187 57,988 Pioneer Natural Resources Co. 2,034,219 ------------ $ 2,860,406 ------------ Total Energy $ 20,521,768 ------------ Materials - 5.5% Aluminum - 0.6% 46,252 Alcoa, Inc. $ 1,527,704 ------------ Commodity Chemicals - 1.1% 23,113 Air Products & Chemicals, Inc. $ 1,212,277 38,676 E.I. du Pont de Nemours and Co. 1,717,988 ------------ $ 2,930,265 ------------ Diversified Chemical - 0.4% 18,467 PPG Industries, Inc. $ 1,154,003 ------------ Diversified Metals & Mining - 2.5% 32,924 Phelps Dodge Corp.* $ 2,551,939 164,111 Rio Tinto Plc 3,949,666 ------------ $ 6,501,605 ------------ Paper Products - 0.5% 43,199 Meadwestvaco Corp. $ 1,269,619 ------------ Specialty Chemicals - 0.4% 32,149 Ecolab, Inc. $ 1,019,123 ------------ Total Materials $ 14,402,319 ------------ Capital Goods - 7.4% Aerospace & Defense - 1.5% 38,908 General Dynamics Corp. $ 3,863,564 ------------ Electrical Components & Equipment - 0.7% 18,467 Emerson Electric Co. $ 1,173,578 26,633 General Electric Co. 862,909 ------------ $ 2,036,487 ------------ Shares Value Industrial Conglomerates - 2.8% 20,674 Illinois Tool Works, Inc. $ 1,982,430 45,528 Johnson Controls, Inc. 2,430,285 31,359 United Technologies Corp. 2,868,721 ------------ $ 7,281,436 ------------ Industrial Machinery - 2.4% 33,682 Caterpillar, Inc. $ 2,675,698 50,290 Deere & Co. 3,527,341 ------------ $ 6,203,039 ------------ Total Capital Goods $ 19,384,526 ------------ Commercial Services & Supplies - 1.0% Office Services & Supplies - 1.0% 47,154 Canon, Inc. (A.D.R.) $ 2,518,023 ------------ Total Commercial Services & Supplies $ 2,518,024 ------------ Transportation - 3.4% Airlines - 0.9% 137,864 Southwest Airlines Co. $ 2,311,979 ------------ Railroads - 2.0% 40,302 Burlington Northern, Inc. $ 1,413,391 146,340 Norfolk Southern Corp. 3,880,937 ------------ $ 5,294,328 ------------ Trucking - 0.5% 16,958 United Parcel Service $ 1,274,733 ------------ Total Transportation $ 8,881,040 ------------ Automobiles & Components - 2.3% Automobile Manufacturers - 2.3% 208,966 Ford Motor Corp. $ 3,270,318 46,602 PACCAR, Inc. 2,702,450 ------------ $ 5,972,768 ------------ Total Automobiles & Components $ 5,972,768 ------------ Media - 6.2% Advertising - 1.0% 35,541 Omnicom Group $ 2,697,206 ------------ Movies & Entertainment - 0.4% 34,933 The Walt Disney Co. $ 890,442 ------------ Publishing - 4.8% 46,390 Elsevier NV $ 652,795 40,418 Gannett Co. 3,429,467 113,495 John Wiley & Sons, Inc. 3,631,840 63,415 McGraw-Hill Co., Inc. 4,855,687 ------------ $ 12,569,789 ------------ Total Media $ 16,157,437 ------------
58 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Retailing - 4.1% Apparel Retail - 0.3% 19,973 Liz Claiborne, Inc. $ 718,629 ------------ Department Stores - 0.6% 53,341 May Department Stores Co. $ 1,466,344 ------------ General Merchandise Stores - 2.1% 29,152 Family Dollar Stores, Inc. $ 886,804 109,408 Target Corp. 4,646,558 ------------ $ 5,533,362 ------------ Home Improvement Retail - 0.8% 39,604 Lowe's Companies, Inc. $ 2,081,190 ------------ Specialty Stores - 0.3% 25,229 Barnes & Noble, Inc.* $ 857,281 ------------ Total Retailing $ 10,656,806 ------------ Food & Drug Retailing - 3.5% Drug Retail - 1.6% 112,775 Walgreen Co. $ 4,083,583 ------------ Food Distributors - 1.3% 12,492 Cardinal Health, Inc. $ 875,065 68,293 Sysco Corp. 2,449,670 ------------ $ 3,324,735 ------------ Hypermarkets & Supercenters - 0.6% 30,854 Wal-Mart Stores, Inc. $ 1,627,857 ------------ Total Food & Drug Retailing $ 9,036,175 ------------ Food, Beverage & Tobacco - 4.7% Packaged Foods & Meats - 3.6% 70,267 Campbell Soup Co. $ 1,888,777 36,702 General Mills, Inc. 1,744,446 45,065 Hershey Foods Corp. 2,085,158 59,465 H.J. Heinz Co., Inc. 2,331,028 61,629 Sara Lee Corp. 1,416,851 ------------ $ 9,466,260 ------------ Soft Drinks - 1.1% 53,078 PepsiCo, Inc. $ 2,859,843 ------------ Total Food, Beverage & Tobacco $ 12,326,103 ------------ Household & Personal Products - 3.3% Household Products - 3.3% 12,405 Clorox Co. $ 667,141 53,543 Colgate-Palmolive Co. 3,129,588 19,005 Estee Lauder Co. 927,064 70,848 Procter & Gamble Co. 3,856,965 ------------ $ 8,580,758 ------------ Total Household & Personal Products $ 8,580,758 ------------ Shares Value Health Care Equipment & Services - 5.9% Health Care Distributors - 2.4% 47,967 Abbott Laboratories $ 1,955,135 75,610 Johnson & Johnson 4,211,477 ------------ $ 6,166,612 ------------ Health Care Equipment - 2.7% 58,653 Becton, Dickinson & Co. $ 3,038,225 35,076 Biomet, Inc. 1,558,777 26,639 Guidant Corp. 1,488,587 13,291 St. Jude Medical, Inc.* 1,005,464 ------------ $ 7,091,053 ------------ Managed Health Care - 0.8% 20,042 United Healthcare Group, Inc. $ 1,247,615 7,549 Wellpoint Health Networks, Inc.* 845,563 ------------ $ 2,093,178 ------------ Total Health Care Equipment & Services $ 15,350,843 ------------ Pharmaceuticals & Biotechnology - 6.1% Pharmaceuticals - 6.1% 33,785 Barr Laboratorie, Inc.* $ 1,138,555 35,772 Eli Lilly & Co. 2,500,821 55,400 Merck & Co., Inc. 2,631,500 67,544 Mylan Laboratories, Inc. 1,367,766 45,761 Novartis AG (A.D.R.) 2,036,364 62,253 Pfizer, Inc. 2,134,033 15,214 Roche Holdings AG (A.D.R.)* 1,508,088 145,764 Schering-Plough Corp. 2,693,719 ------------ $ 16,010,846 ------------ Total Pharmaceuticals & Biotechnology $ 16,010,846 ------------ Banks - 7.4% Diversified Banks - 2.2% 32,784 Charter One Financial, Inc. $ 1,448,725 85,656 U.S. Bancorp 2,360,679 35,519 Wells Fargo & Co. 2,032,752 ------------ $ 5,842,156 ------------ Regional Banks - 4.2% 28,340 First Horizon National Corp. $ 1,288,620 114,053 National City Corp. 3,992,996 38,351 SouthTrust Corp. 1,488,402 47,329 SunTrust Banks, Inc. 3,075,912 19,396 Zions Bancorporation 1,191,884 ------------ $ 11,037,814 ------------ Thrifts & Mortgage Finance - 1.0% 64,028 Washington Mutual, Inc. $ 2,474,042 ------------ Total Banks $ 19,354,012 ------------
The accompanying notes are an integral part of these financial statements. 59 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Diversified Financials - 5.6% Asset Management & Custody Banks - 3.8% 52,067 The Bank of New York Co., Inc. $ 1,534,935 37,051 Federated Investors Inc. 1,124,127 62,368 State Street Corp. 3,058,527 81,766 T. Rowe Price Associates, Inc. 4,121,006 ------------ $ 9,838,595 ------------ Consumer Finance - 0.8% 38,211 American Express Co. $ 1,963,281 ------------ Investment Banking & Brokerage - 1.0% 49,593 Merrill Lynch & Co., Inc. $ 2,677,030 ------------ Total Diversified Financials $ 14,478,906 ------------ Insurance - 3.5% Multi - Line Insurance - 1.0% 37,283 American International Group, Inc. $ 2,657,532 ------------ Property & Casualty Insurance - 2.5% 46,109 Chubb Corp. $ 3,143,712 26,583 Safeco Corp. 1,169,652 52,652 St. Paul Travelers Companies, Inc. 2,134,512 ------------ $ 6,447,876 ------------ Total Insurance $ 9,105,408 ------------ Software & Services - 4.7% Application Software - 2.4% 35,888 Adobe Systems, Inc. $ 1,668,792 119,628 Microsoft Corp. 3,416,576 26,017 Symantec Corp.* 1,139,024 ------------ $ 6,224,392 ------------ Data Processing & Outsourced Services - 2.3% 39,373 Automatic Data Processing, Inc. $ 1,648,941 32,311 Computer Sciences Corp.* 1,500,200 21,836 DST Systems, Inc.* 1,050,093 25,494 Fiserv, Inc.* 991,462 32,184 SunGard Data Systems, Inc.* 836,784 ------------ $ 6,027,480 ------------ Total Software & Services $ 12,251,872 ------------ Technology Hardware & Equipment - 5.4% Communications Equipment - 2.0% 182,952 Motorola, Inc. $ 3,338,874 128,455 Nokia Corp (A.D.R.) 1,867,736 ------------ $ 5,206,610 ------------ Shares Value Computer Hardware - 3.4% 17,403 Apple Computer, Inc.* $ 566,294 60,976 Dell, Inc.* 2,184,160 22,881 Diebold, Inc. 1,209,718 72,740 Hewlett-Packard Co. 1,534,814 24,634 IBM Corp.* 2,171,487 252,670 Sun Microsystems, Inc.* 1,096,588 ------------ $ 8,763,061 ------------ Total Technology Hardware & Equipment $ 13,969,671 ------------ Semiconductors - 3.4% Semiconductor Equipment - 0.9% 120,790 Applied Materials, Inc.* $ 2,369,900 ------------ Semiconductors - 2.5% 126,597 Intel Corp. $ 3,494,077 118,406 Texas Instruments, Inc. 2,863,057 ------------ $ 6,357,134 ------------ Total Semiconductors $ 8,727,034 ------------ Telecommunication Services - 3.2% Integrated Telecommunication Services - 3.2% 18,815 Alltel Corp. $ 952,415 116,841 BellSouth Corp. 3,063,571 176,887 SBC Communications, Inc. 4,289,510 ------------ $ 8,305,496 ------------ Total Telecommunication Services $ 8,305,496 ------------ Utilities - 2.0% Electric Utilities - 1.3% 26,945 American Electric Power Co., Inc. $ 862,240 29,268 Consolidated Edison, Inc. 1,163,696 46,790 Southern Co. 1,363,929 ------------ $ 3,389,865 ------------ Gas Utilities - 0.6% 22,532 KeySpan Energy Corp. (a) $ 826,924 31,011 Vectren Corp. 778,065 ------------ $ 1,604,989 ------------ Water Utilities - 0.1% 14,953 Aqua America, Inc. $ 299,808 ------------ Total Utilities $ 5,294,662 ------------ TOTAL COMMON STOCKS (Cost $224,336,202) $251,286,474 ------------
60 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount Value TEMPORARY CASH INVESTMENTS - 3.7% Repurchase Agreement - 3.4% $ 8,800,000 UBS Warburg, Inc., 1.25%, dated 6/30/04, repurchase price of $8,800,000 plus accrued interest on 7/1/04 collateralized by $8,068,000 U.S. Treasury Bill, 7.0%, 7/15/06 $ 8,800,000 ------------ Shares Security Lending Collateral - 0.3% 766,159 Securities Lending Investment Fund, 1.29% $ 766,159 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $9,566,159) $ 9,566,159 ------------ TOTAL INVESTMENT IN SECURITIES - 100.2% (Cost $233,902,361)(a) $260,852,633 ------------ OTHER ASSETS AND LIABILITIES - (0.2)% $ (506,268) ------------ TOTAL NET ASSETS - 100.0% $260,346,365 ============
* Non-income producing security. (A.D.R.) American Depositary Receipt (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 20,707 KeySpan Energy Corp. $751,043
The accompanying notes are an integral part of these financial statements. 61 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value CONVERTIBLE PREFERRED STOCKS - 1.4% Automobiles & Components - 1.4% Automobile Manufacturers - 1.4% 2,600 General Motors, 5.25%, 3/6/32 $ 64,025 55,600 Ford Capital Trust, 6.5%, 1/15/32 3,033,536 ------------ $ 3,097,561 ------------ Total Automobiles & Components $ 3,097,561 ------------ TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $2,691,323) $ 3,097,561 ------------ Principal Amount CONVERTIBLE CORPORATE BOND - 0.0% Retailing - 0.0% Apparel Retail - 0.0% $200,000 Gap Inc., 5.75%, 3/15/09 $ 311,000 ------------ Total Retailing $ 311,000 ------------ TOTAL CONVERTIBLE CORPORATE BOND (Cost $200,000) $ 311,000 ------------ Shares COMMON STOCKS - 95.5% Energy - 11.7% Integrated Oil & Gas - 11.7% 98,300 ChevronTexaco Corp. $ 9,251,013 114,865 ConocoPhillips 8,763,051 161,066 Exxon Mobil Corp. 7,152,941 35,000 Occidental Petroleum Corp. 1,694,350 ------------ $ 26,861,355 ------------ Total Energy $ 26,861,355 ------------ Materials - 5.2% Commodity Chemicals - 1.7% 50,300 Air Products & Chemicals, Inc. $ 2,638,235 27,341 E.I. du Pont de Nemours and Co. 1,214,487 ------------ $ 3,852,722 ------------ Construction Materials - 0.7% 35,000 Vulcan Materials Co. $ 1,664,250 ------------ Diversified Chemical - 0.7% 25,300 PPG Industries, Inc. $ 1,580,997 ------------ Paper Products - 0.8% 62,400 Meadwestvaco Corp. $ 1,833,936 ------------ Specialty Chemicals - 0.3% 15,000 Valspar Corp. $ 755,850 ------------ Steel - 1.0% 24,700 Nucor Corp. $ 1,895,972 20,050 Roanoke Electric Steel Corp. 272,680 ------------ $ 2,168,652 ------------ Total Materials $ 11,856,407 ------------ Shares Value Capital Goods - 8.6% Aerospace & Defense - 3.0% 51,600 Boeing Co. $ 2,636,244 43,200 General Dynamics Corp. 4,289,760 ------------ $ 6,926,004 ------------ Electrical Components & Equipment - 1.6% 59,000 Emerson Electric Co. $ 3,749,450 ------------ Industrial Conglomerates - 2.7% 58,100 Johnson Controls, Inc. $ 3,101,378 32,700 United Technologies Corp. 2,991,396 ------------ $ 6,092,774 ------------ Industrial Machinery - 1.3% 22,000 Gorman-Rupp Co. $ 597,740 92,200 The Timken Co. 2,442,378 ------------ $ 3,040,118 ------------ Total Capital Goods $ 19,808,346 ------------ Transportation - 0.4% Railroads - 0.4% 26,500 Burlington Northern, Inc. $ 929,355 ------------ Total Transportation $ 929,355 ------------ Automobiles & Components - 3.7% Automobile Manufacturers - 3.7% 145,175 PACCAR, Inc. $ 8,418,698 ------------ Total Automobiles & Components $ 8,418,698 ------------ Media - 3.2% Movies & Entertainment - 1.8% 132,400 Cedar Fair, L.P. (a) $ 4,177,220 ------------ Publishing - 1.4% 40,500 McGraw-Hill Co., Inc. $ 3,101,085 ------------ Total Media $ 7,278,305 ------------ Retailing - 2.3% Department Stores - 1.6% 30,000 J.C. Penney Co., Inc. $ 1,132,800 92,825 May Department Stores Co. 2,551,759 ------------ $ 3,684,559 ------------ General Merchandise Stores - 0.7% 40,300 Sears, Roebuck and Co. $ 1,521,728 ------------ Total Retailing $ 5,206,287 ------------ Food, Beverage & Tobacco - 5.4% Packaged Foods & Meats - 4.4% 147,500 Campbell Soup Co. $ 3,964,800 47,300 General Mills, Inc. 2,248,169 73,700 H.J. Heinz Co., Inc. 2,889,040 46,900 Sara Lee Corp. 1,078,231 ------------ $ 10,180,240 ------------
62 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Soft Drinks - 1.0% 12,900 The Coca-Cola Co. $ 651,192 28,600 PepsiCo, Inc. 1,540,968 ------------ $ 2,192,160 ------------ Total Food, Beverage & Tobacco $ 12,372,400 ------------ Household & Personal Products - 1.5% Household Products - 1.5% 20,000 Clorox Co. $ 1,075,600 39,200 Colgate-Palmolive Co. 2,291,240 ------------ $ 3,366,840 ------------ Total Household & Personal Products $ 3,366,840 ------------ Health Care Equipment & Services - 3.7% Health Care Distributors - 2.8% 88,900 Abbott Laboratories $ 3,623,564 50,600 Johnson & Johnson 2,818,420 ------------ $ 6,441,984 ------------ Health Care Equipment - 0.9% 38,200 Becton, Dickinson & Co. $ 1,978,760 ------------ Total Health Care Equipment & Services $ 8,420,744 ------------ Pharmaceuticals & Biotechnology - 3.6% Pharmaceuticals - 3.6% 57,900 Eli Lilly & Co. $ 4,047,789 74,300 Merck & Co., Inc. 3,529,250 20,000 Pfizer, Inc. 685,600 ------------ $ 8,262,639 ------------ Total Pharmaceuticals & Biotechnology $ 8,262,639 ------------ Banks - 12.6% Diversified Banks - 5.4% 154,900 Charter One Financial, Inc. $ 6,845,031 86,100 U.S. Bancorp 2,372,916 53,700 Wells Fargo & Co. 3,073,251 ------------ $ 12,291,198 ------------ Regional Banks - 5.8% 62,200 First Horizon National Corp. $ 2,828,234 96,900 National City Corp. 3,392,469 79,600 SouthTrust Corp. 3,089,276 63,000 SunTrust Banks, Inc. 4,094,370 ------------ $ 13,404,349 ------------ Thrifts & Mortgage Finance - 1.4% 85,400 Washington Mutual, Inc. $ 3,299,856 ------------ Total Banks $ 28,995,403 ------------ Shares Value Diversified Financials - 3.5% Asset Management & Custody Banks - 2.9% 45,100 Eaton Vance Corp. $ 1,723,271 98,600 T. Rowe Price Associates, Inc. 4,969,440 ------------ $ 6,692,711 ------------ Investment Banking & Brokerage - 0.6% 43,100 A.G. Edwards, Inc. $ 1,466,693 ------------ Total Diversified Financials $ 8,159,404 ------------ Insurance - 4.4% Property & Casualty Insurance - 4.4% 51,600 Chubb Corp. $ 3,518,088 86,800 Safeco Corp. 3,819,200 68,900 St. Paul Travelers Companies, Inc. 2,793,206 ------------ $ 10,130,494 ------------ Total Insurance $ 10,130,494 ------------ Real Estate - 1.1% Real Estate Investment Trusts - 1.1% 51,600 Simon DeBartolo Group, Inc. $ 2,653,272 ------------ Total Real Estate $ 2,653,272 ------------ Software & Services - 0.8% Application Software - 0.4% 31,000 Microsoft Corp. $ 885,360 ------------ Data Processing & Outsourced Services - 0.4% 25,000 Automatic Data Processing, Inc. $ 1,047,000 ------------ Total Software & Services $ 1,932,360 ------------ Technology Hardware & Equipment - 1.6% Computer Hardware - 1.6% 44,300 Diebold, Inc. $ 2,342,141 40,000 Hewlett-Packard Co. 844,000 6,200 IBM Corp.* 546,530 ------------ $ 3,732,671 ------------ Total Technology Hardware & Equipment $ 3,732,671 ------------ Telecommunication Services - 6.6% Integrated Telecommunication Services - 6.6% 41,800 Alltel Corp. $ 2,115,916 170,000 AT&T Corp. 2,487,100 98,500 BellSouth Corp. 2,582,670 169,800 SBC Communications, Inc. 4,117,650 110,000 Verizon Communications, Inc. 3,980,900 ------------ $ 15,284,236 ------------ Total Telecommunication Services $ 15,284,236 ------------
The accompanying notes are an integral part of these financial statements. 63 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Utilities - 15.6% Electric Utilities - 10.1% 60,000 Ameren Corp. $ 2,577,600 55,800 American Electric Power Co., Inc. 1,785,600 56,300 Consolidated Edison, Inc. 2,238,488 153,500 Constellation Energy Group 5,817,650 33,000 FPL Group, Inc. 2,110,350 94,900 Great Plains Energy, Inc. 2,818,530 64,000 NSTAR 3,064,320 98,700 Southern Co. 2,877,105 ------------ $ 23,289,643 ------------ Gas Utilities - 4.3% 111,700 KeySpan Energy Corp. (a) $ 4,099,390 110,300 Questar Corp. 4,261,992 61,100 Vectren Corp. 1,532,999 ------------ $ 9,894,381 ------------ Multi-Utilities & Unregulated Power - 0.6% 24,000 Equitable Resources, Inc. $ 1,241,040 ------------ Water Utilities - 0.6% 71,000 Aqua America, Inc. $ 1,423,550 ------------ Total Utilities $ 35,848,614 ------------ TOTAL COMMON STOCKS (Cost $178,138,936) $219,517,830 ------------ Principal Amount Value TEMPORARY CASH INVESTMENTS - 4.5% Repurchase Agreement - 2.9% $ 6,700,000 UBS Warburg, Inc., 1.25%, dated 6/30/04, repurchase price of $6,700,000 plus accrued interest on 7/1/04 collateralized by $6,540,000 U.S. Treasury Bill, 2.125%, 10/31/04 $ 6,700,000 ------------ Shares Security Lending Collateral - 1.6% 3,514,541 Securities Lending Investment Fund, 1.29% $ 3,514,541 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $10,214,541) $ 10,214,541 ------------ TOTAL INVESTMENT IN SECURITIES - 101.4% (Cost $191,244,800)(a) $233,140,932 ------------ OTHER ASSETS AND LIABILITIES - (1.4)% $ (3,183,134) ------------ TOTAL NET ASSETS - 100.0% $229,957,798 ============
* Non-income producing security. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 40,000 Cedar Fair, L.P. $1,235,200 60,393 KeySpan Energy Corp. 2,190,454 ---------- Total $3,425,654 ==========
64 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 63.8% Energy - 5.5% Integrated Oil & Gas - 0.3% 3,900 Exxon Mobil Corp. $ 173,199 ----------- Oil & Gas Drilling - 4.2% 8,700 Encana Corp. $ 375,492 35,200 ENSCO International, Inc. 1,024,320 22,000 Varco International, Inc.* 481,580 ----------- $ 1,881,392 ----------- Oil & Gas Exploration & Production - 0.9% 11,400 Pioneer Natural Resources Co. $ 399,912 ----------- Total Energy $ 2,454,503 ----------- Materials - 2.4% Precious Metals & Minerals - 2.4% 27,000 Newmont Mining Corp. $ 1,046,520 ----------- Total Materials $ 1,046,520 ----------- Capital Goods - 3.7% Aerospace & Defense - 3.1% 26,000 Northrop Grumman Corp. $ 1,396,200 ----------- Electrical Component & Equipment - 0.5% 8,500 Molex, Inc. $ 231,880 ----------- Total Capital Goods $ 1,628,080 ----------- Commercial Services & Supplies - 0.5% Diversified Commercial Services - 0.5% 5,100 Cintas Corp. $ 243,117 ----------- Total Commercial Services & Supplies $ 243,117 ----------- Transportation - 2.2% Trucking - 2.2% 12,900 United Parcel Service $ 969,693 ----------- Total Transportation $ 969,693 ----------- Shares Value Media - 2.9% Broadcasting & Cable TV - 1.1% 5,800 Clear Channel Communications, Inc. $ 214,310 10,200 Comcast Corp. (Special)* 281,622 ----------- $ 495,932 ----------- Movies & Entertainment - 1.8% 21,840 Viacom, Inc. (Class B) $ 780,125 ----------- Total Media $ 1,276,057 ----------- Retailing - 3.1% Apparel Retail - 0.5% 6,400 Liz Claiborne, Inc. $ 230,272 ----------- General Merchandise Stores - 2.6% 37,800 Family Dollar Stores, Inc. $ 1,149,876 ----------- Total Retailing $ 1,380,148 ----------- Drug Retail - 0.8% 6.7% Food Distributors 8,200 CVS Corp. $ 344,564 ----------- Food Distributors - 1.9% 12,300 Cardinal Health, Inc. $ 861,615 ----------- Food Retail - 2.9% 20,600 Wm. Wrigley Jr. Co. $ 1,298,830 ----------- Hypermarkets & Supercenters - 1.1% 8,900 Wal-Mart Stores, Inc. $ 469,564 ----------- Total Food & Drug Retailing $ 2,974,573 ----------- Food Beverage & Tobacco - 6.3% Distillers & Vintners - 2.7% 22,400 Anheuser-Busch Companies, Inc. $ 1,209,600 ----------- Soft Drinks - 3.6% 12,600 The Coca-Cola Co. $ 636,048 17,900 PepsiCo, Inc. 964,452 ----------- $ 1,600,500 ----------- Total Food Beverage & Tobacco $ 2,810,100 -----------
The accompanying notes are an integral part of these financial statements. 65 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Household & Personal Products - 4.1% Household Products - 1.0% 9,300 Estee Lauder Co. $ 453,654 ----------- Personal Products - 3.1% 32,400 Gillette Co. $ 1,373,760 ----------- Total Household & Personal Products $ 1,827,414 ----------- Health Care Equipment & Services - 3.5% Health Care Distributors - 1.4% 17,800 Wyeth, Inc. $ 643,648 ----------- Health Care Equipment - 2.1% 17,300 Biomet, Inc. $ 768,812 2,900 Guidant Corp. 162,052 ----------- $ 930,864 ----------- Total Health Care Equipment & Services $ 1,574,512 ----------- Pharmaceuticals & Biotechnology - 5.0% Biotechnology - 0.5% 4,316 Amgen, Inc.* $ 235,524 ----------- Pharmaceuticals - 4.4% 4,000 Eli Lilly & Co. $ 279,640 6,500 Merck & Co., Inc. 308,750 40,788 Pfizer, Inc. 1,398,213 ----------- $ 1,986,603 ----------- Total Pharmaceuticals & Biotechnology $ 2,222,127 ----------- Diversified Financials - 2.4% Asset Management & Custody Banks - 1.0% 14,100 The Bank of New York Co., Inc. $ 415,668 ----------- Consumer Finance - 1.4% 12,300 American Express Co. $ 631,974 ----------- Total Diversified Financials $ 1,047,642 ----------- Shares Value Insurance - 5.2% Property & Casualty Insurance - 5.2% 515 Berkshire Hathaway, Inc. (Class B)* $ 1,521,825 9,000 Progressive Corp.* 767,700 ----------- $ 2,289,525 ----------- Total Insurance $ 2,289,525 ----------- Software & Services - 8.4% Application Software - 5.1% 50,100 Microsoft Corp. $ 1,430,856 19,200 Symantec Corp.* 840,576 ----------- $ 2,271,432 ----------- Data Processing & Outsourced Services - 3.3% 32,700 First Data Corp. $ 1,455,804 ----------- Total Software & Services $ 3,727,236 ----------- Technology Hardware & Equipment - 1.5% Computer Hardware - 1.5% 32,022 Hewlett-Packard Co. $ 675,664 ----------- Total Technology Hardware & Equipment $ 675,664 ----------- Semiconductors - 0.4% 5,800 Intel Corp. $ 160,080 ----------- Total Semiconductors $ 160,080 ----------- TOTAL COMMON STOCKS (Cost $24,340,428) $28,306,991 ===========
66 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value ASSET BACKED SECURITIES - 0.4% Diversified Financials - 0.2% Diversified Financial Services - 0.2% $ 89,819 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 88,571 ----------- $ 88,571 ----------- Real Estate - 0.2% Real Estate Investment Trusts - 0.2% 100,000 BBB-/Baa3 Global Signal Trust, 5.395%, 1/15/34 (144A) $ 96,087 ----------- Total Real Estate $ 96,087 ----------- TOTAL ASSET BACKED SECURITIES (Cost $189,819) $ 184,658 ----------- CORPORATE BONDS - 12.7% Energy - 0.3% Integrated Oil & Gas - 0.1% 30,000 BBB+/Baa1 Occidental Petroleum, 7.65%, 2/15/06 $ 32,169 40,000 BBB+/Baa1 Occidental Petroleum, 6.75%, 1/15/12 44,054 ----------- $ 76,223 ----------- Oil & Gas Refining Marketing & Transportation - 0.1% 65,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%, 6/1/14 $ 65,292 ----------- Total Energy $ 141,515 ----------- Materials - 1.3% Commodity Chemicals - 0.2% 100,000 BB+/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ 98,500 ----------- Diversified Metals & Mining - 0.3% 125,000 BBB-/Baa3 Inco, Ltd., 7.2%, 9/15/32 $ 131,707 ----------- Metal & Glass Containers - 0.1% 40,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 47,508 ----------- Paper Products - 0.2% 100,000 BB/Ba2 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 101,300 ----------- Specialty Chemicals - 0.3% 100,000 BBB-/Baa3 Ferro Corp., 9.125%, 1/1/09 $ 114,836 ----------- Steel - 0.2% 75,000 BB/Ba3 International Steel Group, 6.5%, 4/15/14 (144A) $ 70,313 ----------- Total Materials $ 564,164 ----------- Capital Goods - 0.8% Aerospace & Defense - 0.1% 25,000 B/B3 K&F Industries, 9.625%, 12/15/10 $ 27,406 ----------- Electrical Components & Equipment - 0.2% 75,000 BBB-/Ba1 Thomas & Betts Corp., 7.25%, 6/1/13 $ 79,441 ----------- Industrial Conglomerates - 0.2% 55,000 AAA/Aaa General Electric Capital Corp., 6.125%, 2/22/11 $ 58,902 30,000 AAA/Aaa General Electric Capital Corp., 6.75%, 3/15/32 32,250 ----------- $ 91,152 -----------
The accompanying notes are an integral part of these financial statements. 67 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Industrial Machinery - 0.3% $ 150,000 BBB-/Ba1 Timken Co., 5.75%, 2/15/10 $ 150,314 ----------- Total Capital Goods $ 348,313 ----------- Automobiles & Components - 0.8% Automobile Manufacturers - 0.8% 200,000 BBB/Baa1 General Motors, 7.2%, 1/15/11 $ 209,559 50,000 BBB-/A3 Ford Motor Credit Co., 9.14%, 12/30/14 51,464 100,000 BB+/Ba1 Hyundai Motor Co., Ltd., 5.3%, 12/19/08 98,409 ----------- $ 359,432 ----------- Total Automobiles & Components $ 359,432 ----------- Hotels, Restaurants & Leisure - 0.5% Casinos & Gaming - 0.0% 25,000 B+/B1 Turning Stone, 9.125%, 12/15/10 (144A) $ 26,125 ----------- Hotels, Resorts & Cruise Lines - 0.5% 200,000 BBB-/Ba1 Hilton Hotels, 7.625%, 12/1/12 $ 215,000 ----------- Total Hotels, Restaurants & Leisure $ 241,125 ----------- Media - 2.2% Broadcasting & Cable TV - 1.5% 250,000 BBB/Baa3 Comcast Cable Corp., 7.125%, 6/15/13 $ 273,265 240,000 BBB/Baa2 Cox Communications, 7.125%, 10/1/12 263,028 160,000 BB-/Ba3 Echostar DBS Corp., 6.375%, 10/1/11 (144A) 157,600 ----------- $ 693,893 ----------- Movies & Entertainment - 0.2% 100,000 BBB+/Baa1 AOL Time Warner, Inc., 6.875%, 5/1/12 $ 108,059 ----------- Publishing - 0.4% 170,000 BBB-/Baa3 News America Inc., 7.3%, 4/30/28 $ 184,346 ----------- Total Media $ 986,298 ----------- Retailing - 0.2% Specialty Stores - 0.2% 100,000 BB/Ba2 Toys "R" Us, 7.875%, 4/15/13 $ 100,375 ----------- Total Retailing $ 100,375 ----------- Food, Beverage & Tobacco - 0.3% Tobacco - 0.3% 150,000 BBB/Baa2 Altria Group, Inc., 7.0%, 11/4/13 $ 152,748 ----------- Total Food, Beverage & Tobacco $ 152,748 ----------- Health Care Equipment & Services - 0.7% Health Care Facilities - 0.5% 200,000 BBB-/Ba1 HCA, Inc., 6.3%, 10/1/12 $ 200,103 ----------- Health Care Supplies - 0.2% 100,000 BBB-/Ba1 Bausch & Lomb, 7.125%, 8/1/28 $ 100,118 ----------- Total Health Care Equipment & Services $ 300,221 -----------
68 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Pharmaceuticals & Biotechnology - 0.1% Pharmaceuticals - 0.0% $ 40,000 AAA/Aaa Pharmacia Corp., 6.6%, 12/1/28 $ 43,322 ----------- Total Pharmaceuticals & Biotechnology $ 43,322 ----------- Banks - 0.5% Diversified Banks - 0.3% 50,000 NR/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 $ 48,936 75,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 84,955 ----------- $ 133,891 ----------- Thrifts & Mortgage Finance - 0.2% 100,000 BBB-/Baa3 Sovereign Bank, 5.125%, 3/15/13 $ 95,060 ----------- Total Banks $ 228,951 ----------- Diversified Financials - 0.9% Investment Banking & Brokerage - 0.1% 75,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11 (144A) $ 74,625 ----------- Diversified Financial Services - 0.4% 100,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 102,848 100,000 BBB/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) 92,754 ----------- $ 195,602 ----------- Specialized Finance - 0.2% 100,000 B/B2 MDP Acquistions, 9.625%, 10/1/12 $ 109,500 ----------- Total Diversified Financials $ 379,727 ----------- Insurance - 1.3% Life & Health Insurance - 0.2% 100,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 $ 95,231 ----------- Multi - Line Insurance - 0.1% 50,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 46,598 ----------- Property & Casualty Insurance - 0.8% 150,000 BBB+/Baa2 Berkley (WR), 5.875%, 2/15/13 $ 153,089 85,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 83,538 100,000 BBB-/Baa3 Arch Capital Group, Ltd., 7.35%, 5/1/34 100,662 ----------- $ 337,289 ----------- Reinsurance - 0.2% 100,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 107,497 ----------- Total Insurance $ 586,615 ----------- Real Estate - 0.6% Real Estate Investment Trusts - 0.5% 150,000 BBB-/Baa3 Hospitality Properties Trust, 6.75%, 2/15/13 $ 155,727 100,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 101,603 ----------- $ 257,330 ----------- Total Real Estate $ 257,330 ----------- Technology Hardware & Equipment - 1.3% Computer Hardware - 0.8% 250,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 273,454 100,000 BB+/Ba1 UNISYS Corp., 6.875%, 3/15/10 103,000 ----------- $ 376,454 -----------
The accompanying notes are an integral part of these financial statements. 69 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Electronic Manufacturing Services - 0.2% $ 75,000 bb+/Baa3 Jabil Circuit, Inc., 5.875%, 7/15/10 $ 77,475 ----------- Technology Distributors - 0.2% 100,000 BBB-/Baa3 Arrow Electronic Inc., 6.875%, 7/1/13 $ 104,456 ----------- Total Technology Hardware & Equipment $ 558,385 ----------- Telecommunication Services - 0.4% Integrated Telecommunication Services - 0.4% 100,000 BBB+/Baa3 Intelsat, Ltd. 6.5%, 11/1/13 $ 88,343 100,000 BBB+/Baa2 Telecom Italia S.p.A., 5.25%, 11/15/13 (144A) 96,785 ----------- $ 185,128 ----------- Total Telecommunication Services $ 185,128 ----------- Utilities - 0.5% Electric Utilities - 0.2% 95,000 BBB-/Baa3 FLP Energy American Wind Llc, 6.639%, 6/20/23 (144A) $ 96,999 ----------- Multi-Utilities & Unregulated Power - 0.3% 100,000 B/B1 Reliant Energy Inc., 9.5%, 7/15/13 $ 107,750 ----------- Total Utilities $ 204,749 ----------- TOTAL CORPORATE BONDS (Cost $5,493,563) $ 5,638,398 ----------- U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.2% Government - 21.2% 396,360 AAA/Aaa Federal Home Loan Mortgage Corp., 5.0%, 4/1/34 $ 383,027 475,466 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 1/1/34 474,100 216,149 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 9/1/17 221,401 173,487 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 177,830 123,088 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 1/1/32 126,103 273,687 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 11/1/33 279,878 50,005 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 6/1/34 51,135 1,329,244 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 1,360,078 45,587 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 48,248 30,235 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 31,537 91,645 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 95,957 63,104 AAA/Aaa Federal National Mortgage Association, 6.5%, 10/1/32 65,753 150,000 AAA/Aaa Federal National Mortgage Association, 5.0%, 6/1/34 145,071 237,310 AAA/Aaa Federal National Mortgage Association, 5.5%, 11/1/33 236,860 221,223 AAA/Aaa Federal National Mortgage Association, 5.5%, 2/1/17 227,041 137,933 AAA/Aaa Federal National Mortgage Association, 5.5%, 3/1/34 137,452 249,122 AAA/Aaa Federal National Mortgage Association, 5.5%, 4/1/34 248,253 144,591 AAA/Aaa Federal National Mortgage Association, 6.%, 12/1/33 147,784 110,000 AAA/Aaa Federal National Mortgage Association, 6.125%, 3/15/12 118,615 20,007 AAA/Aaa Federal National Mortgage Association, 6.5%, 10/1/32 20,847 83,029 AAA/Aaa Federal National Mortgage Association, 6.5%, 4/1/29 87,034 180,906 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/32 188,502 120,726 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/32 125,900 25,302 AAA/Aaa Federal National Mortgage Association, 6.5%, 8/1/13 26,784 74,676 AAA/Aaa Federal National Mortgage Association, 6.5%, 9/1/32 78,006 82,862 AAA/Aaa Federal National Mortgage Association, 6.5%, 12/1/21 86,794 24,907 AAA/Aaa Federal National Mortgage Association, 6.5%, 8/1/14 26,343 10,000 AAA/Aaa Federal National Mortgage Association, 7.125%, 6/15/10 11,353
70 The accompanying notes are an integral part of these financial statements. Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value (U.S. Government and Agency Obligations Cont.) $ 40,082 AAA/Aaa Federal National Mortgage Association, 9.0%, 4/1/33 $ 44,559 300,000 AAA/Aaa Freddie Mac, 3.25%, 2/25/08 293,859 150,000 AAA/Aaa Freddie Mac, 5.75%, 1/15/12 158,248 545,023 AAA/Aaa Government National Mortgage Association, 6.0%, 9/15/33 559,458 195,356 AAA/Aaa Government National Mortgage Association II, 5.5%, 2/20/34 195,193 34,489 AAA/Aaa Government National Mortgage Association II, 7.5%, 9/20/29 37,185 66,055 AAA/Aaa Government National Mortgage Association, 5.5%, 9/15/33 66,197 311,211 AAA/Aaa Government National Mortgage Association, 5.5%, 6/15/33 311,511 242,819 AAA/Aaa Government National Mortgage Association, 5.5%, 7/15/33 243,053 167,714 AAA/Aaa Government National Mortgage Association, 5.5%, 8/15/33 167,875 169,178 AAA/Aaa Government National Mortgage Association, 6.0%, 9/15/32 173,715 347,177 AAA/Aaa Government National Mortgage Association, 6.0%, 10/20/33 357,148 166,809 AAA/Aaa Government National Mortgage Association, 6.5%, 5/15/33 174,599 68,834 AAA/Aaa Government National Mortgage Association, 6.5%, 10/15/28 72,111 470,000 AAA/Aaa U.S. Treasury Notes, 4.0%, 11/15/12 455,037 500,000 AAA/Aaa U.S. Treasury Notes, 5.625%, 5/15/08 538,203 300,000 AAA/Aaa U.S. Treasury Notes, 4.75%, 11/15/08 313,314 ----------- $ 9,388,951 ----------- TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $9,433,069) $ 9,388,951 ----------- TOTAL INVESTMENT IN SECURITIES - 98.1% (Cost $39,456,879) $43,518,998 ----------- OTHER NET ASSETS - 1.9% $ 835,231 ----------- TOTAL NET ASSETS - 100.0% $44,354,229 ===========
N/R Not rated by either S&P or Moddy's (144A) Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $799,859 or 1.8% of total net assets. The accompanying notes are an integral part of these financial statements. The accompanying notes are an integral part of these financial statements. 71 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
S&P/Moody's Shares Ratings Value CONVERTIBLE PREFERRED STOCKS - 2.8% Materials - 2.8% Construction Materials - 0.0% 1,750 B-/B3 TXI Capital Trust I, 5.5%, 6/30/28 $ 80,325 ----------- Diversified Metals & Mining - 2.8% 3,000 CCC/NR Freeport-McCorp., 5.5% (144A) $ 2,688,750 ----------- Total Materials TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $3,077,338) $ 2,769,075 ----------- Principal Amount CONVERTIBLE CORPORATE BONDS - 35.4% Materials - 5.4% Commodity Chemicals - 0.3% $ 200,000 BB-/B1 Millenium Chemicals, Inc., 4.0%, 11/15/23 (144A) $ 311,000 ----------- Diversified Metals & Mining - 1.6% 500,000 B+/B1 Massey Energy Co., 4.75% 5/15/23 $ 850,625 500,000 B-/NR Freeport McMoran Copper & Gold, Inc., 7.0%, 2/11/11 697,500 ----------- $ 1,548,125 ----------- Gold - 1.1% 1,000,000 NR/NR Coeur D'Alene Mines Corp. 1.25%, 1/15/24 $ 827,500 250,000 BBB+/Baa2 Placer Dome, Inc., 2.75%, 10/15/23 (144A) 282,500 ----------- $ 1,110,000 ----------- Specialty Chemicals - 0.5% 1,000,000 BBB/Baa3 RPM International, Inc., 1.389%, 5/13/33 $ 521,250 ----------- Steel - 1.9% 2,000,000 B-/NR Graftech International, 1.625%, 1/15/24 (144A) (a) $ 1,800,000 ----------- Total Materials $ 5,290,375 ----------- Capital Goods - 5.1% Aerospace & Defense - 2.2% 400,000 NR/NR EDO Corp., 5.25%, 4/15/07 $ 418,500 1,725,000 B/B2 Alliant Technology Systems, 2.75%, 2/15/24 (144A) 1,785,375 ----------- $ 2,203,875 ----------- Constuction & Engineering - 1.3% 875,000 NR/NR Quanta Services, Inc., 4.0%, 7/1/07 $ 796,250 500,000 B/NR Quanta Services, 4.5%, 10/1/23 493,125 ----------- $ 1,289,375 ----------- Electrical Component & Equipment - 1.2% 2,595,000 NR/B1 Roper Industries, Inc., 1.4813%, 1/15/34 (a) $ 1,164,506 ----------- Industrial Machinery - 0.4% 300,000 BB-/Ba3 Kaydon Corp., 4.0%, 5/23/23 (144A) $ 361,125 ----------- Total Capital Goods $ 5,018,881 ----------- Media - 1.4% Advertising - 1.4% 1,000,000 BB+/Baa3 Interpublic Group Companies, 4.5%, 3/15/23 $ 1,360,000 ----------- Total Media $ 1,360,000 -----------
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 Value Retailing - 0.5% Specialty Stores - 0.5% $ 500,000 B+/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 (a) $ 484,375 ----------- Total Retailing $ 484,375 ----------- Health Care Equipment & Services - 2.1% Health Care Equipment - 0.6% 300,000 NR/NR Wilson Greatbatch Technology, 2.25%, 6/15/13 $ 284,625 375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) 358,125 ----------- $ 642,750 ----------- Health Care Facilities - 1.5% 1,400,000 B-/B3 Community Health Systems, 4.25%, 10/15/08 $ 1,457,750 ----------- Total Health Care Equipment & Services $ 2,100,500 ----------- Pharmaceuticals & Biotechnology - 6.8% Biotechnology - 1.9% 800,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 750,000 850,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 860,625 300,000 NR/NR Cubist Pharmaceuticals, 5.5%, 11/1/08 279,750 ----------- $ 1,890,375 ----------- Pharmaceuticals - 4.9% 400,000 NR/NR Vertex Pharmaceuticals, Inc., 5.75%, 2/15/11 (144A) $ 402,000 2,000,000 NR/NR Ivax Corp., 4.5%, 5/15/08 1,980,000 2,500,000 BB-/B1 Valeant Pharmaceuticals, 3.0%, 8/16/10 (144A) 2,381,250 ----------- $ 4,763,250 ----------- Total Pharmaceuticals & Biotechnology $ 6,653,625 ----------- Real Estate - 0.7% Real Estate Management & Development - 0.7% 500,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 $ 698,750 ----------- Total Real Estate $ 698,750 ----------- Software & Services - 1.1% Application Software - 0.8% 200,000 NR/NR Mentor Graphics, 6.875%, 6/15/07 $ 211,500 500,000 NR/NR Serena Software, 1.5%, 12/15/23 (144A) 537,500 ----------- $ 749,000 ----------- IT Consulting & Other Services - 0.3% 400,000 NR/NR Safeguard Scientifics, 2.625%, 3/15/24 (144A) $ 296,500 ----------- Total Software & Services $ 1,045,500 ----------- Technology Hardware & Equipment - 6.0% Communications Equipment - 3.0% 1,500,000 B-/NR Adaptec, Inc., 0.75%, 12/22/23 $ 1,481,250 1,020,000 BB+/Ba2 Corning, Inc., 3.5%, 11/1/08 1,435,650 ----------- $ 2,916,900 ----------- Computer Storage & Peripherals - 0.8% 700,000 NR/B2 Maxtor Corp., 6.8%, 4/30/10 $ 738,500 ----------- Electronic Equipment & Instruments - 0.4% 300,000 B+/NR Flir Systems, Inc., 3.0%, 6/1/23 (a) $ 427,125 -----------
The accompanying notes are an integral part of these financial statements. 73 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Electronic Manufacturing Services - 1.4% $ 1,500,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 1,402,500 ----------- Technology Distributors - 0.4% 400,000 NR/NR Bell Microproducts, Inc., 3.75%, 3/5/24 (144A) $ 397,500 ----------- Total Technology Hardware & Equipment $ 5,882,525 ----------- Semiconductors - 6.3% Semiconductor Equipment - 3.5% 700,000 B-/NR Advanced Energy Industries, Inc., 5.25%, 11/15/06 $ 693,000 1,700,000 B-/NR FEI Co., 5.5%, 8/15/08 1,731,875 700,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 682,500 200,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 198,250 ----------- $ 3,305,625 ----------- Semiconductors - 2.8% 1,825,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 1,747,438 1,000,000 NR/NR Triquint Semiconductor, 4.0%, 3/1/07 (a) 957,500 ----------- $ 2,704,938 ----------- Total Semiconductors $ 6,010,563 ----------- TOTAL CONVERTIBLE CORPORATE BONDS (Cost $33,516,548) $34,545,094 ----------- CORPORATE BONDS - 57.7% Energy - 3.9% Oil & Gas Equipment And Services - 0.3% 100,000 B+/B3 Transmontaigne, Inc., 9.125%, 6/1/10 $ 103,000 200,000 BB-/Ba3 Grant Prideco Escrow, 9.0%, 12/15/09 217,500 ----------- $ 320,500 ----------- Oil & Gas Refining Marketing & Transportation - 3.6% 1,255,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 1,374,225 1,900,000 B/B3 Tesoro Petroleum Corp., 9.625%, 4/1/12 2,132,750 ----------- $ 3,506,975 ----------- Total Energy $ 3,827,475 ----------- Materials - 13.9% Commodity Chemicals - 4.6% 1,100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 1,078,000 2,500,000 BB+/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,375,000 1,000,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,045,000 ----------- $ 4,498,000 ----------- Diversified Metals & Mining - 1.3% 1,375,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 (a) $ 1,258,125 ----------- Metal & Glass Containers - 1.5% 1,000,000 B+/B1 Crown Holdings, 9.5%, 3/1/11 $ 1,090,000 500,000 B/B3 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 415,000 ----------- $ 1,505,000 ----------- Paper Products - 4.3% 685,000 BB/Ba2 Bowater Canada Finance, 7.95%, 11/15/11 $ 707,589 3,700,000 BB/Ba2 Bowater, Inc., 6.5%, 6/15/13 3,480,849 ----------- $ 4,188,438 -----------
74 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Specialty Chemicals - 2.2% $ 1,200,000 BB-/B1 Millenium America, Inc., 7.625%, 11/15/26 $ 1,026,000 1,000,000 BB-/B1 Millennium America, Inc., 9.25%, 6/15/08 1,075,000 ----------- $ 2,101,000 ----------- Total Materials $13,550,563 ----------- Capital Goods - 7.3% Aerospace & Defense - 5.1% 1,000,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 1/15/14 $ 955,000 2,500,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 2,437,500 1,525,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 1,570,750 ----------- $ 4,963,250 ----------- Industrial Machinery - 2.2% 800,000 B+/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 (a) $ 800,000 517,000 BBB+/Ba3 SPX Corp., 7.5%, 1/1/13 529,925 800,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 814,000 ----------- $ 2,143,925 ----------- Total Capital Goods $ 7,107,175 ----------- Transportation - 0.5% Air Freight & Couriers - 0.5% 500,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 525,000 ----------- Total Transportation $ 525,000 ----------- Automobiles & Components - 0.4% Auto Parts & Equipment - 0.4% 400,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 360,000 ----------- Total Automobiles & Components $ 360,000 ----------- Consumer Durables & Apparel - 1.4% Homebuilding - 1.4% 400,000 BB/Ba2 Beazer Homes USA, 8.375%, 4/15/12 $ 422,000 1,000,000 BB/Ba2 Beazer Homes USA, 6.5%, 11/15/13 945,000 ----------- $ 1,367,000 ----------- Total Consumer Durables & Apparel $ 1,367,000 ----------- Media - 2.2% Advertising - 2.2% 2,000,000 BB+/Baa3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,139,558 ----------- Total Media $ 2,139,558 ----------- Retailing - 1.0% Department Stores - 1.0% 1,000,000 BB+/Ba3 J.C. Penney Co., Inc., 7.625%, 3/1/97 $ 1,025,000 ----------- Total Retailing $ 1,025,000 ----------- Health Care Equipment & Services - 0.8% Health Care Facilities - 0.5% 500,000 BBB-/Ba1 HCA, Inc., 6.25%, 2/15/13 $ 497,008 ----------- Health Care Supplies - 0.3% 350,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 357,875 ----------- Total Health Care Equipment & Services $ 854,883 -----------
The accompanying notes are an integral part of these financial statements. 75 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Pharmaceuticals & Biotechnology - 1.4% Pharmaceuticals - 1.3% $ 1,375,000 B/NR Valeant Pharmaceuticals, 7.0%, 12/15/11 (144A) $ 1,340,625 ----------- Total Pharmaceuticals & Biotechnology $ 1,340,625 ----------- Real Estate - 11.9% Real Estate Management & Development - 6.4% 510,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 (144A) $ 712,725 800,000 B+/Ba3 LNR Property Corp., 7.625%, 7/15/13 796,000 2,115,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 2,062,125 2,635,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 2,648,175 ----------- $ 6,219,025 ----------- Real Estate Investment Trusts - 5.5% 500,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 495,000 2,300,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 2,403,500 2,500,000 CCC+/B2 Meristar Hospitality Corp., 9.125%, 1/15/11 2,525,000 ----------- $ 5,423,500 ----------- Total Real Estate $11,642,525 ----------- Technology Hardware & Equipment - 5.5% Communications Equipment - 0.6% 700,000 BB+/Ba2 Corning, Inc., 6.2%, 3/15/16 $ 649,250 ----------- Electronic Equipment & Instruments - 2.0% 1,835,000 B/B2 General Cable Corp, 9.5%, 11/15/10 $ 1,972,625 ----------- Technology Distributors - 2.9% 1,550,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 $ 1,550,547 1,200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 1,253,473 ----------- $ 2,804,020 ----------- Total Technology Hardware & Equipment $ 5,425,895 ----------- Utilities - 7.4% Electric Utilities - 7.5% 1,000,000 B+/B3 CMS Energy Corp., 7.5%, 1/15/09 $ 995,000 2,800,000 B+/B3 CMS Energy Corp., 7.75%, 8/1/10 2,786,000 2,000,000 CCC+/B3 Allegheny Energy Supply, 7.8%, 3/15/11 1,955,000 1,500,000 CCC+/B3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,483,125 ----------- $ 7,219,125 ----------- Total Utilities $ 7,219,125 ----------- TOTAL CORPORATE BONDS (Cost $56,297,175) $56,384,824 -----------
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 Value TEMPORARY CASH INVESTMENT - 4.1% Security Lending Collateral - 4.1% $ 3,990,710 Securities Lending Investment Fund, 1.29% $ 3,990,710 ------------ TOTAL TEMPORARY CASH INVESTMENT (Cost $3,990,710) $ 3,990,710 ------------ TOTAL INVESTMENT IN SECURITIES - 101.7% (Cost $96,881,771)(a) $ 97,689,703 ------------ OTHER ASSETS AND LIABILITIES - (1.7)% $ (1,635,148) ------------ TOTAL NET ASSETS - 100% $ 96,054,555 ============
144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $15,138,100 or 15.8% of net assets. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 285,000 Flir Systems Inc., 3.0%, 6/1/23 $ 403,251 1,306,250 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 1,225,358 329,000 Graftech International, 1.625%, 1/15/24 (144A) 295,568 760,000 Manitowoc Co. Inc., 7.125%, 11/1/13 768,875 404,000 Roper Industries Inc., 1.4813%, 1/15/34 184,681 100,000 Sonic Automotive Inc., 5.25%, 5/7/09 97,648 950,000 Triquint Semiconductor, 4.0%, 3/1/07 920,998 ---------- Total $3,896,379 ==========
The accompanying notes are an integral part of these financial statements. 77 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value CONVERTIBLE CORPORATE BONDS - 3.1% Pharmaceuticals & Biotechnology - 0.8% Biotechnology - 0.8% 90,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 84,375 150,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 151,875 ----------- Total Pharmaceuticals & Biotechnology $ 236,250 ----------- Technology Hardware & Equipment - 1.1% Communications Equipment - 0.6% 200,000 B-/B3 Nortel Networks, 4.25%, 9/1/08 $ 191,500 ----------- Electronic Manufacturing Services - 0.4% 150,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 140,250 ----------- Total Technology Hardware & Equipment $ 331,750 ----------- Semiconductors - 1.2% Semiconductor Equipment - 0.8% 170,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 $ 165,750 100,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 99,125 ----------- $ 264,875 ----------- Semiconductors - 0.4% 130,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 124,475 ----------- Total Semiconductors $ 389,350 ----------- TOTAL CONVERTIBLE CORPORATE BONDS (Cost $852,165) $ 957,350 ----------- ASSET BACKED SECURITIES - 2.7% Diversified Financials - 1.3% Consumer Finance - 0.1% DKK 98,058 AA+/Aa1 Realkredit Danmark, 7.0%, 10/1/32 $ 17,475 ----------- Diversified Financial Services - 1.3% 229,036 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 225,855 172,022 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 175,165 ----------- $ 401,020 ----------- Total Diversified Financials $ 418,495 ----------- Real Estate - 0.5% Real Estate Investment Trusts - 0.5% 160,000 BBB-/Baa3 Global Signal Trust, 5.395%, 1/15/34 (144A) $ 153,739 ----------- Total Real Estate $ 153,739 ----------- Utilities - 0.8% Electric Utilities - 0.8% 247,500 BBB-/Baa3 Empresa Electric Guacolda, 8.625%, 4/30/13 $ 256,835 ----------- Total Utilities $ 256,835 ----------- TOTAL ASSET BACKED SECURITIES (Cost $855,330) $ 829,069 -----------
78 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value CORPORATE BONDS - 55.7% Miscellaneous - 0.5% 150,000 B/B3 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 151,500 ----------- Total Miscellaneous $ 151,500 ----------- Energy - 5.1% Oil & Gas Drilling - 0.6% ITL 275,000,000 BBB-/Baa2 Petroleos Mexicanos, 7.375%, 8/13/07 $ 186,963 ----------- Oil & Gas Equipment And Services - 0.3% 76,000 B+/B3 Transmontaigne Inc., 9.125%, 6/1/10 $ 78,280 ----------- Oil & Gas Exploration & Production - 3.3% 80,000 B/B2 Compton Petroleum Corp., 9.9%, 5/15/09 $ 87,400 200,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 209,500 200,000 BB/Ba3 Cie Generale De Geophysique SA, 10.625%, 11/15/07 213,000 55,000 B/B2 Comstock Resources, Inc., 6.875%, 3/1/12 52,250 50,000 B/B2 Paramount Resources, Ltd., 8.875%, 7/15/2014 49,875 300,000 BB-/Ba2 Gaz Capital SA, 8.625%, 4/28/34 (144A) 290,625 100,000 B/B3 Paramount Resources, Ltd., 7.875%, 11/1/10 95,500 ----------- $ 998,150 ----------- Oil & Gas Refining Marketing & Transportation - 0.9% 75,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 82,125 200,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%, 6/1/14 200,898 ----------- $ 283,023 ----------- Total Energy $ 1,546,416 ----------- Materials - 11.2% Commodity Chemicals - 1.0% 100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 98,000 105,000 BBB-/Ba1 Methanex Corp., 7.75%, 8/15/05 109,463 25,000 B+/B1 Lyondell Petrochemical Co., 9.875%, 5/1/07 26,125 75,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 78,375 ----------- $ 311,963 ----------- Construction Materials - 1.9% NOK 2,700,000 NR/NR Kvaerner A.S., 0.0%, 10/30/11 $ 245,373 NOK 60,000 NR/NR Kvaerner A.S., 0.0%, 10/30/11 37,800 300,000 B/B2 Ship Finance International, Ltd., 8.5%, 12/15/13 (144A) 289,500 ----------- $ 572,673 ----------- Diversified Chemical - 0.5% EUR 130,000 CCC+/Caa1 Huntsman ICI Chemicals LLC, 10.125%, 7/1/09 $ 156,937 ----------- Diversified Metals & Mining - 2.0% 140,000 B-/B2 Freeport-McMoran Copper & Gold, 10.125%, 2/1/10 $ 154,700 250,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 228,750 150,000 NR/Ba2 Vale Overseas, Ltd., 8.25%, 1/17/34 130,500 100,000 BBB/Ba1 Kennametal, Inc., 7.2%, 6/15/12 105,762 ----------- $ 619,712 ----------- Forest Products - 0.2% 75,000 B+/B1 Ainsworth Lumber, 6.75%, 3/15/14 (144A) $ 70,312 -----------
The accompanying notes are an integral part of these financial statements. 79 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Metal & Glass Containers - 1.1% 130,000 B+/B2 Greif Brothers Corp., 8.875%, 8/1/12 $ 139,912 EUR 150,000 B+/NR Crown Holdings, 10.25%, 3/1/11 202,116 ----------- $ 342,028 ----------- Paper Packaging - 0.2% 10,000 B/B2 Stone Container Corp., 9.75%, 2/1/11 $ 11,000 50,000 B/B2 Stone Container Corp., 8.375%, 7/1/12 52,250 ----------- $ 63,250 ----------- Paper Products - 0.3% 100,000 BB/Ba2 Abitibi-Consolidated Inc., 6.0%, 6/20/13 $ 88,507 ----------- Specialty Chemicals - 2.0% 135,000 B-/B3 United Industries Co., 9.875%, 4/1/09 $ 140,400 170,000 B-/Caa2 OM Group, Inc., 9.25%, 12/15/11 174,250 100,000 BBB-/Baa3 Ferro Corp., 7.125%, 4/1/28 100,728 EUR 45,000 CCC+/Caa1 Rhodia SA, 9.25%, 6/1/11 (144A) 45,819 EUR 140,000 CCC+/B3 Rhodia SA, 8.0%, 6/1/10 (144A) 155,352 ----------- $ 616,549 ----------- Steel - 2.0% 150,000 BB/Ba3 International Steel Group, 6.5%, 4/15/14 (144A) $ 140,625 200,000 B-/Caa1 Ispat Inland ULC, 9.75%, 4/1/14 (144A) 206,000 325,000 B+/B1 CSN Islands VIII Corp., 9.75%, 12/16/13 (144A) 290,875 ----------- $ 637,500 ----------- Total Materials $ 3,479,431 ----------- Capital Goods - 6.3% Aerospace & Defense - 1.3% 200,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 7/15/13 $ 193,000 100,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 97,500 100,000 CCC+/Caa2 Hexcel Corp., 9.75%, 1/15/09 104,875 ----------- $ 395,375 ----------- Building Products - 0.5% 50,000 B-/B3 US Concrete, Inc., 8.375%, 4/1/14 (144A) $ 49,875 90,000 B+/B2 NCI Building Systems, Inc., 9.25%, 5/1/09 94,500 ----------- $ 144,375 ----------- Construction & Farm Machinery & Heavy Trucks - 0.7% 75,000 BB+/Ba2 Cummins, Inc., 7.125%, 3/1/28 $ 71,250 140,000 B-/B3 American Rock Salt Co. LLC, 9.5%, 3/15/14 (144A) 143,500 ----------- $ 214,750 ----------- Constuction & Engineering - 0.3% 100,000 B+/B2 North American Energy Partners, 8.75%, 12/1/11 (144A) $ 99,000 ----------- Electrical Component & Equipment - 0.2% 50,000 BB-/Ba2 MSW Energy Holdings, 7.375%, 9/1/10 (144A) $ 49,750 ----------- Heavy Electrical Equipment - 0.6% 199,780 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 $ 188,792 -----------
80 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Industrial Machinery - 2.7% 125,000 B/B2 The Manitowoc Co., Inc., 10.5%, 8/1/12 (144A) $ 143,125 125,000 BB+/Ba3 SPX Corp., 7.5%, 1/1/13 128,125 175,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 (a) 178,062 250,000 B+/Ba2 Sun Sage BV, 8.25%, 3/26/09 (144A) 241,875 125,000 BBB-/Ba1 Timken Co., 5.75%, 2/15/10 125,262 ----------- $ 816,449 ----------- Total Capital Goods $ 1,908,491 ----------- Commercial Services & Supplies - 1.3% Commercial Printing - 0.7% 200,000 B/B1 Sheridan Group, 10.25%, 8/15/11 (144A) $ 210,500 ----------- Diversified Commercial Services - 0.4% 115,000 B-/B3 Cornell Co's, Inc., 10.75%, 7/1/12 (144A) $ 116,150 ----------- Environmental Services - 0.2% 75,000 B-/B3 IESI Corp., 10.25%, 6/15/12 $ 81,750 ----------- Total Commercial Services & Supplies $ 408,400 ----------- Transportation - 2.2% Air Freight & Couriers - 0.5% 130,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 136,500 ----------- Airlines - 0.5% 50,000 CCC/Caa2 AMR Corp., 9.0%, 9/15/16 $ 37,750 85,000 CCC/Caa2 AMR Corp., 9.8%, 10/1/21 61,200 35,000 CCC/Caa2 AMR Corp., 9.0%, 8/1/12 (a) 27,650 50,000 B-/Caa1 Northwest Airlines, Inc., 9.875%, 3/15/07 39,500 ----------- $ 166,100 ----------- Marine - 0.3% 100,000 B-/B3 Horizon Lines LLC, 9.0%, 11/1/12 (144A) $ 100,000 ----------- Railroads - 0.4% 120 B/B3 Atlantic Express Transport, 12.0%, 4/15/08 $ 118,800 ----------- Transportation - 0.5% 150,000 B/B2 TFM SA De CV, 11.75%, 6/15/09 $ 146,250 ----------- Total Transportation $ 667,650 ----------- Automobiles & Components - 0.5% Auto Parts & Equipment - 0.4% 140,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 126,000 ----------- Automobile Manufacturers - 0.1% 35,000 BBB-/A3 Ford Motor Credit Co., 5.8%, 1/12/09 $ 35,329 ----------- Total Automobiles & Components $ 161,329 ----------- Hotels Restaurants & Leisure - 0.8% Hotels, Resorts & Cruise Lines - 0.8% 100,000 BB+/Ba1 Starwood Hotels & Resorts, 7.875%, 5/1/12 $ 107,000 125,000 B/B2 John Q Hamons Hotels, 8.875%, 5/15/12 135,625 ----------- Total Hotels Restaurants & Leisure $ 242,625 -----------
The accompanying notes are an integral part of these financial statements. 81 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Media - 1.6% Broadcasting & Cable TV - 1.3% EUR 100,000 B-/B3 Telenet Communication NV, 9.0%, 12/15/13 (144A) $ 121,330 100,000 B/B3 Kabel Deutschland GMBH, 10.625%, 7/1/14 (144A) 102,750 175,000 BB-/Ba3 Echostar DBS Corp., 6.375%, 10/1/11 (144A) 172,375 ----------- $ 396,455 ----------- Publishing - 0.3% 80,000 BBB-/Baa3 News America Holdings, 8.5%, 2/23/25 $ 96,330 ----------- Total Media $ 492,785 ----------- Retailing - 1.3% Department Stores - 0.5% 150,000 BB+/Ba3 J.C. Penney, 7.125%, 11/15/23 $ 153,750 ----------- Specialty Stores - 0.8% 100,000 BB/Ba2 Toys R Us, 7.375%, 10/15/18 $ 92,375 145,000 B/B3 Asbury Automotive Group, 8.0%, 3/15/14 138,475 ----------- $ 230,850 ----------- Total Retailing $ 384,600 ----------- Food, Beverage & Tobacco - 1.1% Brewers - 0.7% 220,000 BBB-/Baa3 CIA Brasileira De Bebida, 8.75%, 9/15/13 (144A) $ 232,100 ----------- Soft Drinks - 0.3% 80,000 BBB-/Baa3 CIA Brasileira de Bebida, 10.5%, 12/15/11 $ 91,600 ----------- Total Food, Beverage & Tobacco $ 323,700 ----------- Household & Personal Products - 0.4% Household Products - 0.4% 125,000 B-/B3 Solo Cup Co., 8.5%, 2/15/14 (144A) $ 116,250 ----------- Total Household & Personal Products $ 116,250 ----------- Health Care Equipment & Services - 1.8% Health Care Distributors - 0.2% 60,000 BB+/Ba2 Omnicare, Inc., 6.125%, 6/1/13 $ 57,300 ----------- Health Care Facilities - 1.2% 165,000 B-/B3 Curative Health Services, 10.75%, 5/1/11 (144A) $ 158,400 200,000 BBB-/Ba1 HCA, Inc., 6.3%, 10/1/12 200,103 ----------- $ 358,503 ----------- Health Care Supplies - 0.4% 125,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 127,812 ----------- Total Health Care Equipment & Services $ 543,615 ----------- Pharmaceuticals & Biotechnology - 0.3% Pharmaceuticals - 0.3% 80,000 B/B3 Alaris Medical, Inc., 7.25%, 7/1/11 $ 88,000 ----------- Total Pharmaceuticals & Biotechnology $ 88,000 ----------- Banks - 0.1% Diversified Banks - 0.1% 15,000 BBB+/A1 Skandinaviska Enskilda Bank, 8.125%, 9/6/49 (144A) $ 16,394 ----------- Total Banks $ 16,394 -----------
82 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Diversified Financials - 5.6% Investment Banking & Brokerage - 1.6% EUR 200,000 B-/B3 BCP Caylux Holdings Lux SCA, 10.375%, 6/15/14 (144A) $ 257,903 225,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11 (144A) 223,875 ----------- $ 481,778 ----------- Diversified Financial Services - 2.2% 157,000 CCC/Caa1 Alamosa Delaware, Inc., 0.0%, 7/31/09 $ 151,505 210,000 B/B3 Dollar Financial Group, 9.75%, 11/15/11 (144A) 219,450 315,000 BBB/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) 292,175 ----------- $ 663,130 ----------- Specialized Finance - 1.8% 100,000 B-/B3 UGS Corp., 10.0%, 6/1/12 (144A) $ 106,500 200,000 B/B2 Inmarsat Finance Plc, 7.625%, 6/3/12 (144A) 193,500 80,000 BBB-/Baa3 GATX Financial Corp., 8.875%, 6/1/09 89,757 145,000 BB-/B3 Consolidated Commercial Holdings, 9.75%, 4/1/12 (144A) 147,175 ----------- $ 536,932 ----------- Total Diversified Financials $ 1,681,840 ----------- Insurance - 4.5% Life & Health Insurance - 1.8% 265,000 B+/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 265,994 300,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 (a) 285,692 ----------- $ 551,686 ----------- Multi-Line Insurance - 0.6% 210,000 BB/Ba3 Allmerica Financial Corp., 7.625%, 10/15/25 $ 197,400 ----------- Property & Casualty Insurance - 1.4% 285,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 280,098 150,000 BB-/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 150,318 ----------- $ 430,416 ----------- Reinsurance - 0.7% 200,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 214,993 ----------- Total Insurance $ 1,394,495 ----------- Real Estate - 2.3% Real Estate Management & Development - 0.9% 100,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 $ 97,500 185,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 185,925 ----------- $ 283,425 ----------- Real Estate Investment Trusts - 1.4% 120,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 118,800 155,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 161,975 150,000 B-/B1 Meristar Hospitality Operations Finance Corp., 10.5%, 6/15/09 159,750 ----------- $ 440,525 ----------- Total Real Estate $ 723,950 -----------
The accompanying notes are an integral part of these financial statements. 83 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Technology Hardware & Equipment - 2.0% Communications Equipment - 0.7% 150,000 BB+/Ba2 Corning, Inc., 6.3%, 3/1/09 $ 152,749 50,000 BB+/Ba2 Corning, Inc., 5.9%, 3/15/14 46,750 ----------- $ 199,499 ----------- Electronic Manufacturing Services - 0.2% 50,000 BB-/Ba2 Sanmina-SCI Corp., 10.375%, 1/15/10 $ 57,250 ----------- Office Electronics - 0.4% 120,000 B-/B3 Xerox Corp., 8.0%, 2/1/27 $ 109,500 ----------- Technology Distributors - 0.7% 200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 $ 208,912 ----------- Total Technology Hardware & Equipment $ 575,161 ----------- Telecommunication Services - 5.9% Integrated Telecom Services - 2.4% 125,000 B+/B2 GCI, Inc., 7.25%, 2/15/14 $ 119,375 125,000 CCC/B3 Primus Telecomm Group., 8.0%, 1/15/14 (144A) 110,000 150,000 B-/B3 TSI Telecommunication Services, 12.75%, 2/1/09 161,250 145,000 B+/B2 Innova S De R.L., 9.375%, 9/19/13 151,887 200,000 NR/Baa3 Tele Norte Leste Participacoes SA, 8.0%, 12/18/13 (144A) 179,001 ----------- $ 721,513 ----------- Wireless Telecom Services - 3.5% 150,000 CCC/Caa1 Alamosa Delaware, Inc., 8.5%, 1/31/12 (144A) $ 147,000 170,000 CCC+/B3 MetroPCS, Inc., 10.75%, 10/1/11 (144A) 184,450 275,000 CCC/Caa1 Ubiquitel Operating Co., 9.87%, 3/1/11 (144A) 275,000 CAD 240,000 BB+/Ba3 Rogers Cantel, Inc., 10.5%, 6/1/06 194,866 150,000 CCC+/B3 Mobifon Holdings, 12.5%, 7/31/10 (144A) 171,000 115,000 B+/Ba3 Mobile Telesystems Finance, 8.375%, 10/14/10 (144A) 108,388 ----------- $ 1,080,704 ----------- Total Telecommunication Services $ 1,802,217 ----------- Utilities - 0.9% Electric Utilities - 0.6% 189,200 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) $ 185,416 ----------- Multi-Utilities & Unregulated Power - 0.3% 30,000 B/B1 Reliant Resources, Inc., 9.25%, 7/15/10 $ 32,025 60,000 B/B1 Reliant Resources, Inc., 9.5%, 7/15/13 64,650 ----------- $ 96,675 ----------- Total Utilities $ 282,091 ----------- TOTAL CORPORATE BONDS (Cost $16,575,719) $16,990,940 -----------
84 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.4% 395,358 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 to 11/1/33 $ 404,327 350,035 AAA/Aaa Federal Home Loan Mortgage Corp. (Gold), 5.0%, 6/1/34 338,260 91,229 AAA/Aaa Federal Home Loan Mortgage Corp. (Gold), 6.0%, 11/1/33 93,293 86,744 AAA/Aaa Federal Home Loan Bank, 5.5%, 10/1/16 88,915 415,710 AAA/Aaa Federal Home Loan Bank, 6.0%, 6/1/17 433,784 250,000 AAA/Aaa Federal National Mortgage Association, 6.0%, TBA 255,156 414,338 AAA/Aaa Federal National Mortgage Association, 5.5%, 3/1/18 to 5/1/34 419,071 767,760 AAA/Aaa Federal National Mortgage Association, 6.0%, 7/1/17 to 1/1/34 788,211 AUD 300,000 AAA/Aaa Federal National Mortgage Association, 6.375%, 8/15/07 212,738 28,419 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/31 to 2/1/32 29,638 2,293 AAA/Aaa Federal National Mortgage Association, 7.0%, 9/1/29 2,428 462 AAA/Aaa Federal National Mortgage Association, 7.5%, 6/1/30 496 198,714 AAA/Aaa Government National Mortgage Association, 5.5%, 4/20/34 198,549 1,588,679 AAA/Aaa Government National Mortgage Association, 6.0%, 6/15/17 to 10/15/33 1,638,648 628,729 AAA/Aaa Government National Mortgage Association, 6.5% 3/15/29 to 1/15/34 657,893 10,160 AAA/Aaa Government National Mortgage Association, 7.0%, 3/15/31 10,800 33,092 AAA/Aaa Government National Mortgage Association, 7.5% 5/15/23 35,339 445,636 AAA/Aaa Government National Mortgage Association II, 6.0%, 11/20/33 456,882 196,808 AAA/Aaa Government National Mortgage Association II, 5.5%, 3/20/34 196,644 75,000 AAA/Aaa U.S. Treasury Bond, 5.25%, 2/15/29 73,535 190,000 AAA/Aaa U.S. Treasury Notes 5.375%, 2/15/31 191,625 ----------- TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $6,520,373) $ 6,526,232 ----------- FOREIGN GOVERNMENT BONDS - 12.8% ITL 410,000,000 B+/B2 Banco Nac De Desen Econo , 8.0% 4/28/10 $ 229,962 CAD 27,000 AAA/Aaa Canadian Government, 4.25%, 9/1/08 20,345 CAD 315,000 AAA/Aaa Canadian Government, 5.25%, 6/1/12 243,276 CAD 200,000 AAA/Aaa Candian Government, 5.75%, 9/1/06 157,301 100,000 B+/B2 Federal Republic of Brazil, 11.0%,1/11/12 100,600 AUD 150,000 AAA/Aaa Government of Australia, 4.0%, 8/20/15 145,242 EUR 343,000 AAA/Aaa Government of France, 3.0%, 7/25/09 486,153 SEK 5,000 TSY/Aaa Swedish Government, 5.25%, 3/15/11 698 NOK 3,410,000 TSY/Aaa Norwegian Government, 6.75%, 1/15/07 534,409 AUD 332,000 AA/Aa2 Ontario Province, 5.5%, 4/23/13 219,785 AUD 207,000 NR/Aaa Queensland Treasury, 6.0%, 8/14/13 144,105 253,509 BB+/Ba2 Republic of Columbia, 9.75%, 4/9/11 280,127 185,000 BB-/Ba3 Republic of Peru, 8.375%, 5/3/16 172,050 EUR 125,000 BBB/Baa2 Republic of South Africa, 5.25%, 5/16/13 148,233 145,000 BB+/Baa3 Russia Regs., 5.0%, 3/31/30 132,385 SEK 2,955,000 TSY/Aaa Swedish Government, 5.5%, 10/08/12 418,061 SEK 2,150,000 TSY/Aaa Swedish Government, 8.0%, 8/15/07 322,873 AUD 25,000 AA+/Aa1 Swedish Export Credit, 4.1%, 2/13/06 16,994 DEM 180,000 BBB-/Baa3 United Mexican States, 8.25%, 2/24/09 127,161 ----------- TOTAL FOREIGN GOVERNMENT BONDS (Cost $3,492,603) $ 3,899,760 -----------
The accompanying notes are an integral part of these financial statements. 85 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings USD ($) (unaudited) Value SOVEREIGN ISSUES - 0.7% 75,000 CC/B3 Dominican Republic, 9.04%, 1/23/13 (144A) $ 47,250 75,000 BB-/Ba3 Republic of Peru, 9.125%, 2/21/12 76,875 100,000 BB-/Ba3 Republic of Peru, 9.875%, 2/6/15 104,500 ----------- TOTAL SOVEREIGN ISSUES (Cost $267,376) $ 228,625 ----------- SUPERNATIONAL BONDS - 0.5% Insurance - 0.5% NZD 258,000 AAA/Aaa International Finance Corp., 6.75%, 7/15/09 $ 164,996 ----------- TOTAL SUPERNATIONAL BONDS (Cost $113,817) $ 164,996 ----------- MUNICIPAL BONDS - 1.2% 90,000 BBB/Baa3 Golden State Tobacco Securitization, 6.75%, 6/1/39 $ 80,862 100,000 NR/NR Wayne Charter County SPL, 6.75%, 12/1/15 85,344 175,000 B/Caa2 New Jersey Economic Development Authority Special Facility Revenue, 7.0%, 11/15/30 135,630 60,000 BBB/Baa3 Tobacco Settlement Financing Corp., 7.0%, 6/1/41 55,553 ----------- TOTAL MUNICIPAL BONDS (Cost $346,230) $ 357,389 ----------- Shares TEMPORARY CASH INVESTMENT - 1.9% Securities Lending Collateral - 1.8% 578,396 Securities Lending Investment Fund, 1.29% $ 578,395 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $578,396) $ 578,395 ----------- TOTAL INVESTMENT IN SECURITIES - 97.8% (Cost $29,602,009)(a) $30,532,756 ----------- OTHER ASSETS AND LIABILITIES - 2.2% $ 696,710 ----------- TOTAL NET ASSETS - 100.0% $31,229,467 ===========
86 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- N/R Not rated by either S&P or Moddy's TSY Treasury Security * Non-income producing security. TBA TBA (To Be Assigned) securities are purchased on a forward commitment basis with an approximate (generally plus/minus 2.5%) principal and no definite maturity date period The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. (144A) Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $7,731,379 or 24.7% of total net assets. Note: The Porfolio's investments in mortgage-backed securites of the Government Mortgage Association (GNMA) and the Federal National Mortgage Association (FNMA) are interests in separate pools of mortgages. All separate investments in the issuer which have the same coupon rate have been aggregated for the purpose of presentation in the schedule of investments. Note: Principal amounts are denominated in US dollars unless otherwise denoted. AUD Australian dollar DKK Danish kroner. EURO Euro dollar. NZD New Zealand dollar. DEM Deutsche Marks. CAD Canadian Dollar. ITL Italian Lira. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 33,250 AMR Corp., 9.0%, 8/1/12 $ 27,174 166,250 JLG Industries Inc., 8.375%, 6/15/12 169,740 95,000 Lucent Technologies, Inc., 5.5%, 11/15/08* 90,190 285,000 Provident Companies Inc., 7.0%, 7/15/18 278,708 ---------- Total $ 565,812* ==========
*Security sold as of June 30, 2004, but not returned from loan. The accompanying notes are an integral part of these financial statements. 87 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Principal Amount Value CORPORATE BONDS - 0.6% Miscellaneous - 0.6% $ 250,000 Private Export Funding, 3.375%, 2/15/09 $ 242,131 ----------- TOTAL CORPORATE BONDS (Cost $240,945) $ 242,131 ----------- U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 93.1% 550,000 Federal Farm Credit Bank, 6.5%, 9/29/06 $ 589,480 100,000 Federal Farm Credit Bank, 5.88%, 9/8/08 107,242 400,000 Federal Farm Credit Bank, 4.9%, 3/17/14 375,846 200,000 Federal Farm Credit Bank, Medium Term Note, 6.38%, 11/27/06 214,430 400,000 Federal Home Loan Mortgage Corp., 4.53%, 10/30/06 411,843 850,000 Federal Home Loan Mortgage Corp., 5.875%, 11/15/07 909,101 300,000 Federal Home Loan Mortgage Corp., 5.89%, 6/30/08 322,359 3,921,848 Federal Home Loan Mortgage Corp., 6.0%, 10/1/32 to 5/1/34 4,011,435 901,212 Federal Home Loan Mortgage Corp., 6.5%, 1/1/29 to 7/1/32 940,477 140,000 Federal Home Loan Mortgage Corp., 6.7%, 1/5/07 151,495 185,833 Federal Home Loan Mortgage Corp., 7.0%, 4/1/30 to 4/1/32 196,977 73,070 Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 78,699 2,419,765 Federal National Mortgage Association, 5.5%, 3/1/18 to 3/1/34 2,436,771 2,289,692 Federal National Mortgage Association, 6.0%, 12/1/11 to 6/1/33 2,349,031 500,000 Federal National Mortgage Association, 6.5%, TBA 30 Year 520,469 1,720,919 Federal National Mortgage Association, 6.5%, 7/1/21 to 9/1/32 1,794,641 467,446 Federal National Mortgage Association, 7.0%, 9/1/18 to 1/1/32 495,003 35,476 Federal National Mortgage Association, 7.5%, 2/1/31 38,031 81,061 Federal National Mortgage Association, 9.0%, 4/1/33 90,116 500,000 Government National Mortgage Association, 4.5%, TBA 30 Year 469,375 723,092 Government National Mortgage Association, 4.5%, 8/15/33 to 6/15/34 680,471 374,405 Government National Mortgage Association, 5.0%, 7/15/17 379,866 1,305,089 Government National Mortgage Association, 5.5%, 4/15/31 to 7/1/33 1,306,546 3,966,710 Government National Mortgage Association, 6.0%, 5/15/17 to 9/15/33 4,079,080 3,312,786 Government National Mortgage Association, 6.5%, 4/15/17 to 1/15/34 3,470,454 940,004 Government National Mortgage Association, 7.0%, 1/15/26 to 4/15/33 999,827 172,281 Government National Mortgage Association, 7.5%, 10/15/22 to 1/15/32 185,983 148,618 Government National Mortgage Association I, 6.0%, 11/15/30 152,523 275,243 Government National Mortgage Association I, 6.5%, 5/15/29 to 5/15/31 288,099 125,788 Government National Mortgage Association I, 7.0%, 11/15/30 to 12/15/30 133,783 35,837 Government National Mortgage Association I, 7.5%, 1/15/31 38,624 416,154 Government National Mortgage Association II, 5.0%, 12/20/18 418,994 488,390 Government National Mortgage Association II, 5.5%, 12/20/34 487,983 607,748 Government National Mortgage Association II, 6.0%, 12/20/18 to 6/20/34 624,636 200,086 Government National Mortgage Association II, 6.5%, 8/20/28 to 9/20/31 209,062 255,695 Government National Mortgage Association II, 7.0%, 5/20/26 to 1/20/31 271,797 13,284 Government National Mortgage Association II, 7.5%, 8/20/27 14,326 4,640 Government National Mortgage Association II, 8.0%, 8/20/25 5,091 12,000 Tennessee Valley Authority, 6.75%, 6/1/28 282,000 400,000 U.S. Treasury Bonds, 7.25%, 5/15/16 483,578 925,000 U.S. Treasury Bonds, 6.375%, 8/15/27 1,044,058 4,700,000 U.S. Treasury Notes, 6.5%, 2/15/10 5,295,946
88 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount Value U.S. Government and Agency Obligations - (Cont.) $ 200,000 U.S. Treasury Notes, 4.75%, 5/15/14 $ 202,086 1,850,000 U.S. Treasury Notes, 6.25%, 8/15/23 2,048,587 ------------ TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $39,224,189) $ 39,606,221 ------------ COLLATERALIZED MORTGAGE OBLIGATIONS - 1.7% Government - 1.7% 250,000 Freddie Mac 3.2%, 5/21/08 $ 244,210 300,000 Freddie Mac 5.25%, 11/15/12 294,354 191,180 Freddie Mac 5.0%, 1/15/16 195,031 ------------ TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS - 1.72% (Cost $749,943) $ 733,595 ------------ TEMPORARY CASH INVESTMENT - 7.0% Repurchase Agreement - 7.0% 3,000,000 UBS Warburg 1.25% dated 6/30/04, repurchase price of $3.000,000 plus accrued interest on 7/1/04, collateralized by $2,911,000 U.S. Treasury Note, 5.75%, 11/15/05 $ 3,000,000 ------------ TOTAL TEMPORARY CASH INVESTMENT - 7.0% (Cost $3,000,000) $ 3,000,000 ------------ TOTAL INVESTMENTS IN SECURITIES - 102.4% (Cost $43,215,077) $ 43,581,947 ------------ OTHER ASSETS AND LIABILITIES - (2.4%) $ (1,028,597) ------------ TOTAL NET ASSETS - 100.0% $ 42,553,350 ============
TBA (To Be Assigned) securities are purchased on a forward commitment basis with an approximate (generally plus/minus 2.5%) principal and no definite maturity date period. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. The accompanying notes are an integral part of these financial statements. 89 Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Principal Amount Value CORPORATE BONDS - 53.8% Energy - 5.1% Integrated Oil & Gas - 5.1% $ 1,500,000 Exxon Capital Corp., 0.00%, 11/15/04 $ 1,491,384 ----------- Total Energy $ 1,491,384 ----------- Capital Goods - 3.1% Industrial Conglomerates - 3.1% 400,000 Tennessee Valley Authority, 4.75%, 7/15/04 $ 400,539 500,000 GE Capital Corp., Floating Rate, 2/16/05 500,095 ----------- $ 900,634 ----------- Total Capital Goods $ 900,634 ----------- Food, Beverage & Tobacco - 4.2% Soft Drinks - 4.2% 1,220,000 Pepsico, Inc., 4.5%, 9/15/04 $ 1,228,102 ----------- Total Food, Beverage & Tobacco $ 1,228,102 ----------- Household & Personal Products - 1.8% Household Products - 1.8% 500,000 Procter & Gamble Co., 6.6%, 12/15/04 $ 512,116 ----------- Total Household & Personal Products $ 512,116 ----------- Pharmaceuticals & Biotechnology - 4.3% Pharmaceuticals - 4.3% 1,250,000 Abbott Laboratories, 5.125%, 7/1/04 $ 1,250,000 ----------- Total Pharmaceuticals & Biotechnology $ 1,250,000 ----------- Banks - 16.5% Diversified Banks - 16.5% 1,000,000 Associates Corp., Floating Rate, 6/27/05 $ 1,000,000 750,000 Bank of America Corp., Floating Rate, 1/31/05 751,623 750,000 Bank of America Corp., Floating Rate, 4/28/05 751,377 1,000,000 First Union Corp., Floating Rate, 3/31/05 1,003,015 300,000 First USA Bank, Floating Rate, 7/21/04 300,034 1,000,000 Wells Fargo Co., 6.625%, 7/15/04 1,002,086 ----------- $ 4,808,135 ----------- Total Banks $ 4,808,135 ----------- Diversified Financials - 14.9% Consumer Finance - 5.6% 1,635,000 National Rural Utilities, 5.25%, 7/15/04 $ 1,637,655 ----------- Investment Banking & Brokerage - 9.3% 500,000 Merrill Lynch, Floating Rate, 4/11/05 $ 500,000 500,000 Merril Lynch, Floating Rate, 10/29/04 500,775 Principal Amount Value $ 1,200,000 American Express, Floating Rate, 4/18/05 1,201,453 500,000 American Express, Floating Rate, 12/16/04 500,395 ----------- $ 2,702,623 ----------- Total Diversified Financials $ 4,340,278 ----------- Technology Hardware & Equipment - 3.9% Computer Hardware - 3.9% 500,000 IBM Corp., 6.0%, 11/30/04 $ 508,695 650,000 IBM Corp., Floating Rate, 9/10/04 650,197 ----------- Total Technology Hardware & Equipment $ 1,158,892 ----------- Total Corporate Bonds (Cost $15,689,541) $15,689,541 ----------- U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 37.8% Banks - 29.2% Thrifts & Mortgage Finance - 29.2% 2,500,000 Federal Home Loan Mortgage Corp., 4.5%, 8/15/04 $ 2,510,409 2,500,000 Federal National Mortgage Association, 6.5%, 8/15/04 2,515,785 500,000 Federal National Mortgage Association, 3.5%, 9/15/04 502,413 1,000,000 Federal National Mortgage Association, 1.56%, 5/16/05 1,000,000 2,000,000 Freddie Mac, Floating Rate, 2/4/05 1,999,667 ----------- $ 8,528,274 ----------- Total Banks $ 8,528,274 ----------- Government - 8.6% 500,000 Federal Home Loan Bank, 1.47%, 3/01/05 $ 500,000 1,000,000 Federal Home Loan Bank, 1.38%, 3/28/05 1,000,000 1,000,000 Federal Home Loan Bank, 1.28%, 4/22/05 1,000,000 ----------- $ 2,500,000 ----------- Total Government $ 2,500,000 ----------- TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $11,028,275) $11,028,274 -----------
90 The accompanying notes are an integral part of these financial statements. Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount Value TEMPORARY CASH INVESTMENTS - 24.1% Commercial Paper - 24.1% $ 1,500,000 American General Finance Corp., 1.17%, 7/19/04 $ 1,499,123 1,400,000 Coca-Cola Co., 1.08%, 7/12/04 1,399,538 1,500,000 EI Dupont, 1.16%, 7/22/04 1,498,985 1,300,000 Paccar Financial, 1.10%, 8/04/04 1,298,649 1,350,000 Toyota Motor Credit Corp., 1.18%, 7/23/04 1,349,027 ----------- $ 7,045,322 ----------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $7,045,321) $ 7,045,322 ----------- TOTAL INVESTMENT IN SECURITIES - 115.7% (Cost $33,763,137) $33,763,137 ----------- OTHER ASSETS AND LIABILITIES - (15.7)% $(4,584,371) ----------- TOTAL NET ASSETS - 100.0% $29,178,766 ===========
The accompanying notes are an integral part of these financial statements. 91 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 6/30/04 Year Ended Year Ended Year Ended Year Ended Year Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $17.37 $11.03 $11.23 $12.10 $ 18.75 $10.49 ------ ------ ------ ------ ------- ------ Increase (decrease) from investment operations: Net investment income (loss) $ 0.13 $ 0.20 $ 0.06 $ 0.15 $ (0.12) $(0.03) Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.98) 6.20 (0.19) (1.02) (6.20) 8.29 ------ ------ ------ ------ ------- ------ Net increase (decrease) from investment operations $(0.85) $ 6.40 $(0.13) $(0.87) $ (6.32) $ 8.26 Distributions to shareowners: Net investment income (0.15) (0.06) (0.07) -- -- -- Net realized gain -- -- -- -- (0.33) -- ------ ------ ------ ------ ------- ------ Net increase (decrease) in net asset value $(1.00) $ 6.34 $(0.20) $(0.87) $ (6.65) $ 8.26 ------ ------ ------ ------ ------- ------ Net asset value, end of period $16.37 $17.37 $11.03 $11.23 $ 12.10 $18.75 ====== ====== ====== ====== ======= ====== Total return* (4.94)% 58.17% (1.20)% (7.19)% (34.20)% 78.74% Ratio of net expenses to average net assets+ 1.75%** 1.75% 1.75% 1.66% 1.79% 1.88% Ratio of net investment income (loss) to average net assets+ 1.24%** 1.43% 0.63% 1.30% (0.59)% (0.74)% Portfolio turnover rate 64%** 79% 124% 175% 156% 144% Net assets, end of period (in thousands) $7,300 $8,399 $5,886 $6,896 $ 9,446 $9,679 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.87%** 2.51% 2.88% 3.83% 2.45% 6.56% Net investment income (loss) 1.12%** 0.67% (0.50)% (0.87)% (1.25)% (5.42)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.75%** 1.75% 1.75% 1.66% 1.75% 1.75% Net investment income (loss) 1.24%** 1.43% 0.63% 1.30% (0.55)% (0.61)%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. 92 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 9.05 $ 6.82 $ 8.42 $ 11.07 $ 13.61 $ 10.60 ------ ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.11 $ 0.09 $ 0.05 $ 0.01 $ (0.06) $ 0.05 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.01 2.17 (1.65) (2.51) (2.45) 2.97 ------ ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 0.12 $ 2.26 $ (1.60) $ (2.50) $ (2.51) $ 3.02 Distributions to shareowners: Net investment income (0.07) (0.03) -- (0.15) (0.02) -- Net realized gain -- -- -- -- (0.01) (0.01) ------ ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 0.05 $ 2.23 $ (1.60) $ (2.65) $ (2.54) $ 3.01 ------ ------- ------- ------- ------- ------- Net asset value, end of period $ 9.10 $ 9.05 $ 6.82 $ 8.42 $ 11.07 $ 13.61 ====== ======= ======= ======= ======= ======= Total return* 1.33% 33.26% (19.00)% (22.66)% (18.46)% 28.47% Ratio of net expenses to average net assets+ 1.50%** 1.50% 1.50% 1.50% 1.48% 1.53% Ratio of net investment income (loss) to average net assets+ 2.12%** 1.14% 0.68% 0.25% (0.28)% 0.56% Portfolio turnover rate 74%** 52% 94% 73% 92% 60% Net assets, end of period (in thousands) $8,563 $ 9,330 $ 8,696 $12,417 $18,474 $12,735 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.93%** 2.52% 2.21% 1.99% 1.55% 2.58% Net investment income (loss) 1.69%** 0.12% 0.03% (0.24)% (0.35)% (0.49)% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.50%** 1.50% 1.50% 1.50% 1.48 1.50% Net investment income (loss) 2.12%** 1.14% 0.68% 0.25% (0.28)% 0.60%
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 10.06 $ 7.79 $ 9.00 $ 11.83 $ 15.38 $ 10.79 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.07 $ 0.07 $ 0.03 $ 0.02 $ 0.01 $ 0.07 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.28 2.26 (1.23) (2.83) (3.45) 4.67 ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 0.35 $ 2.33 $ (1.20) $ (2.81) $ (3.44) $ 4.74 Distributions to shareowners: Net investment income (0.05) (0.06) (0.01) (0.02) (0.11) (0.15) ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 0.30 $ 2.27 $ (1.21) $ (2.83) $ (3.55) $ 4.59 ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 10.36 $ 10.06 $ 7.79 $ 9.00 $ 11.83 $ 15.38 ======= ======= ======= ======= ======= ======= Total return* 3.52% 30.06% (13.31)% (23.74)% (22.50)% 44.38% Ratio of net expenses to average net assets+ 1.68%** 1.69% 1.46% 1.38% 1.25% 1.22% Ratio of net investment income (loss) to average net assets+ 1.28%** 0.68% 0.62% 0.21% 0.10% 0.01% Portfolio turnover rate 189%** 99% 31% 39% 55% 90% Net assets, end of period (in thousands) $21,711 $22,506 $21,271 $32,083 $48,380 $69,192 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.68%** 1.69% 1.46% 1.38% 1.25% 1.22% Net investment income (loss) 1.28%** 0.68% 0.62% 0.21% 0.10% 0.01% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.68%** 1.69% 1.46% 1.38% 1.25% 1.22% Net investment income (loss) 1.28%** 0.68% 0.62% 0.21% 0.10% 0.01%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 93 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 11/8/01 6/30/04 Ended Ended to Class I (unaudited) 12/31/03 12/31/02 12/31/01(a) Net asset value, beginning of period $ 12.50 $ 9.23 $ 10.87 $10.00 ------- ------- ------- ------ Increase (decrease) from investment operations: Net investment income (loss) $ (0.02) $ -- $ (0.01) $ 0.01 Net realized and unrealized gain (loss) on investments and foreign currency transactions 1.02 3.27 (1.63) 0.86 ------- ------- ------- ------ Net increase (decrease) from investment operations $ 1.00 $ 3.27 $ (1.64) $ 0.87 Distributions to shareowners: Net investment income -- -- (0.00)(b) (0.00) Net realized gain -- -- (0.00)(b) -- ------- ------- ------- ------ Net increase (decrease) in net asset value $ 1.00 $ 3.27 $ (1.65) $ 0.87 ------- ------- ------- ------ Net asset value, end of period $ 13.50 $ 12.50 $ 9.23 $10.87 ======= ======= ======= ====== Total return* 8.00% 35.43% (15.08)% 8.70% Ratio of net expenses to average net assets 1.25%* * 1.25% 1.25% 1.21%** Ratio of net investment income (loss) to average net assets 0.34%* * 0.03% (0.05)% 0.86%** Portfolio turnover rate 43%** 74% 50% 0%** Net assets, end of period (in thousands) $14,543 $12,049 $ 6,603 $ 504 Ratios with no waiver of management fees and assumption of expenses by PIM: Net expenses 1.32%* * 2.40% 2.76% 77.48%** Net investment income (loss) (0.41)%** (1.12)% (1.56)% (75.41)%** Ratios with waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.25%* * 1.25% 1.25% 1.21%** Net investment income (loss) (0.34)%** 0.03% (0.05)% 0.86%**
(a) Shares of Pioneer Small Cap Value VCT Portfolio were first publicly offered on November 8, 2001. (b) Amount rounds to less than one cent per share * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. 94 The accompanying notes are an integral part of these financial statements. Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 1/19/01 6/30/04 Ended Ended to Class I (unaudited) 12/31/03 12/31/02 12/31/01(a) Net asset value, beginning of period $11.44 $ 9.13 $ 10.97 $10.00 ------ ------ ------- ------ Increase (decrease) from investment operations: Net investment income (loss) $(0.02) $ 0.00(b) $ 0.00(b) $ 0.02 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.73 2.31 (1.84) 0.95 ------ ------ ------- ------ Net increase (decrease) from investment operations $ 0.71 $ 2.31 $ (1.84) $ 0.97 Distributions to shareowners: Net investment income -- -- (0.00)(b) -- ------ ------ ------- ------ Net increase (decrease) in net asset value $ 0.71 $ 2.31 $ (1.84) $ 0.97 ------ ------ ------- ------ Net asset value, end of period $12.15 $11.44 $ 9.13 $10.97 ====== ====== ======= ====== Total return* 6.21% 25.30% (16.75)% 9.70% Ratio of net expenses to average net assets+ 1.25%** 1.25% 1.25%** 1.24%** Ratio of net investment income (loss) to average net assets+ (0.35)%** 0.02% 0.07%** 0.30%** Portfolio turnover rate 46%** 38% 53%** 72%** Net assets, end of period (in thousands) $3,574 $3,875 $ 3,441 $2,375 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.52%** 2.42% 2.68%** 7.49%** Net investment income (loss) (0.62)%** (1.15)% (1.36)%** (5.95)%** Ratio with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.25%* * 1.25% 2.68% 1.24%** Net investment income (loss) (0.35)%** 0.02% 1.36% 0.30%**
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 20.47 $ 14.94 $ 17.35 $ 17.79 $ 16.26 $ 14.49 -------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.05 $ 0.14 $ 0.07 $ 0.07 $ 0.13 $ 0.13 Net realized and unrealized gain (loss) on investments 1.76 5.45 (1.97) 1.06 2.62 1.77 -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ 1.81 $ 5.59 $ (1.90) $ 1.13 $ 2.75 $ 1.90 Distributions to shareowners: Net investment income (0.08) (0.06) (0.05) (0.10) (0.13) (0.13) Net realized gain (0.21) -- (0.46) (1.47) (1.09) -- -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ 1.52 $ 5.53 $ (2.41) $ (0.44) $ 1.53 $ 1.77 -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 21.99 $ 20.47 $ 14.94 $ 17.35 $ 17.79 $ 16.26 ======== ======== ======== ======== ======== ======== Total return* 8.85% 37.48% (11.21)% 6.49% 18.00% 13.13% Ratio of net expenses to average net assets+ 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76% Ratio of net investment income (loss) to average net assets+ 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77% Portfolio turnover rate 71%** 52% 68% 95% 85% 91% Net assets, end of period (in thousands) $198,767 $170,237 $120,687 $128,340 $111,466 $120,526 Ratio with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76% Net investment income (loss) 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77% Ratio with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76% Net investment income (loss) 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77%
(a) Shares of Pioneer Small Company VCT Portfolio were first publicly offered on January 19, 2001. (b) Amount rounds to less than one cent per share. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 95 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 12.22 $ 9.75 $ 14.95 $ 18.39 $ 21.92 $ 20.34 ------- ------- ------- ------- ------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.00 $ (0.01) $ 0.00(a) $ 0.01 $ (0.03) $ (0.02) Net realized and unrealized gain (loss) on investments (0.12) 2.48 (5.19) (3.45) (1.91) 1.64 ------- ------- ------- ------- ------- -------- Net increase (decrease) from investment operations $ (0.12) $ 2.47 $ (5.19) $ (3.44) $ (1.94) $ 1.62 Distributions to shareowners: Net investment income -- (0.00)(a) ( 0.01) -- (0.00) (0.01) Net realized gain -- -- -- -- (1.59) (0.03) ------- ------- ------- ------- ------- -------- Net increase (decrease) in net asset value $ (0.12) $ 2.47 $ (5.20) $ (3.44) $ (3.53) $ 1.58 ------- ------- ------- ------- ------- -------- Net asset value, end of period $ 12.10 $ 12.22 $ 9.75 $ 14.95 $ 18.39 $ 21.92 ======= ======= ======= ======= ======= ======== Total return* (0.98)% 25.35% (34.71)% (18.71)% (7.88)% 7.93% Ratio of net expenses to average net assets+ 0.90%** 1.08% 0.97% 0.85% 0.73% 0.76% Ratio of net investment income (loss) to average net assets+ 0.04%** (0.05)% 0.01% 0.07% (0.11)% (0.08)% Portfolio turnover rate 208%** 58% 86% 111% 95% 47% Net assets, end of period (in thousands) $32,969 $35,750 $34,746 $72,456 $105,855 $162,730 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.90%** 1.08% 0.97% 0.85% 0.73% 0.76% Net investment income (loss) 0.04%** (0.05)% 0.01% 0.07% (0.11)% (0.08)% Ratios with waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.90%** 1.08% 0.97% 0.85% 0.73% 0.76% Net investment income (loss) 0.04%** (0.05)% 0.01% 0.07% (0.11)% (0.08)%
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 $ 13.07 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.42 $ 0.74 $ 0.62 $ 0.68 $ 0.71 $ 0.66 Net realized and unrealized gain (loss) on investments 0.96 4.16 (0.23) 0.40 2.67 (1.20) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 1.38 $ 4.90 $ 0.39 $ 1.08 $ 3.38 $ (0.54) Distributions to shareowners: Net investment income (0.40) (0.64) (0.69) (0.56) (0.59) (0.60) Net realized gain -- -- -- -- -- (0.12) Tax return of capital -- (0.16) -- (0.17) (0.10) (0.08) ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 0.98 $ 4.10 $ (0.30) $ 0.35 $ 2.69 $ (1.34) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 19.55 $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 ======= ======= ======= ======= ======= ======= Total return* 7.40% 34.75% (2.53)% 7.80% 29.51% (4.17)% Ratio of net expenses to average net assets+ 0.94%** 1.03% 1.07% 1.16% 1.10% 1.15% Ratio of net investment income (loss) to average net assets+ 4.22%** 4.49% 4.76% 4.71% 5.02% 5.07% Portfolio turnover rate 43%** 20% 29% 34% 31% 54% Net assets, end of period (in thousands) $30,297 $31,891 $29,873 $33,026 $32,982 $28,318 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.30% Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 4.92% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.14% Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 5.08%
(a) Amount rounds to less than one cent per share. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. 96 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT Portfolio - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 18.70 $ 15.28 $ 19.08 $ 22.67 $ 22.70 $ 19.76 -------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.10 $ 0.20 $ 0.19 $ 0.17 $ 0.18 $ 0.16 Net realized and unrealized gain (loss) on investments 0.28 3.41 (3.81) (2.57) 0.10 2.97 -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ 0.38 $ 3.61 $ (3.62) $ (2.40) $ 0.28 $ 3.13 Distributions to shareowners: Net investment income (0.10) (0.19) (0.18) (0.17) (0.18) (0.17) Net realized gain -- -- -- (1.02) (0.13) (0.02) -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ 0.28 $ 3.42 $ (3.80) $ (3.59) $ (0.03) $ 2.94 -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 18.98 $ 18.70 $ 15.28 $ 19.08 $ 22.67 $ 22.70 ======== ======== ======== ======== ======== ======== Total return* 2.04% 23.76% 19.03% (10.85)% 1.22% 15.91% Ratio of net expenses to average net assets+ 0.71%** 0.76% 0.80% 0.74% 0.69% 0.70% Ratio of net investment income (loss) to average net assets+ 1.03%** 1.16% 1.09% 0.83% 0.78% 0.82% Portfolio turnover rate 25%** 11% 11% 7.0% 37% 8% Net assets, end of period (in thousands) $149,565 $154,839 $141,892 $199,160 $222,107 $204,927 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.71%** 0.76% 0.80% 0.74% 0.69% 0.70% Net investment income (loss) 1.03%** 1.16% 1.09% 0.83% 0.78% 0.82% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.71%** 0.76% 0.80% 0.74% 0.69% 0.70% Net investment income (loss) 1.03%** 1.16% 1.09% 0.83% 0.78% 0.82%
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 18.09 $ 15.11 $ 18.40 $ 21.28 $ 20.72 $ 21.44 -------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.22 $ 0.41 $ 0.42 $ 0.40 $ 0.51 $ 0.42 Net realized and unrealized gain (loss) on investments 0.49 2.96 (3.30) (1.86) 2.28 (0.15) -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ 0.71 $ 3.37 $ (2.88) $ (1.46) $ 2.79 $ 0.27 Distributions to shareowners: Net investment income (0.18) (0.39) (0.41) (0.36) (0.49) (0.41) Net realized gain -- -- -- (1.06) (1.74) (0.58) -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ 0.53 $ 2.98 $ (3.29) $ (2.88) $ 0.56 $ (0.72) -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 18.62 $ 18.09 $ 15.11 $ 18.40 $ 21.28 $ 20.72 ======== ======== ======== ======== ======== ======== Total return* 3.94% 22.61% (15.82)% (6.97)% 14.85% 1.21% Ratio of net expenses to average net assets+ 0.72%** 0.78% 0.80% 0.75% 0.71% 0.70% Ratio of net investment income (loss) to average net assets+ 2.34%** 2.55% 2.48% 2.07% 2.40% 1.97% Portfolio turnover rate 18%** 12% 12% 13% 13% 23% Net assets, end of period (in thousands) $158,805 $155,634 $133,258 $164,019 $181,920 $226,379 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.72%** 0.78% 0.80% 0.75% 0.71% 0.70% Net investment income (loss) 2.34%** 2.55% 2.48% 2.07% 2.40% 1.97% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.72%** 0.78% 0.80% 0.75% 0.71% 0.70% Net investment income (loss) 2.34%** 2.55% 2.48% 2.07% 2.40% 1.97%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 97 Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01(a) 12/31/00 12/31/99 Net asset value, beginning of period $ 14.04 $ 12.27 $ 13.91 $ 14.60 $ 14.31 $ 14.47 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.13 $ 0.23 $ 0.21 $ 0.34 $ 0.48 $ 0.51 Net realized and unrealized gain (loss) on investments 0.14 1.80 (1.63) (0.67) 0.29 (0.16) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 0.27 $ 2.03 $ (1.42) $ (0.33) $ 0.77 $ 0.35 Distributions to shareowners: Net investment income (0.13) (0.26) (0.22) (0.36) (0.48) (0.51) Net realized gain -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 0.14 $ 1.77 $ (1.64) $ (0.69) $ 0.29 $ (0.16) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 14.18 $ 14.04 $ 12.27 $ 13.91 $ 14.60 $ 14.31 ======= ======= ======= ======= ======= ======= Total return* 1.93% 16.71% (10.27)% (2.26)% 5.45% 2.53% Ratio of net expenses to average net assets+ 0.88%** 0.91% 0.95% 0.84% 0.82% 0.78% Ratio of net investment income (loss) to average net assets+ 1.76%** 1.75% 1.62% 2.42% 3.21% 3.58% Portfolio turnover rate 35%** 37% 179% 136% 15% 59% Net assets, end of period (in thousands) $37,641 $40,773 $42,849 $56,890 $59,545 $72,669 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.88%** 0.91% 0.95% 0.84% 0.82% 0.78% Net investment income (loss) 1.76%** 1.75% 1.62% 2.42% 3.21% 3.58% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.88%** 0.91% 0.95% 0.84% 0.82% 0.77% Net investment income (loss) 1.76%** 1.75% 1.62% 2.42% 3.21% 3.59%
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year 5/1/00 6/30/04 Ended Ended Ended to Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00(b) Net asset value, beginning of period $ 11.45 $ 9.27 $ 10.33 $ 9.82 $10.00 ------- ------- ------- ------- ------ Increase (decrease) from investment operations: Net investment income (loss) $ 0.31 $ 0.76 $ 0.92 $ 0.95 $ 0.61 Net realized and unrealized gain (loss) on investments (0.28) 2.18 (1.06) 0.62 (0.18) ------- ------- ------- ------- ------ Net increase (decrease) from investment operations $ 0.03 $ 2.94 $ (0.14) $ 1.57 $ 0.43 Distributions to shareowners: Net investment income (0.31) (0.76) ( 0.92) (0.95) (0.61) Net realized gain (0.05) -- -- (0.11) -- ------- ------- ------- ------- ------ Net increase (decrease) in net asset value $ (0.33) $ 2.18 $ (1.06) $ 0.51 $(0.18) ------- ------- ------- ------- ------ Net asset value, end of period $ 11.12 $ 11.45 $ 9.27 $ 10.33 $ 9.82 ======= ======= ======= ======= ====== Total return* 0.25% 32.78% (1.42)% 16.60% 4.12% Ratio of net expenses to average net assets+ 0.77%** 0.89% 1.02% 1.15% 1.25%** Ratio of net investment income (loss) to average net assets+ 5.53%** 7.22% 9.39% 9.15% 9.18%** Portfolio turnover rate 67%** 48% 42% 36% 33%** Net assets, end of period (in thousands) $63,375 $66,587 $41,111 $32,331 $6,849 Ratios with no waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.77%** 0.89% 1.02% 1.28% 2.35%** Net investment income (loss) 5.53%** 7.22% 9.39% 9.02% 8.08%**
(a) The Portfolio began accreting discounts and amortizing premiums on debt securities. The effect of this change for the year ended December 31, 2001, was to decrease net investment income by $0.00, increase net realized and unrealized gain (loss) by $0.00 (both amounts round to less than one cent per share) and to decrease the ratio of net investment income to average net assets with waiver of management fees by PIM and reduction for fees paid indirectly. Per share ratios and supplemental data for periods prior to January 1, 2001, have not been restated to reflect this change in presentation. (b) Shares of High Yield VCT Portfolio were first publicly offered on May 1, 2000. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. 98 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year 7/29/99 6/30/04 Ended Ended Ended Ended to Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99(a) Net asset value, beginning of period $ 11.01 $ 9.67 $ 9.33 $ 9.43 $ 9.75 $10.00 ------- ------- ------- ------ ------- ------ Increase (decrease) from investment operations: Net investment income (loss) $ 0.31 $ 0.62 $ 0.65 $ 0.67 $ 0.73 $ 0.28 Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.28) 1.38 0.32 (0.04) (0.32) (0.21) ------- ------- ------- ------ ------- ------ Net increase (decrease) from investment operations $ 0.03 $ 2.00 $ 0.97 $ 0.63 $ 0.41 $ 0.07 Distributions to shareowners: Net investment income (0.32) (0.66) (0.63) (0.67) (0.73) (0.28) Tax return of capital (0.16) -- -- (0.06) -- (0.04) ------- ------- ------- ------ ------- ------ Net increase (decrease) in net asset value $ (0.45) $ 1.34 $ 0.34 $(0.10) $ (0.32) $(0.25) ------- ------- ------- ------ ------- ------ Net asset value, end of period $ 10.56 $ 11.01 $ 9.67 $ 9.33 $ 9.43 $ 9.75 ======= ======= ======= ====== ======= ====== Total return* 0.32% 21.24% 10.72% 6.90% 4.51% 0.70% Ratio of net expenses to average net assets+ 1.08%** 1.25% 1.25% 1.25% 1.30% 1.54%** Ratio of net investment income (loss) to average net assets+ 5.87%** 5.95% 6.75% 7.16% 7.53% 6.46%** Portfolio turnover rate 51%** 68% 50% 55% 54% 49% Net assets, end of period (in thousands) $19,396 $19,312 $14,692 $7,479 $ 3,265 $1,244 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.08%** 1.25% 1.62% 2.44% 2.97% 8.68%** Net investment income (loss) 5.87%** 5.95% 6.38% 5.97% 5.86% (0.68)%** Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.08%** 1.25% 1.25% 1.25% 1.25% 1.25%** Net investment income (loss) 5.87%** 5.95% 6.75% 7.16% 7.58% 6.75%**
(a) Shares of Strategic Income VCT Portfolio were first publicly offered on July 29, 1999. * Assumes initial investment at net asset value at the beginning of the period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of the period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 99 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01(a) 12/31/00 12/31/99 Net asset value, beginning of period $ 10.35 $ 10.59 $ 10.06 $ 9.97 $ 9.47 $ 10.29 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.23 $ 0.35 $ 0.46 $ 0.52 $ 0.58 $ 0.56 Net realized and unrealized gain (loss) on investments (0.21) (0.16) 0.56 0.12 0.50 (0.81) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 0.02 $ 0.19 $ 1.02 $ 0.64 $ 1.08 $ (0.25) Distributions to shareowners: Net investment income (0.34) (0.43) (0.49) (0.55) (0.58) (0.55) Net realized gain -- -- -- -- -- (0.01) ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ (0.32) $ (0.24) $ 0.53 $ 0.09 $ 0.50 $ (0.82) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 10.03 $ 10.35 $ 10.59 $ 10.06 $ 9.97 $ 9.47 ======= ======= ======= ======= ======= ======= Total return* 0.15% 1.81% 10.32% 6.48% 11.76% (2.52)% Ratio of net expenses to average net assets+ 0.78% 0.78% 0.81% 83.00% 0.84% 0.81% Ratio of net investment income (loss) to average net assets+ 4.47% 3.45% 4.39% 5.19% 6.00% 5.64% Portfolio turnover rate 28% 34% 54% 71% 55% 41% Net assets, end of period (in thousands) $35,435 $44,526 $69,551 $37,381 $25,791 $29,779 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.78% 0.78% 0.81% 0.85% 0.84% 0.81% Net investment income (loss) 4.47% 3.45% 4.39% 5.17% 6.00% 5.64% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.78% 0.78% 0.81% 0.82% 0.81% 0.79% Net investment income (loss) 4.47% 3.45% 4.39% 5.20% 6.03% 5.66%
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.003 $ 0.006 $ 0.01 $ 0.03 $ 0.06 $ 0.04 ------- ------- ------- ------- ------- ------- Distributions to shareowners: Net investment income (0.003) (0.006) (0.01) (0.03) (0.06) (0.04) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 1.000 $ 1.000 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= ======= Total return* 0.25% 0.56% 1.19% 3.39% 5.71% 4.38% Ratio of net expenses to average net assets+ 0.68% 0.72% 0.78% 0.78% 0.76% 0.79% Ratio of net investment income (loss) to average net assets+ 0.49% 0.58% 1.11% 3.16% 5.58% 4.34% Net assets, end of period (in thousands) $29,179 $34,736 $59,521 $49,545 $36,979 $37,347 Ratios with no waiver of fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.72% 0.72% 0.78% 0.78% 0.76% 0.79% Net investment income (loss) 0.49% 0.58% 1.11% 3.16% 5.58% 4.34% Ratios with waiver of fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.72% 0.72% 0.78% 0.78% 0.75% 0.78% Net investment income (loss) 0.49% 0.58% 1.11% 3.16% 5.59% 4.35%
(a) The Portfolio began accreting discounts and amortizing premiums on debt securities. The effect of this change for the year ended December 31, 2001, was to decrease net investment income by $0.00, increase net realized and unrealized gain (loss) by $0.00 (both amounts round to less than one cent per share) and to decrease the ratio of net investment income to average net assets with waiver of management fees by PIM and reduction for fees paid indirectly from 5.38% to 5.17%. Per share ratios and supplemental data for periods prior to January 1, 2001, have not been restated to reflect this change in presentation. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. 100 The accompanying notes are an integral part of these financial statements. (This page has been left blank intentionally.) Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Emerging Pioneer Markets Europe VCT Portfolio VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $1,264,443, $0, $977,587, $1,136,534, $855,251, $25,821,135, and $0, respectively) (Cost $26,418,556, $11,935,102, $21,427,015, $15,991,691, $11,015,956, $547,111,834, and $38,249,059, respectively) $32,153,781 $14,273,318 Cash 2,806,900 295,005 Foreign currencies, at value (Cost $97,982) 97,118 -- Receivables -- Investment securities sold 97,441 47,786 Fund shares sold 26,435 37,989 Variation margin -- -- Dividends, interest and foreign taxes withheld 105,985 45,476 Forward foreign currency settlement contracts, net 32 -- Due from Pioneer Investment Management, Inc. -- 2,606 Other 3,186 369 ----------- ----------- Total assets $35,290,878 $14,702,549 ----------- ----------- LIABILITIES: Payables -- Investment securities purchased $ 1,303,499 $ 71,100 Fund shares repurchased 37,473 3,968 Dividends -- -- Upon return of securities loaned 1,335,560 -- Forward foreign currency settlement contracts, net -- 437 Reserve for repatriation taxes 86,981 -- Due to bank -- -- Due to affiliates 28,056 10,679 Accrued expenses 74,448 31,661 ----------- ----------- Total liabilities $ 2,866,017 $ 117,845 ----------- ----------- NET ASSETS: Paid-in capital $31,725,483 $20,406,813 Accumulated net investment income (loss) 122,425 155,154 Accumulated undistributed net realized gain (loss) (5,068,348) (8,317,054) Net unrealized gain (loss) on: Investments 5,648,244 2,338,216 Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (2,943) 1,575 ----------- ----------- Total net assets $32,424,861 $14,584,704 ----------- ----------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 7,300,338 $ 8,562,896 Shares outstanding 445,997 940,919 ----------- ----------- Net asset value per share $ 16.37 $ 9.10 Class II: No par value (unlimited number of shares authorized) Net assets $25,124,523 $ 6,021,808 Shares outstanding 1,544,610 673,287 ----------- ----------- Net asset value per share $ 16.27 $ 8.94
102 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Pioneer Pioneer Pioneer Pioneer Pioneer International Small Cap Small Mid Cap Growth Value Value Company Value Shares VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio $ 24,625,668 $19,052,797 $12,615,363 $623,337,278 $ 38,392,430 343,632 2,718,102 704,756 232,088 166,266 -- -- -- -- -- 945,383 23,852 923 9,079,092 350,395 -- 21,160 2,836 824,503 -- -- 7,700 -- -- -- 43,287 15,498 9,766 422,351 44,334 -- -- -- -- -- -- -- -- -- -- 338 584 408 -- 470 ------------ ----------- ----------- ------------ ------------ $ 25,958,308 $21,839,693 $13,334,052 $633,895,312 $ 38,953,895 ------------ ----------- ----------- ------------ ------------ $ 896,946 $ 10,897 $ -- $ 9,767,200 $ 328,381 50,440 20,907 4,118 17,620 8,488 -- -- -- -- -- 1,038,146 1,202,726 906,300 25,038,825 -- 3,112 -- -- -- -- -- -- -- -- -- 584 -- -- -- -- 24,038 6,556 11,625 439,928 27,887 29,328 41,630 28,619 31,864 27,509 ------------ ----------- ----------- ------------ ------------ $ 2,042,594 $ 1,282,716 $ 950,662 $ 35,295,437 $ 392,265 ------------ ----------- ----------- ------------ ------------ $ 35,249,709 $17,643,559 $11,122,927 $491,654,895 $ 78,004,905 148,255 (32,380) (26,069) 1,141,650 2,672 (14,677,563) (170,680) (312,875) 29,577,886 (39,589,318) 3,198,653 3,061,106 1,599,407 76,225,444 143,371 -- 55,372 -- -- -- (3,340) -- -- -- -- ------------ ----------- ----------- ------------ ------------ $ 23,915,714 $20,556,977 $12,383,390 $598,599,875 $ 38,561,630 ------------ ----------- ----------- ------------ ------------ $ 21,710,796 $14,543,028 $ 3,574,012 $198,767,124 $ 32,969,391 2,096,193 1,077,380 294,266 9,037,285 2,724,557 ------------ ----------- ----------- ------------ ------------ $ 10.36 $ 13.50 $ 12.15 $ 21.99 $ 12.10 $ 2,204,918 $ 6,013,949 $ 8,809,378 $399,832,751 $ 5,592,239 213,362 447,131 731,606 18,321,840 467,443 ------------ ----------- ----------- ------------ ------------ $ 10.33 $ 13.45 $ 12.04 $ 21.82 $ 11.96
The accompanying notes are an integral part of these financial statements. 103 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Pioneer Shares Fund VCT Portfolio VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $0, $751,043, $3,425,654, $0, $3,896,379, $565,812, $0, and $0 respectively) (Cost $55,838,852, $233,902,361, $191,244,800, $39,456,879, $96,881,771, $29,602,009, $43,215,077, and $33,763,137, respectively) $72,899,325 $260,852,633 Cash 1,906,225 63,820 Foreign currencies, at value (cost $0, $0, $0, $0, $0, $452,063, $0, and $0, -- -- respectively) Receivables -- Investment securities sold 2,124,520 -- Fund shares sold 181,129 150,340 Dividends, interest and foreign taxes withheld 428,504 264,315 Other 354 622 ----------- ------------ Total assets $77,540,057 $261,331,730 ----------- ------------ LIABILITIES: Payables -- Investment securities purchased $ 2,208,201 $ -- Fund shares repurchased 378,282 14,838 Dividends -- -- Upon return for securities loaned -- 766,159 Forward foreign currency portfolio hedge contracts, open -- net -- -- Due to bank -- -- Due to affiliates 66,321 184,570 Accrued expenses 19,954 19,798 Other -- -- ----------- ------------ Total liabilities $ 2,672,758 $ 985,365 ----------- ------------ NET ASSETS: Paid-in capital $57,527,714 $268,906,525 Accumulated net investment income (loss) 160,542 (75,908) Accumulated undistributed net realized gain (loss) 118,570 (35,434,524) Net unrealized gain (loss) on: Investments 17,060,473 26,950,272 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- -- ----------- ------------ Total net assets $74,867,299 $260,346,365 ----------- ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $30,296,916 $149,564,869 Shares outstanding 1,549,560 7,879,911 ----------- ------------ Net asset value per share $ 19.55 $ 18.98 Class II: No par value (unlimited number of shares authorized) Net assets $44,570,383 $110,781,496 Shares outstanding 2,283,389 5,850,266 ----------- ------------ Net asset value per share $ 19.52 $ 18.94
104 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Pioneer Pioneer Pioneer Pioneer Pioneer Equity Pioneer High Strategic America Money Income Balanced Yield Income Income Market VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio $ 233,140,932 $ 43,518,998 $ 97,689,703 $30,532,756 $43,581,947 $33,763,137 165,432 935,566 4,966,498 1,103,312 31,752 -- -- -- -- 452,882 -- -- -- 242,436 1,251,309 99,189 -- -- 107,679 1,060 129,186 63,956 58,936 22,617 386,897 160,986 1,389,274 518,040 357,466 269,795 272 427 240 395 418 824 ------------- ------------ ------------- ----------- ----------- ----------- $ 233,801,212 $ 44,859,473 $ 105,426,210 $32,770,530 $44,030,519 $34,056,373 ------------- ------------ ------------- ----------- ----------- ----------- $ -- $ 452,482 $ 5,290,138 $ 732,931 $ 1,424,051 $ 1,502,658 129,721 1,345 22 182,840 45 22,201 -- -- -- 2,901 -- -- 3,514,541 -- 3,990,710 578,396 -- -- -- -- -- 5,662 -- -- -- -- -- -- -- 3,320,254 157,442 29,685 62,907 22,297 24,632 17,023 41,710 21,732 27,878 16,036 28,441 15,471 -- -- -- -- -- -- ------------- ------------ ------------- ----------- ----------- ----------- $ 3,843,414 $ 505,244 $ 9,371,655 $ 1,541,063 $ 1,477,169 $ 4,877,607 ------------- ------------ ------------- ----------- ----------- ----------- $ 202,494,815 $ 45,716,039 $ 92,183,318 $29,754,738 $43,324,529 $29,185,735 1,549,361 (5,493) 42,466 136,607 (239,082) (3,910) (15,982,510) (5,418,436) 3,020,839 412,206 (898,967) (3,059) 41,896,132 4,062,119 807,932 930,747 366,870 -- -- -- -- (4,831) -- -- ------------- ------------ ------------- ----------- ----------- ----------- $ 229,957,798 $ 44,354,229 $ 96,054,555 $31,229,467 $42,553,350 $29,178,766 ------------- ------------ ------------- ----------- ----------- ----------- $ 158,805,031 $ 37,640,853 $ 63,375,020 $19,396,101 $35,435,314 $29,178,766 8,530,519 2,654,818 5,697,234 1,836,427 3,533,687 29,189,692 ------------- ------------ ------------- ----------- ----------- ----------- $ 18.62 $ 14.18 $ 11.12 $ 10.56 $ 10.03 $ 1.00 $ 71,152,767 $ 6,713,376 $ 32,679,535 $11,833,366 $ 7,118,036 $ -- 3,801,847 474,365 2,937,735 1,120,547 708,630 -- ------------- ------------ ------------- ----------- ----------- ----------- $ 18.72 $ 14.15 $ 11.12 $ 10.56 $ 10.04 $ --
The accompanying notes are an integral part of these financial statements. 105 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Pioneer Emerging Markets Europe VCT Portfolio VCT Portfolio Six Months Six Months Ended Ended 6/30/04 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $65,563, $40,379, $37,883, $61, $49, $5,324, and $1,046, respectively) $ 514,353 $ 264,706 Interest 4,135 1,946 Income on securities loaned, net 4,740 -- Other -- -- ------------ ---------- Total investment income $ 523,228 $ 266,652 ------------ ---------- EXPENSES: Management fees $ 201,264 $ 72,527 Transfer agent fees 1,508 1,536 Distribution fees (Class II) 33,390 7,024 Administrative fees 9,250 9,250 Custodian fees 72,734 28,760 Professional fees 33,721 25,032 Printing 5,746 2,983 Fees and expenses of nonaffiliated trustees -- -- Miscellaneous 1,870 735 ------------ ---------- Total expenses $ 359,483 $ 147,847 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (21,299) (31,868) ------------ ---------- Net expenses $ 338,184 $ 115,979 ------------ ---------- Net investment income (loss) $ 185,044 $ 150,673 ------------ ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 3,090,302 $ 706,240 Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (38,564) (3,507) ------------ ---------- $ 3,051,738 $ 702,733 ------------ ---------- Change in net unrealized gain or loss from: Investments (includes the change in reserve for repatriation taxes of $86,981, $0, $0, $0, $0, $0 and $0, respectively) $ (4,991,310) $ (667,025) Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (5,835) (5,768) ------------ ---------- $ (4,997,145) $ (672,793) ------------ ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ (1,945,407) $ 29,940 ============ ========== Net increase (decrease) in net assets resulting from operations $ (1,760,363) $ 180,613 ============ ==========
106 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Pioneer Pioneer Pioneer Pioneer Pioneer International Value Small Cap Value Small Company Mid Cap Value Growth Shares VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio Six Months Six Months Six Months Six Months Six Months Ended Ended Ended Ended Ended 6/30/04 6/30/04 6/30/04 6/30/04 6/30/04 $ 341,167 $ 74,837 $ 50,058 $ 3,149,536 $ 179,113 910 4,917 1,876 61,832 2,776 5,408 1,081 1,378 6,732 -- -- -- -- -- -- ------------ ---------- --------- ----------- ------------ $ 347,485 $ 80,835 $ 53,312 $ 3,218,100 $ 181,889 ------------ ---------- --------- ----------- ------------ $ 116,707 $ 65,883 $ 43,522 $ 1,558,884 $ 135,655 1,458 (1,877) 497 1,432 1,508 1,882 5,351 9,708 369,014 5,230 9,250 9,250 9,250 41,873 9,250 27,002 18,376 12,204 39,878 11,802 36,283 22,386 10,476 37,060 14,662 5,128 2,274 10,106 23,211 30 -- -- -- -- -- 1,425 1,004 496 5,011 1,080 ------------ ---------- --------- ----------- ------------ $ 199,135 $ 122,647 $ 96,259 $ 2,076,363 $ 179,217 -- (5,768) (14,892) -- -- ------------ ---------- --------- ----------- ------------ $ 199,135 $ 116,879 $ 81,367 $ 2,076,363 $ 179,217 ------------ ---------- --------- ----------- ------------ $ 148,350 $ (36,044) $ (28,055) $ 1,141,737 $ 2,672 ------------ ---------- --------- ----------- ------------ $ 2,344,688 $ 839,832 $ 393,255 $31,570,054 $ 1,809,705 -- 26,278 13,667 -- -- (40,661) -- (3,327) -- -- ------------ ---------- --------- ----------- ------------ $ 2,304,027 $ 866,110 $ 403,595 $31,570,054 $ 1,809,705 ------------ ---------- --------- ----------- ------------ $ (1,630,701) $ 481,469 $ 325,045 $ 7,930,499 $ (2,214,548) -- 32,938 (11,218) -- -- (13,527) -- -- -- -- ------------ ---------- --------- ----------- ------------ $ (1,644,228) $ 514,407 $ 313,827 $ 7,930,499 $ (2,214,548) ------------ ---------- --------- ----------- ------------ $ 659,799 $1,380,517 $ 717,422 $39,500,553 $ (404,843) ============ ========== ========= =========== ============ $ 808,149 $1,344,473 $ 689,367 $40,642,290 $ (402,171) ============ ========== ========= =========== ============
The accompanying notes are an integral part of these financial statements. 107 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Pioneer Real Estate Shares Fund VCT Portfolio VCT Portfolio Six Months Six Months Ended Ended 6/30/04 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $1,676, $19,683, $0, $341, $0, $0, $0, and $0, respectively) $1,885,996 $ 2,102,920 Interest (net of foreign taxes withheld of $0, $0, $94, $0, $2,145, $0 and $0, respectively) 18,128 57,470 Income on securities loaned, net 535 7,876 Other -- -- ---------- ------------ Total investment income $1,904,659 $ 2,168,266 ---------- ------------ EXPENSES: Management fees $ 294,190 $ 811,005 Transfer agent fees 1,494 1,223 Distribution fees (Class II) 53,188 123,119 Administrative fees 9,250 15,324 Custodian fees 13,052 20,922 Professional fees 19,250 26,346 Printing 8,855 3,962 Fees and expenses of nonaffiliated trustees -- -- Miscellaneous 899 3,740 ---------- ------------ Total expenses $ 400,178 $ 1,005,641 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- -- ---------- ------------ Net expenses $ 400,178 $ 1,005,641 ---------- ------------ Net investment income (loss) $1,504,481 $ 1,162,625 ---------- ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $3,075,780 $ (1,304,040) Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- (3,646) ---------- ------------ $3,075,780 $ (1,307,686) ---------- ------------ Change in net unrealized gain or loss from: Investments $ 359,869 $ 5,111,020 Futures contracts -- -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- -- ---------- ------------ $ 359,869 $ 5,111,020 ---------- ------------ Net gain (loss) on investments, futures contracts and foreign currency transactions $3,435,649 $ 3,803,334 ========== ============ Net increase (decrease) in net assets resulting from operations $4,940,130 $ 4,965,959 ========== ============
108 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Pioneer Pioneer Pioneer Pioneer Pioneer Pioneer America Money Equity Income Balanced High-Yield Strategic Income Income Market VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio Six Months Six Months Six Months Six Months Six Months Six Months Ended Ended Ended Ended Ended Ended 6/30/04 6/30/04 6/30/04 6/30/04 6/30/04 6/30/04 $ 3,355,605 $ 135,243 $ 25,646 $ -- $ -- $ -- 44,410 451,405 2,986,213 940,961 1,130,558 179,500 5,416 -- 2,414 1,048 -- -- -- -- -- -- -- -- ----------- ---------- ------------ ------------ ---------- -------- $ 3,405,431 $ 586,648 $ 3,014,273 $ 942,009 $1,130,558 $179,500 ----------- ---------- ------------ ------------ ---------- -------- $ 723,317 $ 144,037 $ 311,486 $ 87,824 $ 118,586 $ 77,434 1,488 1,475 293 1,383 1,383 754 81,276 6,237 34,430 9,221 5,992 -- 22,108 9,250 9,604 9,250 9,250 9,250 20,776 8,120 9,660 11,172 10,276 12,186 24,135 26,333 26,244 34,553 26,051 10,880 6,146 5,838 8,162 4,607 3,519 (8,151) 1,681 -- -- -- -- -- 5,460 1,694 1,996 1,010 573 2,106 ----------- ---------- ------------ ------------ ---------- -------- $ 886,387 $ 202,984 $ 401,875 $ 159,020 $ 175,630 $104,459 -- -- -- -- -- -- ----------- ---------- ------------ ------------ ---------- -------- $ 886,387 $ 202,984 $ 401,875 $ 159,020 $ 175,630 $104,459 ----------- ---------- ------------ ------------ ---------- -------- $ 2,519,044 $ 383,664 $ 2,612,398 $ 782,989 $ 954,928 $ 75,041 ----------- ---------- ------------ ------------ ---------- -------- $ (626,853) $ 934,310 $ 3,020,965 $ 416,409 $ (18,903) $ -- -- -- -- -- -- -- -- -- -- (3,412) -- -- ----------- ---------- ------------ ------------ ---------- -------- $ (626,853) $ 934,310 $ 3,020,965 $ 412,997 $ (18,903) $ -- ----------- ---------- ------------ ------------ ---------- -------- $ 6,585,509 $ (500,826) $ (6,002,478) $ (1,181,610) $ (878,602) $ -- -- -- -- -- -- -- -- -- -- 12,963 -- -- ----------- ---------- ------------ ------------ ---------- -------- $ 6,585,509 $ (500,826) $ (6,002,478) $ (1,168,647) $ (878,602) $ -- ----------- ---------- ------------ ------------ ---------- -------- $ 5,958,656 $ 433,484 $ (2,981,513) $ (755,650) $ (897,505) $ -- =========== ========== ============ ============ ========== ======== $ 8,477,700 $ 817,148 $ (369,115) $ 27,339 $ 57,423 $ 75,041 =========== ========== ============ ============ ========== ========
The accompanying notes are an integral part of these financial statements. 109 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Emerging Pioneer Markets VCT Portfolio Europe VCT Portfolio Six Months Six Months Ended Year Ended Year 6/30/04 Ended 6/30/04 Ended (unaudited) 12/31/03 (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 185,044 $ 262,378 $ 150,673 $ 110,674 Net realized gain (loss) on investments 3,051,738 1,187,664 702,733 (108,393) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (4,997,145) 10,449,480 (672,793) 3,419,238 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations $ (1,760,363) $ 11,899,522 $ 180,613 $ 3,421,519 ------------ ------------ ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (65,091) $ (25,889) $ (65,952) $ (36,322) Class II (196,317) (60,429) (38,910) (9,367) Net realized gain Class I -- -- -- -- Class II -- -- -- -- Tax return of capital Class I -- -- -- -- Class II -- -- -- -- ------------ ------------ ------------ ------------ Total distributions to shareowners $ (196,317) $ (86,319) $ (104,862) $ (45,689) ------------ ------------ ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 5,260,358 $ 16,360,576 $ 1,713,293 $ 6,502,123 Reinvestment of distributions 259,912 85,767 104,862 45,689 Cost of shares repurchased (6,009,356) (8,062,148) (1,644,175) (6,113,517) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from fund share transactions $ (489,086) $ 8,384,195 $ 173,980 $ 434,295 ------------ ------------ ------------ ------------ Net increase (decrease) in net assets $ (2,510,857) $220,197,398 $ 249,731 $ 3,810,125 ------------ ------------ ------------ ------------ NET ASSETS: Beginning of period $ 34,935,718 $ 14,738,320 $ 14,334,973 $ 10,524,848 ------------ ------------ ------------ ------------ End of period $ 32,424,861 $ 34,935,718 $ 14,584,704 $ 14,334,973 ============ ============ ============ ============ Accumulated/(distributions in excess of) net investment income (loss) $ 122,425 $ 198,789 $ 155,154 $ 109,343 ============ ============ ============ ============
110 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Pioneer International Pioneer Small Cap Value Pioneer Small Company Value VCT Portfolio VCT Portfolio VCT Portfolio Six Months Six Months Six Months Ended Year Ended Year Ended Year 6/30/04 Ended 6/30/04 Ended 6/30/04 Ended (unaudited) 12/31/03 (unaudited) 12/31/03 (unaudited) 12/31/03 $ 148,350 $ 136,624 $ (36,044) $ 2,125 $ (28,055) $ (9,162) 2,304,027 (857,791) 866,110 (334,168) 403,595 (296,269) (1,644,228) 6,236,488 514,407 3,353,942 313,827 2,171,849 ------------ ------------ ------------ ------------- ------------ ------------ $ 808,149 $ 5,515,321 $ 1,344,473 $ 3,021,899 $ 689,367 $ 1,866,418 ------------ ------------ ------------ ------------- ------------ ------------ $ (113,572) $ (146,246) $ -- $ -- $ -- $ -- (8,890) (4) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ------------ ------------ ------------ ------------- ------------ ------------ $ (122,462) $ (146,250) $ -- $ -- $ -- $ -- ------------ ------------ ------------ ------------- ------------ ------------ $ 2,046,605 $ 39,187,523 $ 6,450,844 $ 15,752,093 $ 2,429,035 $ 6,156,243 122,459 146,246 -- -- -- -- (2,526,547) (42,386,651) (2,046,639) (10,568,904) (1,705,541) (3,911,566) ------------ ------------ ------------ ------------- ------------ ------------ $ (357,483) $ (3,052,882) $ 4,404,205 $ 5,183,189 $ 723,494 $ 2,244,677 ------------ ------------ ------------ ------------- ------------ ------------ $ 328,204 $ 2,316,189 $ 5,748,678 $ 8,205,088 $ 1,412,861 $ 4,111,095 ------------ ------------ ------------ ------------- ------------ ------------ $ 23,587,510 $ 21,271,321 $ 14,808,299 $ 6,603,211 $ 10,970,529 $ 6,859,434 ------------ ------------ ------------ ------------- ------------ ------------ $ 23,915,714 $ 23,587,510 $ 20,556,977 $ 14,808,299 $ 12,383,390 $ 10,970,529 ============ ============ ============ ============= ============ ============ $ 148,255 $ 122,367 $ (32,380) $ 3,664 $ (26,069) $ 1,986 ============ ============ ============ ============= ============ ============
The accompanying notes are an integral part of these financial statements. 111 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Mid Cap Pioneer Growth Value VCT Portfolio Shares VCT Portfolio Six Months Six Months Ended Year Ended Year 6/30/04 Ended 6/30/04 Ended (unaudited) 12/31/03 (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 1,141,737 $ 1,803,484 $ 2,672 $ (20,270) Net realized gain (loss) on investments 31,570,054 6,004,760 1,809,705 (3,697,565) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 7,930,499 75,230,670 (2,214,548) 11,680,101 ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations $ 40,642,290 $ 83,038,914 $ (402,171) $ 7,962,266 ------------- ------------- ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (711,725) $ (438,494) $ -- $ (4,477) Class II (1,067,643) (236,135) -- -- Net realized gain Class I (1,863,831) -- -- -- Class II (3,740,321) -- -- -- Tax return of capital Class I -- -- -- -- Class II -- -- -- -- ------------- ------------- ------------ ------------ Total distributions to shareowners $ (7,383,520) $ (674,629) $ -- $ (4,477) ------------- ------------- ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 196,943,386 $ 161,143,658 $ 3,453,095 $ 4,104,812 Reinvestment of distributions 7,383,520 674,611 -- 4,477 Cost of shares repurchased (20,342,972) (44,550,616) (3,287,636) (8,277,302) ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from fund share transactions $ 183,983,934 $ 117,267,653 $ 165,459 $ (4,168,013) ------------- ------------- ------------ ------------ Net increase (decrease) in net assets $ 217,242,704 $ 199,631,938 $ (236,712) $ 3,789,776 ------------- ------------- ------------ ------------ NET ASSETS: Beginning of period $ 381,357,171 $ 181,725,233 $ 38,798,342 $ 35,008,566 ------------- ------------- ------------ ------------ End of period $ 598,599,875 $ 381,357,171 $ 38,561,630 $ 38,798,342 ============= ============= ============ ============ Accumulated/(distributions in excess of) net investment income (loss) $ 1,141,650 $ 1,779,281 $ 2,672 $ -- ============= ============= ============ ============
112 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Pioneer Real Estate Pioneer Fund Pioneer Equity Shares VCT Portfolio VCT Portfolio Income VCT Portfolio Six Months Six Months Six Months Ended Year Ended Year Ended Year 6/30/04 Ended 6/30/04 Ended 6/30/04 Ended (unaudited) 12/31/03 (unaudited) 12/31/03 (unaudited) 12/31/03 $ 1,504,481 $ 3,062,870 $ 1,162,625 $ 2,086,873 $ 2,519,044 $ 4,413,641 3,075,780 (474,302) (1,307,686) (8,525,302) (626,853) (634,370) 359,869 15,553,008 5,111,020 49,662,141 6,585,509 34,115,732 ------------ ------------- ------------- ------------- ------------- ------------- $ 4,940,130 $ 18,141,576 $ 4,965,959 $ 43,223,712 $ 8,477,700 $ 37,895,003 ------------ ------------- ------------- ------------- ------------- ------------- $ (637,400) $ (1,422,912) $ (793,149) $ (1,580,150) $ (1,543,147) $ (3,313,897) (859,854) (1,519,594) (445,384) (520,900) (583,520) (860,942) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ------------ ------------- ------------- ------------- ------------- ------------- $ (1,497,254) $ (2,942,506) $ (1,238,533) $ (2,101,050) $ (2,126,667) $ (4,174,839) ------------ ------------- ------------- ------------- ------------- ------------- $ 7,974,724 $ 9,753,610 $ 33,243,901 $ 58,651,489 $ 23,048,590 $ 52,433,019 1,497,254 2,942,506 1,238,553 2,101,050 2,126,667 4,174,840 (9,831,522) (17,969,003) (20,190,548) (37,658,369) (17,557,375) (34,680,633) ------------ ------------- ------------- ------------- ------------- ------------- $ (359,544) $ (5,272,887) $ 14,291,886 $ 23,940,170 $ 7,617,882 $ 21,927,226 ------------ ------------- ------------- ------------- ------------- ------------- $ 3,083,332 $ 9,926,183 $ 18,019,312 $ 64,216,832 $ 13,968,915 $ 55,647,390 ------------ ------------- ------------- ------------- ------------- ------------- $ 71,783,967 $ 61,857,784 $ 242,327,053 $ 178,110,221 $ 215,988,883 $ 160,341,493 ------------ ------------- ------------- ------------- ------------- ------------- $ 74,867,299 $ 71,783,967 $ 260,346,365 $ 242,327,053 $ 229,957,798 $ 215,988,883 ============ ============= ============= ============= ============= ============= $ 160,542 $ 153,315 $ (75,908) $ -- $ 1,549,361 $ 1,156,984 ============ ============= ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. 113 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Pioneer High Yield Balanced VCT Portfolio VCT Portfolio Six Months Six Months Ended Year Ended Year 6/30/04 Ended 6/30/04 Ended (unaudited) 12/31/03 (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 383,664 $ 718,572 $ 2,612,398 $ 4,106,902 Net realized gain (loss) on investments 934,310 336,352 3,020,965 1,124,588 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (500,826) 5,309,842 (6,002,478) 10,301,474 ------------ ------------ ------------- ------------- Net increase (decrease) in net assets resulting from operations $ -- $ 6,364,766 $ (369,115) $ 15,532,964 ------------ ------------ ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (353,982) $ (800,491) $ (1,887,530) $ (3,817,405) Class II (47,983) (20,067) (724,685) (279,944) Net realized gain Class I -- -- (265,040) -- Class II -- -- (135,300) -- Tax return of capital Class I -- -- -- -- Class II -- -- -- -- ------------ ------------ ------------- ------------- Total distributions to shareowners $ (401,965) $ (820,558) $ (3,012,555) $ (4,097,349) ------------ ------------ ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 4,614,728 $ 4,068,440 $ 40,007,704 $ 45,609,360 Reinvestment of distributions 401,960 820,551 2,994,517 4,059,022 Cost of shares repurchased (5,240,015) (9,119,455) (27,753,753) (18,254,761) ------------ ------------ ------------- ------------- Net increase (decrease) in net assets resulting from fund share transactions $ (223,327) $ (4,230,464) $ 15,248,468 $ 31,413,621 ------------ ------------ ------------- ------------- Net increase (decrease) in net assets $ 191,856 $ 1,313,744 $ 11,866,798 $ 42,849,236 ------------ ------------ ------------- ------------- NET ASSETS: Beginning of period $ 44,162,373 $ 42,848,629 $ 84,187,757 $ 41,338,521 ------------ ------------ ------------- ------------- End of period $ 44,354,229 $ 44,162,373 $ 96,054,555 $ 84,187,757 ============ ============ ============= ============= Accumulated/(distributions in excess of) net investment income (loss) $ (5,493) $ 12,808 $ 42,466 $ 42,283 ============ ============ ============= =============
114 The accompanying notes are an integral part of these financial statements. Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Pioneer Strategic Pioneer America Pioneer Money Income VCT Portfolio Income VCT Portfolio Market VCT Portfolio Six Months Six Months Six Months Ended Year Ended Year Ended Year 6/30/04 Ended 6/30/04 Ended 6/30/04 Ended (unaudited) 12/31/03 (unaudited) 12/31/03 (unaudited) 12/31/03 $ 782,989 $ 1,068,721 $ 954,928 $ 2,011,935 $ 75,041 $ 277,950 412,997 713,901 (18,903) 193,917 -- 2,354 (1,168,647) 1,695,515 (878,602) (1,192,882) -- -- ------------ ------------ ------------- ------------- ------------- ------------- $ 27,339 $ 3,478,137 $ 57,423 $ 1,012,960 $ 75,041 $ 280,304 ------------ ------------ ------------- ------------- ------------- ------------- $ (586,082) $ (1,087,224) $ (1,275,683) $ (2,321,232) $ (78,951) $ (277,950) (212,869) (52,386) (149,828) (26,127) -- -- (294,735) -- -- -- -- -- (171,204) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ------------ ------------ ------------- ------------- ------------- ------------- $ (1,264,890) $ (1,139,610) $ (1,425,511) $ (2,347,359) $ (78,951) $ (277,950) ------------ ------------ ------------- ------------- ------------- ------------- $ 11,917,524 $ 11,160,025 $ 6,288,054 $ 10,875,454 $ 11,576,926 $ 27,291,288 1,239,783 1,105,582 1,425,494 2,347,346 56,332 277,946 (3,666,138) (6,320,659) (10,954,747) (34,276,542) (17,186,820) (52,356,043) ------------ ------------ ------------- ------------- ------------- ------------- $ 9,491,169 $ 5,944,948 $ (3,241,200) $ (21,053,742) $ (5,553,562) $ (24,786,809) ------------ ------------ ------------- ------------- ------------- ------------- $ 8,253,618 $ 8,283,475 $ (4,609,288) $ (22,388,136) $ (5,557,472) $ (24,784,455) ------------ ------------ ------------- ------------- ------------- ------------- $ 22,975,849 $ 14,692,374 $ 47,162,638 $ 69,550,779 $ 34,736,238 $ 59,520,693 ------------ ------------ ------------- ------------- ------------- ------------- $ 31,229,467 $ 22,975,849 $ 42,553,350 $ 47,162,643 $ 29,178,766 $ 34,736,238 ============ ============ ============= ============= ============= ============= $ 136,607 $ 152,569 $ (239,082) $ 231,501 $ -- $ -- ============ ============ ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. 115 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Variable Contracts Trust (the Trust) is a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate diversified portfolios fourteen of which issue both Class I and Class II shares (collectively, the "Portfolios", individually the "Portfolio") as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio)(Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The financial statements of Value Portfolio, Papp America Pacific Rim Portfolio, Papp Small & Mid Cap Growth Portfolio and Oak Ridge Large Cap Growth Portfolio and the Class II financial highlights of all the Portfolios are presented in separate books. The investment objective of Emerging Markets Portfolio, Europe Portfolio and International Value Portfolio is to seek long-term capital growth. Small Company Portfolio, Small Cap Value Portfolio, Mid-Cap Value Portfolio and Growth Shares Portfolio seek capital appreciation. Real Estate Shares Portfolio pursues long-term capital growth, with current income as a secondary objective. Fund Portfolio seeks reasonable income and growth of capital. Equity Income Portfolio seeks current income and long-term capital growth. Balanced Portfolio's investment objectives are capital growth and current income. High Yield Portfolio seeks to maximize total return through a combination of income and capital appreciation. Strategic Income Portfolio seeks to produce a high level of current income. America Income Portfolio seeks a high level of current income as consistent with preservation of capital. Money Market Portfolio invests for current income consistent with preserving capital and providing liquidity. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses and gains and losses on investments during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the Portfolios are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale 116 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- price on the principal exchange where they traded, are determined as of such times. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. The Portfolios also may use the fair value of a security, including a non-U.S. security, when the closing market price on the primary exchange where the security is traded no longer accurately reflects the value of the security as of the close of the exchange. At June 30, 2004, there were no fair valued securities except as follows. All securities that trade in foreign markets whose closing prices are as of times prior to the close of the New York Stock Exchange ("NYSE") and that are held by Emerging markets Portfolio, Europe Portfolio and International Value Portfolio are fair valued using vendor-supplied pricing updates for each security to the time of the close of the NYSE. Temporary cash investments and securities held by any Portfolio are valued at amortized cost. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Discounts and premiums on fixed income securities are accreted and amortized, respectively, on a yield-to-maturity basis and are included in interest income. Dividend and interest income from foreign securities are reported net of unrecoverable foreign taxes withheld at the applicable country rates. Gains and losses from sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Because Real Estate Shares Portfolio invests a substantial portion of its assets in real estate investment trusts (REITs), the Portfolio may be subject to certain risks associated with direct investments in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital returns may be made at any time. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code or its failure to maintain exemption from registration under the Investment Company Act of 1940. Emerging Markets, International Value and Europe Portfolios' investments in emerging markets or countries with limited or developing markets may subject the Portfolios to a greater degree of risk than in a developed market. Risks associated with these developing markets include political, social or economic factors and may affect the price of the Portfolios' investments and income generated by these investments, as well as the Portfolios' ability to repatriate such amounts. High Yield and Strategic Income Portfolios invest in below investment grade (high yield) debt securities and preferred stocks. Some of these high yield securities may be convertible into equity securities of the issuer. Debt securities rated below investment grade are commonly referred to as "junk bonds" and are considered speculative. These securities involve greater risk of loss, are subject to greater price volatility, and are less liquid, especially during periods of economic uncertainty or change, than higher rated debt securities. Small capitalization stocks, while offering the potential for higher returns, such as those in Small Company and Small Cap Value Portfolio may be subject to greater short-term price fluctuations than securities of larger companies. B. Futures Contracts The Portfolios may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the
- ----------------------------------------------------------------------------------------------------------------- Number of Contracts Settlement Unrealized Portfolio Type Long/(Short) Month Market Value Gain/(Loss) - ----------------------------------------------------------------------------------------------------------------- Small Cap Value Portfolio Russell 2000 4 September 2004 $1,184,700 $55,372 - -----------------------------------------------------------------------------------------------------------------
117 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- Portfolios are required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolios, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolios as unrealized gains or losses. When the contract is closed, the Portfolios realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk such as the changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolios' hedging and trading strategies and potentially result in a loss. As of June 30, 2004, open contracts are shown in the table at the bottom of the preceding page. C. Foreign Currency Translation The books and records of the Portfolios are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts Certain Portfolios are authorized to enter into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolios' financial statements. The Portfolios record realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar (see Note 8). E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolios may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the six months ended June 30, 2004, no such taxes were paid. In determining the daily net asset value, the Portfolios estimate the reserve for such taxes, if any, associated with investments in certain countries. Any estimated reserve for taxes on capital gains is based on the net unrealized appreciation on certain portfolio securities, the holding period of such securities and the related tax rates, tax loss carryforward (if applicable) and other such factors. Any estimated reserve for taxes on repatriation of foreign currencies is based on principal balances and/or unrealized appreciation of applicable securities, the holding period of such investments and the related tax rates and other such factors. As of June 30, 2004, the Portfolios had no reserves related to taxes on capital gains. Except that Emerging Markets Portfolio had a reserve of $86,981 for the taxes on the repatriation of foreign currencies. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. A portion of the dividend income recorded by Real Estate Shares Portfolio is from distributions by publicly traded REITs, and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Trust as a reduction of the cost basis of the securities held. 118 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, certain Portfolios had capital loss carryforwards as follows:
- -------------------------------------------------------------------------------- Small Fiscal Emerging International Cap Year Markets Europe Value Value Ending Portfolio Portfolio Portfolio Portfolio - -------------------------------------------------------------------------------- 2003 $ -- $ -- $ -- $ -- 2004 $ -- $ -- $ -- $ -- 2005 $ -- $ -- $ -- $ -- 2006 $ -- $ -- $ -- $ -- 2007 $ -- $ -- $ 2,465,434 $ -- 2008 $1,376,025 $ 837,566 $ -- $ -- 2009 $5,058,209 $ 4,365,566 $ 7,057,019 $ -- 2010 $1,176,783 $ 1,896,288 $ 5,309,516 $ 508,141 2011 $ -- $ 783,043 $ 2,130,998 $ 5,487 -------------------------------------------------------------------- Total $7,611,017 $ 7,882,463 $16,962,967 $ 513,628 ==================================================================== Real Fiscal Small Growth Estate Year Company Shares Shares Fund Ending Portfolio Portfolio Portfolio Portfolio - -------------------------------------------------------------------------------- 2003 $ -- $ -- $ -- $ -- 2004 $ -- $ -- $ -- $ -- 2005 $ -- $ -- $ -- $ -- 2006 $ -- $ -- $ -- $ -- 2007 $ -- $ -- $ 2,238,480 $ -- 2008 $ -- $ 4,132,928 $ 619,294 $ -- 2009 $ 92,858 $ 9,820,202 $ -- $ 6,699,261 2010 $ 235,402 $19,245,183 $ -- $14,227,957 2011 $ 284,913 $ 7,319,241 $ 453,069 $13,017,527 -------------------------------------------------------------------- Total $ 613,173 $40,517,554 $ 3,310,843 $33,944,745 ==================================================================== Fiscal Equity America Money Year Income Balanced Income Market Ending Portfolio Portfolio Portfolio Portfolio - -------------------------------------------------------------------------------- 2003 $ -- $ -- $ -- $ -- 2004 $ -- $ -- $ -- $ -- 2005 $ -- $ -- $ -- $ -- 2006 $ -- $ 985,646 $ -- $ -- 2007 $ -- $ -- $ -- $ -- 2008 $ -- $ -- $ 382,424 $ -- 2009 $ 6,328,025 $ -- $ -- $ 2,813 2010 $ 6,407,206 $ 2,699,582 $ -- $ -- 2011 $ 2,620,426 $ 2,590,145 $ 435,523 $ -- -------------------------------------------------------------------- Total $15,355,657 $ 6,275,373 $ 817,947 $ 2,813 ==================================================================== - --------------------------------------------------------------------------------
119 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- The following Portfolios elected to defer capital and/or currency losses recognized between November 1, 2003 and December 31, 2003 to their fiscal year ending December 31, 2004.
- -------------------------------------------------------------------------------- Portfolio Capital Losses Currency Losses - -------------------------------------------------------------------------------- Europe Portfolio $ 49,695 $ -- Growth Shares Portfolio 85,372 -- America Income Portfolio 54,391 -- Money Market Portfolio 246 -- - --------------------------------------------------------------------------------
The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis. The tax character of current year distributions will be determined at the end of the current fiscal year.
- ------------------------------------------------------------------------------------------------------------------------------- Pioneer Pioneer Pioneer Emerging Pioneer International Small Cap Markets Europe Value Value VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio 2003 2003 2003 2003 - ------------------------------------------------------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 86,319 $ 45,689 $ 146,250 $ -- Long-Term capital gain -- -- -- -- ----------------------------------------------------------------------------------- $ 86,319 $ 45,689 $ 146,250 $ -- Return of Capital -- -- -- -- ----------------------------------------------------------------------------------- Total distributions $ 86,319 $ 45,689 $ 146,250 $ -- ----------------------------------------------------------------------------------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 261,372 $ 104,830 $ 122,367 $ 3,397 Undistributed long-term gain/ (capital loss carryforward) (7,611,017) (7,882,463) (16,962,967) (513,628) Unrealized appreciation (depreciation) 10,070,794 1,929,468 4,820,918 2,079,176 ----------------------------------------------------------------------------------- Total $ 2,721,149 $(5,848,165) $ (12,019,682) $ 1,568,945 =================================================================================== Pioneer Pioneer Pioneer Pioneer Small Mid Cap Growth Real Estate Company Value Shares Shares VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio 2003 2003 2003 2003 - ------------------------------------------------------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ -- $ 674,629 $ 4,477 $ 2,171,485* Long-Term capital gain -- -- -- -- ----------------------------------------------------------------------------------- $ -- $ 674,629 $ 4,477 $ 2,171,485 Return of Capital -- -- -- 771,021 ----------------------------------------------------------------------------------- Total distributions $ -- $ 674,629 $ 4,477 $ 2,942,906 =================================================================================== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- $ 3,095,345 $ -- $ -- Undistributed long-term gain/ (capital loss carryforward) (613,173) 4,286,038 (40,517,554) (2,665,210) Unrealized appreciation (depreciation) 1,184,269 66,304,827 1,561,822 16,408,604 ----------------------------------------------------------------------------------- Total $ 571,096 $73,686,210 $ (38,955,732) $ 13,743,394 =================================================================================== - -------------------------------------------------------------------------------------------------------------------------------
120 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------- Pioneer Pioneer Equity Pioneer Pioneer Fund Income Balanced High Yield VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio 2003 2003 2003 2003 - ------------------------------------------------------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 2,101,050 $ 4,174,839 $ 820,558 $4,097,349 Long-Term capital gain -- -- -- -- ------------------------------------------------------------------------------------- $ 2,101,050 $ 4,174,839 $ 820,558 $4,097,349 Return of Capital -- -- -- -- ------------------------------------------------------------------------------------- Total distributions $ 2,101,050 $ 4,174,839 $ 820,558 $4,097,349 ------------------------------------------------------------------------------------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- $ 82,058 $ 400 $ 42,283 Undistributed long-term gain/ (capital loss carryforward) (33,944,745) (15,355,657) (6,275,373) 400,214 Unrealized appreciation (depreciation) 21,657,159 36,385,549 4,497,980 6,810,410 ------------------------------------------------------------------------------------- Total $(12,287,586) $ 21,111,950 $(1,776,993) $7,252,907 ===================================================================================== Pioneer Pioneer Pioneer Strategic America Money Income Income Market VCT Portfolio VCT Portfolio VCT Portfolio 2003 2003 2003 - ------------------------------------------------------------------------------------------------------------ Distributions paid from: Ordinary Income $1,139,610 $2,347,359 $277,950 Long-Term capital gain -- -- -- ------------------------------------------------------------------ $1,139,610 $2,347,359 $277,950 Return of Capital -- -- -- ------------------------------------------------------------------ Total distributions $1,139,610 $2,347,359 $277,950 ------------------------------------------------------------------ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 380,350 $ 422,952 $ -- Undistributed long-term gain/ (capital loss carryforward) 212,557 (817,947) (2,813) Unrealized appreciation (depreciation) 2,119,373 1,046,300 -- ------------------------------------------------------------------ Total $2,712,280 $ 651,305 (2,813) ================================================================== - -------------------------------------------------------------------------------------------------------------------------------
* Included in the Portfolio's distributions from 2003 ordinary income is $192,564 in excess of investment company taxable income, which, in accordance with U.S. tax law, is taxable to shareowners as ordinary income distributions. The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. Prior to June 30, 2004, Real Estate Shares Portfolio has reclassified $21,639 to decrease net unrealized gain on investments, $6,268 to decrease accumulated undistributed net realized gain on investments and $27,907 to increase paid-in capital. The reclassification has no impact on the net assets of the Portfolio and presents the Portfolio's capital accounts on a tax basis. F. Portfolio Shares The Portfolios record sales and repurchases of their shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the 121 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of share based on their respective percentage of adjusted net assets at the beginning of the day. High Yield, Strategic Income, America Income and Money Market Portfolios declare as daily dividends substantially all of their respective net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. G. Securities Lending The Portfolios lend securities in their portfolios to certain broker-dealers or other institutional investors, with the Portfolios' custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolios also continue to receive interest or dividends on the securities loaned, and gain or loss on the fair value of the loaned securities that may occur during the term of the loan will be for account of the Portfolios. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The amount of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Portfolios have the right under the lending agreements to recover the securities on loan from the borrower on demand. The Portfolios invest cash collateral in the Securities Lending Investment Fund, which is managed by Brown Brothers Harriman & Co., the Portfolios' custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolios, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreements at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Trust's custodian, or subcustodians. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolios, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rates:
- ----------------------------------------------------------------------------- Management Fee as a Percentage of each Portfolio's Average Portfolio Daily Net Assets - ----------------------------------------------------------------------------- Emerging Markets Portfolio 1.15% Europe Portfolio 1.00% International Value Portfolio 1.00% Small Cap Value Portfolio 0.75% Small Company Portfolio 0.75% Mid Cap Value Portfolio 0.65% Growth Shares Portfolio 0.70% Real Estate Shares Portfolio 0.80% Fund Portfolio 0.65% Equity Income Portfolio 0.65% Balanced Portfolio 0.65% High Yield Portfolio 0.65% Strategic Income Portfolio 0.65% America Income Portfolio 0.55% Money Market Portfolio 0.50% - -----------------------------------------------------------------------------
122 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PIM has agreed not to impose a portion of its management fees and to assume other operating expenses for certain Portfolios through June 30, 2004 to the extent necessary to limit expenses of Class I shares (Class II shares in the case of High Yield and Value Portfolios) to the following percentages of the Portfolios' average daily net assets attributable to Class I shares:
- -------------------------------------------------------------------------------- Expense Limitation as a Percentage of each Portfolio's Portfolio Average Daily Net Assets - -------------------------------------------------------------------------------- Emerging Markets Portfolio 1.75% Europe Portfolio 1.50% Small Cap Value Portfolio 1.25% Small Company Portfolio 1.25% High Yield Portfolio 1.30% Strategic Income Portfolio 1.25% - --------------------------------------------------------------------------------
The portion of the Portfolios' expenses attributable to Class II (or Class I for shares in the case of High Yield Portfolio) will be reduced only to the extent such expenses are reduced for Class I shares (or Class II shares). PIM may subsequently recover reimbursed expenses (within three years of being incurred) from certain Portfolios if the expense ratio of the Class I (or Class II) shares would otherwise be less than the expense limitation of the class. Each class will reimburse PIM no more than the amount by which that class' expenses were reduced. At June 30, 2004, $7,270 was reimbursed by High Yield Portfolio under this arrangement and is included in miscellaneous expense. The Expense limit agreement for Emerging Markets, Europe and Strategic Income Portfolios does not provide for the expense reimbursement described above. There can be no assurance that Pioneer will extend any expense limitation beyond June 30, 2004. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolios. At June 30, 2004, the following amounts were payable to PIM related to management fees, administrative fees and certain other services and are included in due to affiliates:
- -------------------------------------------------------------------------------- Portfolio Amount - -------------------------------------------------------------------------------- Emerging Markets Portfolio $ 22,079 Europe Portfolio 9,045 International Value Portfolio 23,315 Small Cap Value Portfolio 5,022 Small Company Portfolio 9,419 Mid Cap Value Portfolio 352,423 Growth Shares Portfolio 26,397 Real Estate Shares Portfolio 55,958 Fund Portfolio 159,258 Equity Income Portfolio 141,022 Balanced Portfolio 27,997 High Yield Portfolio 56,197 Strategic Income Portfolio 19,621 America Income Portfolio 22,840 Money Market Portfolio 16,894 - --------------------------------------------------------------------------------
123 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano, provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. The following amounts of transfer agent fees payable to PIMSS are included in due to affiliates at June 30, 2004:
- -------------------------------------------------------------------------------- Portfolio Amount - -------------------------------------------------------------------------------- Emerging Markets Portfolio $258 Europe Portfolio 258 International Value Portfolio 259 Small Cap Value Portfolio 255 Small Company Portfolio 255 Mid Cap Value Portfolio 258 Growth Shares Portfolio 258 Real Estate Shares Portfolio 257 Fund Portfolio 257 Equity Income Portfolio 258 Balanced Portfolio 259 High Yield Portfolio 255 Strategic Income Portfolio 258 America Income Portfolio 258 Money Market Portfolio 129 - --------------------------------------------------------------------------------
4. Distribution Plans The Portfolios have adopted plans of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plans, each Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate PFD for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by PFD in connection with each Portfolio's Class II shares. The following amounts of distribution fees payable to PFD are included in due to affiliates at June 30, 2004:
- -------------------------------------------------------------------------------- Portfolio Amount - -------------------------------------------------------------------------------- Emerging Markets Portfolio $ 5,719 Europe Portfolio 1,376 International Value Portolio 464 Small Cap Value Portfolio 1,279 Small Company Portfolio 1,951 Mid Cap Value Portfolio 87,247 Growth Shares Portfolio 1,232 Real Estate Shares Portfolio 10,106 Fund Portfolio 25,055 Equity Income Portfolio 16,162 Balanced Portfolio 1,429 High Yield Portfolio 6,455 Strategic Income Portfolio 2,418 America Income Portfolio 1,534 - --------------------------------------------------------------------------------
124 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:
- ------------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Portfolio Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------------------- Emerging Markets Portfolio $26,991,159 $ 5,927,418 $ (764,796) $ 5,162,622 Europe Portfolio 13,022,731 1,297,351 (46,764) 1,250,587 International Value Portfolio 21,445,638 3,451,463 (271,433) 3,180,030 Small Cap Value Portfolio 16,492,152 2,915,941 (355,296) 2,560,645 Small Company Portfolio 11,106,049 1,913,795 (404,481) 1,509,314 Mid Cap Value Portfolio 549,097,482 120,657,540 (46,417,744) 74,239,796 Growth Shares Portfolio 39,045,156 1,123,103 (1,775,829) (652,726) Real Estate Shares Portfolio 56,411,455 16,815,051 (327,181) 16,487,870 Fund Portfolio 234,084,454 39,850,461 (13,082,282) 26,768,179 Equity Income Portfolio 190,169,874 47,191,020 (4,219,962) 42,971,058 Balanced Portfolio 39,521,844 4,458,969 (461,815) 3,997,154 High Yield Portfolio 96,881,771 3,691,838 (2,883,906) 807,932 Strategic Income Portfolio 29,602,495 1,359,738 (429,477) 930,261 America Income Portfolio 43,414,254 391,118 (223,425) 167,693 Money Market Portfolio 33,763,137 -- -- -- - -------------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were as follows:
- -------------------------------------------------------------------------------- Portfolio Purchases Sales - -------------------------------------------------------------------------------- Emerging Markets Portfolio $ 10,761,173 $ 12,315,024 Europe Portfolio 5,352,378 5,238,860 International Value Portfolio 21,825,171 21,914,026 Small Cap Value Portfolio 7,241,266 3,313,196 Small Company Portfolio 3,888,393 2,470,587 Mid Cap Value Portfolio 343,646,689 167,846,365 Growth Shares Portfolio 39,697,597 38,914,354 Real Estate Shares Portfolio 17,444,652 15,240,948 Fund Portfolio 50,667,140 30,168,567 Equity Income Portfolio 27,101,040 19,453,205 Balanced Portfolio 4,672,761 5,692,754 High Yield Portfolio 47,769,685 31,032,220 Strategic Income Portfolio 14,699,615 6,400,106 America Income Portfolio -- -- Money Market Portfolio 417,166,777 416,535,000 - --------------------------------------------------------------------------------
125 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- The cost of purchases and the proceeds from sales of long-term U.S. Government obligations for the six months ended June 30, 2004, were as follows:
- -------------------------------------------------------------------------------- Portfolio Purchases Sales - -------------------------------------------------------------------------------- Balanced Portfolio $3,231,879 $ 1,924,745 Strategic Income Portfolio 192,761 398,065 America Income Portfolio 5,943,558 10,883,367 Money Market Portfolio -- -- - --------------------------------------------------------------------------------
7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows for the six months ended June 30, 2004 and the fiscal year ended December 31, 2003:
- ------------------------------------------------------------------------------------------- '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------- Emerging Markets Portfolio CLASS I: Shares sold 46,186 $ 815,949 143,611 $ 1,837,255 Reinvestment of distributions 3,952 63,595 2,017 25,338 Shares repurchased (87,603) (1,501,936) (195,769) (2,390,909) ------------------------------------------------------- Net increase (decrease) (37,465) $ (622,392) (50,141) (528,316) ======================================================= CLASS II: Shares sold 255,499 $ 4,444,409 1,162,017 $14,523,321 Reinvestment of distributions 12,278 196,317 4,838 60,429 Shares repurchased (260,491) (4,507,420) (435,883) (5,671,239) ------------------------------------------------------- Net increase (decrease) 7,286 $ 133,306 730,972 $ 8,912,511 ======================================================= Europe Portfolio CLASS I: Shares sold 13,195 $ 121,336 59,876 $ 462,031 Reinvestment of distributions 7,232 65,952 4,817 36,322 Shares repurchased (110,796) (1,006,213) (308,777) (2,225,749) ------------------------------------------------------- Net increase (decrease) (90,369) $ (818,925) (244,084) $(1,727,396) ======================================================= CLASS II: Shares sold 176,925 $ 1,591,957 836,602 $ 6,040,092 Reinvestment of distributions 4,343 38,910 1,262 9,637 Shares repurchased (70,861) (637,962) (547,441) (3,887,768) ------------------------------------------------------- Net increase (decrease) 110,407 $ 992,905 290,423 $ 2,161,691 ======================================================= International Value Portfolio: CLASS I: Shares sold 82,417 $ 841,974 148,266 $ 1,260,116 Reinvestment of distributions 10,994 113,572 17,452 146,246 Shares repurchased (234,008) (2,386,367) (658,580) (5,442,461) ------------------------------------------------------- Net increase (decrease) (140,597) $(1,430,821) (492,862) $(4,036,099) ======================================================= CLASS II: Shares sold 113,388 $ 1,204,631 108,723 $ 993,224 Reinvestment of distributions 862 8,887 -- -- Shares repurchased (13,519) (140,180) (1,092) (10,007) ------------------------------------------------------- Net increase (decrease) 105,731 $ 1,073,338 107,631 $ 983,217 ======================================================= - -------------------------------------------------------------------------------------------
126 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------ '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------------ Small Cap Value Portfolio CLASS I: Shares sold 239,892 $ 3,132,677 1,276,588 $ 13,058,675 Reinvestment of distributions -- -- -- -- Shares repurchased (126,447) (1,650,422) (1,028,432) (10,409,382) ------------------------------------------------------------ Net increase (decrease) 113,445 $ 1,482,255 248,156 $ 2,649,293 ============================================================ CLASS II: Shares sold 255,800 $ 3,318,167 235,328 $ 2,693,418 Reinvestment of distributions -- -- -- -- Shares repurchased (29,908) (396,217) (14,089) (159,522) ------------------------------------------------------------ Net increase (decrease) 225,892 $ 2,921,950 221,239 $ 2,533,896 ============================================================ Small Company Portfolio CLASS I: Shares sold 26,644 $ 310,139 286,397 $ 2,774,242 Reinvestment of distributions -- -- -- -- Shares repurchased (71,189) (828,339) (324,514) (3,132,628) ------------------------------------------------------------ Net increase (decrease) (44,545) $ (518,200) (38,117) $ (358,386) ============================================================ CLASS II: Shares sold 180,783 $ 2,118,896 328,726 $ 3,382,001 Reinvestment of distributions -- -- -- -- Shares repurchased (74,557) (877,202) (80,215) (778,938) ------------------------------------------------------------ Net increase (decrease) 106,226 $ 1,241,694 248,511 $ 2,603,063 ============================================================ Mid Cap Value Portfolio CLASS I: Shares sold 1,350,399 $ 28,801,387 2,677,744 $ 46,157,551 Reinvestment of distributions 117,892 2,575,556 26,084 438,476 Shares repurchased (746,981) (15,842,125) (2,465,836) (40,592,863) ------------------------------------------------------------ Net increase (decrease) 721,400 $ 15,534,818 237,992 $ 6,003,164 ============================================================ CLASS II: Shares sold 7,925,107 $168,141,999 6,515,291 $114,986,107 Reinvestment of distributions 221,974 4,807,964 93,450 14,131 Shares repurchased (214,474) (4,500,847) (1,080,224) (249,002) ------------------------------------------------------------ Net increase (decrease) 7,932,607 $168,449,116 6,280,420 $111,264,489 ============================================================ Growth Shares Portfolio CLASS I: Shares sold 50,359 $ 618,962 91,892 $ 1,012,931 Reinvestment of distributions -- -- 403 4,477 Shares repurchased (251,629) (3,068,841) (731,375) (7,757,809) ------------------------------------------------------------ Net increase (decrease) (201,270) $ (2,449,879) (639,080) $ (6,740,401) ============================================================ CLASS II: Shares sold 233,502 $ 2,834,133 271,796 $ 3,091,881 Reinvestment of distributions -- -- -- -- Shares repurchased (18,080) (218,795) (46,885) (519,493) ------------------------------------------------------------ Net increase (decrease) 215,422 $ 2,615,338 224,911 $ 2,572,388 ============================================================ - ------------------------------------------------------------------------------------------------
127 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------ '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------------ Real Estate Shares Portfolio CLASS I: Shares sold 46,990 $ 914,044 153,884 $ 2,545,266 Reinvestment of distributions 31,935 637,400 87,137 1,422,912 Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017) ------------------------------------------------------------ Net increase (decrease) (167,581) $ (3,090,354) (347,178) $ (5,232,839) ============================================================ CLASS II: Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344 Reinvestment of distributions 43,174 859,854 92,474 1,519,594 Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986) ------------------------------------------------------------ Net increase (decrease) 132,798 $ 2,730,810 (62,278) $ (40,048) ============================================================ Fund Portfolio CLASS I: Shares sold 184,697 $ 3,484,043 519,126 $ 8,479,870 Reinvestment of distributions 42,211 793,149 94,945 1,580,150 Shares repurchased (628,636) (11,825,399) (1,616,113) (25,564,887) ------------------------------------------------------------ Net increase (decrease) (401,728) $ (7,548,207) (1,002,042) $(15,504,867) ============================================================ CLASS II: Shares sold 1,580,694 $ 29,759,858 3,031,681 $ 50,171,619 Reinvestment of distributions 23,726 445,384 30,685 520,900 Shares repurchased (443,565) (8,365,149) (747,392) (12,093,482) ------------------------------------------------------------ Net increase (decrease) 1,160,855 $ 21,840,093 2,314,974 $ 38,599,037 ============================================================ Equity Income Portfolio CLASS I: Shares sold 537,739 $ 9,891,118 1,544,529 $ 24,668,979 Reinvestment of distributions 84,147 1,543,147 204,954 3,313,898 Shares repurchased (694,977) (12,774,712) (1,964,325) (30,892,038) ------------------------------------------------------------ Net increase (decrease) (73,091) $ (1,340,447) (214,842) $ (2,909,161) ============================================================ CLASS II: Shares sold 712,923 $ 13,157,472 1,723,515 $ 27,764,040 Reinvestment of distributions 31,627 583,520 52,432 860,942 Shares repurchased (261,146) (4,782,663) (242,114) (3,788,595) ------------------------------------------------------------ Net increase (decrease) 483,404 $ 8,958,329 1,533,833 $ 24,836,387 ============================================================ Balanced Portfolio CLASS I: Shares sold 64,930 $ 924,475 58,603 $ 777,329 Reinvestment of distributions 25,041 353,982 60,877 800,492 Shares repurchased (339,465) (4,804,032) (705,902) (9,066,098) ------------------------------------------------------------ Net increase (decrease) (249,494) $ (3,525,575) (586,422) $ (7,488,277) ============================================================ CLASS II: Shares sold 260,134 $ 3,690,253 244,252 $ 3,291,111 Reinvestment of distributions 3,399 47,978 1,455 20,059 Shares repurchased (30,909) (435,983) (3,966) (53,357) ------------------------------------------------------------ Net increase (decrease) 232,624 $ 3,302,248 241,741 $ 3,257,813 ============================================================ - ------------------------------------------------------------------------------------------------
128 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------- '04 Shares '04 Amount '03 Shares '03 Amount - --------------------------------------------------------------------------------------------------- High Yield Portfolio CLASS I: Shares sold 1,201,971 $ 13,743,588 2,515,726 $ 26,817,319 Reinvestment of distributions 187,908 2,134,532 357,809 3,779,086 Shares repurchased (1,508,494) (17,051,802) (1,491,103) (15,895,254) ---------------------------------------------------------------- Net increase (decrease) (118,615) $ (1,173,682) 1,382,432 $ 14,701,151 ================================================================ CLASS II: Shares sold 2,297,852 $ 26,264,116 1,708,526 $ 18,792,041 Reinvestment of distributions 75,932 859,985 25,089 279,936 Shares repurchased (972,496) (10,701,951) (221,726) (2,359,507) ---------------------------------------------------------------- Net increase (decrease) 1,401,288 $ 16,422,150 1,511,889 $ 16,712,470 ================================================================ Strategic Income Portfolio CLASS I: Shares sold 276,859 $ 3,041,159 712,653 $ 7,385,764 Reinvestment of distributions 79,451 855,733 100,561 1,053,192 Shares repurchased (273,985) (2,992,605) (579,108) (6,045,569) ---------------------------------------------------------------- Net increase (decrease) 82,325 $ 904,287 234,106 $ 2,393,387 ================================================================ CLASS II: Shares sold 813,612 $ 8,876,365 353,538 $ 3,774,292 Reinvestment of distributions 35,881 384,050 4,862 52,365 Shares repurchased (61,738) (673,533) (25,608) (275,096) ---------------------------------------------------------------- Net increase (decrease) 787,755 $ 8,586,882 332,792 $ 3,551,561 ================================================================ America Income Portfolio CLASS I: Shares sold 168,394 $ 1,696,627 711,258 $ 8,118,733 Reinvestment of distributions 124,770 1,275,682 221,712 2,321,232 Shares repurchased (1,059,762) (10,858,369) (3,202,256) (34,132,706) ---------------------------------------------------------------- Net increase (decrease) (766,598) $ (7,886,060) 2,269,286 (23,692,741) ================================================================ CLASS II: Shares sold 449,092 $ 4,591,427 265,643 $ 2,756,721 Reinvestment of distributions 14,695 149,812 2,521 26,114 Shares repurchased (9,832) (96,378) (13,939) (143,836) ---------------------------------------------------------------- Net increase (decrease) 454,405 $ 4,644,861 254,225 $ 2,638,999 ================================================================ Money Market Portfolio CLASS I: Shares sold 11,576,927 $ 11,576,926 27,291,288 $ 27,291,288 Reinvestment of distributions 56,332 56,332 277,946 277,946 Shares repurchased (17,186,821) (17,186,820) (52,356,043) (52,356,043) ---------------------------------------------------------------- Net increase (decrease) (5,553,562) $ (5,553,562) (24,786,809) $ (24,786,809) ================================================================ - ---------------------------------------------------------------------------------------------------
129 Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 8. Forward Foreign Currency Contracts During the six months ended June 30, 2004, certain Portfolios had entered into various contracts that obligate the Portfolios to deliver currencies at specified future dates. At the maturity of a contract, the Portfolios must make delivery of the foreign currency. Alternatively, prior to the settlement date of a portfolio hedge, the Portfolio may close out such contracts by entering into an offsetting hedge contract. As of June 30, 2004, the Portfolios' open portfolio hedges were as follows:
- -------------------------------------------------------------------------------------------------------------------------------- Contracts to In Exchange Settlement Net Portfolio Deliver For Date Value Unrealized Gain (Loss) - -------------------------------------------------------------------------------------------------------------------------------- Strategic Income Portfolio EURO (970,000) $(1,176,610) 7/21/04 $(1,182,307) $ 5,697 Strategic Income Portfolio EURO (118,399) $ (143,014) 7/2/04 $ (144,459) $ 1,445 Strategic Income Portfolio NOK (500,000) $ 72,171 7/6/04 $ 72,192 $ (21) Strategic Income Portfolio NOK (1,000,000) $ 143,014 7/2/04 $ 144,473 $(1,459) - --------------------------------------------------------------------------------------------------------------------------------
Outstanding forward currency settlement contracts as of June 30, 2004 were as follows:
- ----------------------------------------------------------------------------------------------------------------- Net Gross Settlement Gross Receivable/ Portfolio Receivable Date Payable (Payable) - ----------------------------------------------------------------------------------------------------------------- Emerging Markets Portfolio $ (22,235) 7/1/04 $ (22,235) $ -- Emerging Markets Portfolio $ 21,527 7/1/04 $ 21,485 $ 42 Emerging Markets Portfolio $ (3,613) 7/1/04 $ (3,623) $ (10) Europe Portfolio $ (39,985) 7/1/04 $ (40,379) $ (394) Europe Portfolio $ 42,274 7/1/04 $ 42,317 $ (43) International Value Portfolio $(215,870) 7/1/04 $(218,202) $(2,332) International Value Portfolio $ (61,833) 7/1/04 $ (61,783) $ 50 International Value Portfolio $ 150,662 7/1/04 $ 151,021 $ (359) International Value Portfolio $(177,285) 7/1/04 $(178,089) $ (804) International Value Portfolio $ (28,328) 7/1/04 $ (28,528) $ (200) International Value Portfolio $ 104,214 7/1/04 $ 103,313 $ 901 International Value Portfolio $(220,184) 7/1/04 $(220,185) $ (1) International Value Portfolio $ 121,036 7/1/04 $ 121,403 $ (367) - -----------------------------------------------------------------------------------------------------------------
130 [Pioneer Investments Logo] Pioneer Variable Contracts Trust Issuer Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96 In New York and Hawaii, issued by First Allmerica Financial Life Insurance Company, Contract Form A3025-96 GRC General Distributor Veravest Investments, Inc. 400 Lincoln Street Worcester, MA 01653 16059-00-0804 [PIONEER LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Fund VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 8 Notes to Financial Statements 12
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [REPRESENTATION OF PIE CHART] U.S. Common Stocks 94.7% Depositary Receipts for International Stocks 3.5% International Common Stocks 1.8%
Sector Distribution (As a percentage of equity holdings) [REPRESENTATION OF PIE CHART] Financials 17.1% Information Technology 13.9% Consumer Discretionary 13.0% Health Care 12.5% Industrials 12.3% Consumer Staples 11.9% Energy 8.2% Materials 5.7% Telecommunication Services 3.3% Utilities 2.1%
Five Largest Holdings (As a percentage of equity holdings) 1. ChevronTexaco Corp. 2.17% 2. Exxon Mobil Corp. 2.11 3. McGraw-Hill Co., Inc. 1.93 4. Target Corp. 1.85 5. SBC Communications, Inc. 1.71
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 18.94 $ 18.66
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.080 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Fund VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [REPRESENTATION OF LINE CHART]
Pioneer Fund VCT S&P 500 Portfolio 10/97 10000 10000 10643 10545 12/98 13686 13257 16565 15312 12/00 15060 15561 13275 13836 12/02 10342 11173 13306 13791 6/04 13764 14058
The S&P 500 Index is an unmanaged measure of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 5.24% (10/31/97) 5 Years -0.82% 1 Year 17.55%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In the following discussion, portfolio manager John Carey, reviews the investment environment and the performance of Pioneer Fund VCT Portfolio over the six months ended June 30, 2004. Q: How did the Portfolio perform over the first six months of 2004? A: Class II shares of Pioneer Fund VCT Portfolio recorded a positive total return of 1.93% at net asset value in the six months ended June 30, 2004. Pioneer Fund VCT Portfolio lagged the Standard & Poor's 500 Index, which showed a total return of 3.44% over the same period. While the mild returns might suggest a calm market, the reality was a market of sharp contrasts. With reference to performance of the respective sectors in the S&P 500, information technology, the darling of investors in 2003, barely moved, with a gain of 0.44% for the period, while energy, industrials and consumer staples advanced, respectively, 12.97%, 7.42%, and 6.12%. Investors appeared to be "rotating" out of more highly priced stocks and into shares more moderately priced, with dividends and steadier earnings outlooks. Q: Please discuss the Portfolio's performance versus the S&P 500 Index. A: Our underperformance versus the S&P was attributable mainly to our stock holdings in four sectors: information technology, materials, industrials and telecommunications services. Our strongest positive contributors were our investments in consumer discretionary, consumer staples and health care. Taking first the negative contributors, our technology holdings showed an overall decline of 1.59% versus the S&P sector gain of 0.44%. The main culprits were our positions in Texas Instruments, Novellus Systems, Synopsys and Nokia. After analyzing the different situations, we retained shares in Texas Instruments and Nokia, but liquidated our positions in Novellus and Synopsys. With regard to materials, where again we showed a negative return (3.80%) versus a slight positive return (0.71%) for the S&P sector, the largest factor was our position in Rio Tinto. In the case of the materials, we believe that the fundamentals are strong for the group looking out at least over the next couple of years and that it was mainly "profit taking" behind the weak share prices. Perhaps, too, there was some concern about a potential slow-down in the Chinese economy, which has been a prime user of many raw materials as that country rapidly industrializes. Following our evaluation of the "pros and cons," we retained Rio Tinto, a prominent worldwide mining company, as well as our shares of other companies in the sector. Industrials presented a mixed picture, with our investments rising 5.13% versus an increase for the sector of 7.42%. We had very good performance from our railroad holding Norfolk Southern, but our capital-goods stocks were more sluggish. Finally, in telecomm services, we did not own AT&T Wireless, which received a premium take-over bid, but instead owned BellSouth and SBC Communications, the companies in the joint venture, Cingular, that made the bid. BellSouth and SBC both declined as investors worried that they "overpaid." On the bright side, we had some nice gains from stocks in consumer discretionary, consumer staples and health care. They were, respectively, John Wiley & Sons, publisher of scientific and technical books and journals and also owner of the "For Dummies" imprint; Colgate-Palmolive, major brand in toothpaste; and Becton Dickinson, provider of medical supplies including disposable syringes. Q: What changes have you made to the Portfolio so far this year? A: We were fairly active during the six months, adding 18 positions and eliminating 18. The combined effect of securities transactions and market fluctuations produced overall increases for our weightings in the energy, consumer discretionary, consumer staples, health care and financials sectors; overall decreases for our weightings in industrials and information technology; and no meaningful change for our weightings in materials, telecommunications services and utilities. In energy, we initiated positions in Apache, British Petroleum, Pioneer Natural Resources and Occidental Petroleum and sold positions in Transocean, Royal Dutch Petroleum, and Shell Transport & Trading. We believed that Transocean was fairly valued, and in the cases of Royal Dutch and the allied Shell Transport we had developed reservations about management in the wake of significant downward revisions in oil and gas reserves estimates. On the other hand, we thought that prospects were positive for the companies we added and that the larger number of holdings would provide the portfolio with more diversification. In consumer discretionary we invested in three companies we thought were poised to do better with the stronger economy, Ford Motor, Liz Claiborne, and Walt Disney, and sold two stocks that had been longer-term disappointments, Dow Jones and Eastman Kodak. We also added Clorox, formulator of bleaches and other household cleansers, and Estee Lauder, cosmetics manufacturer, in consumer staples. Our health care additions were among our most significant and included equipment makers Guidant and St. Jude Medical, distributor Cardinal Health, and generic-drug companies Barr Pharmaceuticals and Mylan Laboratories. One of our purchases in financials proved to be particularly well timed, as SouthTrust, a regional bank headquartered in Birmingham, Alabama, received a generous acquisition offer from another bank, Wachovia, not long after we had bought it. Another entry we made to the portfolio was U.S. Bancorp, based in Minneapolis, Minnesota. In other sectors, we bought, in materials, Ecolab, supplier of industrial and institutional cleaning chemicals, and, in information technology, Apple Computer, survivor, against all odds, in the personal-computer business as well as innovative producer of the very hot iPod digital-music player. Along with the seven names already mentioned in energy and consumer discretionary and (above) in information technology, we deleted the following: Boeing, Lockheed Martin, Robert Half, Union Pacific, Medco Health Solutions, Bank of America, Electronics Data Systems, BMC Software, Cisco Systems, QUALCOMM and Altera. As always, we had a variety of reasons, in some instances recognizing difficulties for the companies that appeared beyond a reasonable time horizon in their resolution, in other instances seeing a fully valued stock relative to identifiable earnings power, and in still other cases just thinking we had more attractive alternatives. Q: What is your outlook on the stock market and economy for the remainder of 2004? A: At the midpoint of 2004, the market appears in disarray. Truth be told, interest rates have not really moved very much at all, but there appears great anxiety about greater moves to come. Inflation is not a current problem, yet the high oil and raw-materials prices, as well as the prospect of rising wages with growth in employment, provide the worriers a reason to focus on the risk of inflation. Corporate earnings are generally very strong and also strongly up from last year, but the expressed concern is with respect to slowing of the impressive comparisons. The market to us remains attractive, even if more moderately attractive than it was in early 2003 when prices were much lower and the economy was still just poised for its rebound rather than underway with the rebound as it is currently. We see especially good values, however, among the good companies with good long-term records in which we like to invest on your behalf and which were relatively neglected by investors up until recently. Betting which way the market might go on a short-term basis has never seemed to us like a particularly fruitful endeavor. So our intention is, as always, to stay invested over the coming months, and years, and to stay invested in the solid kinds of companies we always aim to own in your Portfolio. Thank you for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 96.5% Energy - 7.9% Integrated Oil & Gas - 5.9% 16,643 BP Amoco Plc (A.D.R.) $ 891,566 57,921 ChevronTexaco Corp. 5,450,945 24,727 ConocoPhillips 1,886,423 119,280 Exxon Mobil Corp. 5,297,224 36,993 Occidental Petroleum Corp. 1,790,831 ------------ $ 15,316,989 ------------ Oil & Gas Drilling - 0.9% 42,044 Smith International, Inc.* $ 2,344,373 ------------ Oil & Gas Exploration & Production - 1.1% 18,971 Apache Corp. $ 826,187 57,988 Pioneer Natural Resources Co. 2,034,219 ------------ $ 2,860,406 ------------ Total Energy $ 20,521,768 ------------ Materials - 5.5% Aluminum - 0.6% 46,252 Alcoa, Inc. $ 1,527,704 ------------ Commodity Chemicals - 1.1% 23,113 Air Products & Chemicals, Inc. $ 1,212,277 38,676 E.I. du Pont de Nemours and Co. 1,717,988 ------------ $ 2,930,265 ------------ Diversified Chemical - 0.4% 18,467 PPG Industries, Inc. $ 1,154,003 ------------ Diversified Metals & Mining - 2.5% 32,924 Phelps Dodge Corp.* $ 2,551,939 164,111 Rio Tinto Plc 3,949,666 ------------ $ 6,501,605 ------------ Paper Products - 0.5% 43,199 Meadwestvaco Corp. $ 1,269,619 ------------ Specialty Chemicals - 0.4% 32,149 Ecolab, Inc. $ 1,019,123 ------------ Total Materials $ 14,402,319 ------------ Capital Goods - 7.4% Aerospace & Defense - 1.5% 38,908 General Dynamics Corp. $ 3,863,564 ------------ Electrical Components & Equipment - 0.7% 18,467 Emerson Electric Co. $ 1,173,578 26,633 General Electric Co. 862,909 ------------ $ 2,036,487 ------------
Shares Value Industrial Conglomerates - 2.8% 20,674 Illinois Tool Works, Inc. $ 1,982,430 45,528 Johnson Controls, Inc. 2,430,285 31,359 United Technologies Corp. 2,868,721 ------------ $ 7,281,436 ------------ Industrial Machinery - 2.4% 33,682 Caterpillar, Inc. $ 2,675,698 50,290 Deere & Co. 3,527,341 ------------ $ 6,203,039 ------------ Total Capital Goods $ 19,384,526 ------------ Commercial Services & Supplies - 1.0% Office Services & Supplies - 1.0% 47,154 Canon, Inc. (A.D.R.) $ 2,518,023 ------------ Total Commercial Services & Supplies $ 2,518,024 ------------ Transportation - 3.4% Airlines - 0.9% 137,864 Southwest Airlines Co. $ 2,311,979 ------------ Railroads - 2.0% 40,302 Burlington Northern, Inc. $ 1,413,391 146,340 Norfolk Southern Corp. 3,880,937 ------------ $ 5,294,328 ------------ Trucking - 0.5% 16,958 United Parcel Service $ 1,274,733 ------------ Total Transportation $ 8,881,040 ------------ Automobiles & Components - 2.3% Automobile Manufacturers - 2.3% 208,966 Ford Motor Corp. $ 3,270,318 46,602 PACCAR, Inc. 2,702,450 ------------ $ 5,972,768 ------------ Total Automobiles & Components $ 5,972,768 ------------ Media - 6.2% Advertising - 1.0% 35,541 Omnicom Group $ 2,697,206 ------------ Movies & Entertainment - 0.4% 34,933 The Walt Disney Co. $ 890,442 ------------ Publishing - 4.8% 46,390 Elsevier NV $ 652,795 40,418 Gannett Co. 3,429,467 113,495 John Wiley & Sons, Inc. 3,631,840 63,415 McGraw-Hill Co., Inc. 4,855,687 ------------ $ 12,569,789 ------------ Total Media $ 16,157,437 ------------
4 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Retailing - 4.1% Apparel Retail - 0.3% 19,973 Liz Claiborne, Inc. $ 718,629 ------------ Department Stores - 0.6% 53,341 May Department Stores Co. $ 1,466,344 ------------ General Merchandise Stores - 2.1% 29,152 Family Dollar Stores, Inc. $ 886,804 109,408 Target Corp. 4,646,558 ------------ $ 5,533,362 ------------ Home Improvement Retail - 0.8% 39,604 Lowe's Companies, Inc. $ 2,081,190 ------------ Specialty Stores - 0.3% 25,229 Barnes & Noble, Inc.* $ 857,281 ------------ Total Retailing $ 10,656,806 ------------ Food & Drug Retailing - 3.5% Drug Retail - 1.6% 112,775 Walgreen Co. $ 4,083,583 ------------ Food Distributors - 1.3% 12,492 Cardinal Health, Inc. $ 875,065 68,293 Sysco Corp. 2,449,670 ------------ $ 3,324,735 ------------ Hypermarkets & Supercenters - 0.6% 30,854 Wal-Mart Stores, Inc. $ 1,627,857 ------------ Total Food & Drug Retailing $ 9,036,175 ------------ Food, Beverage & Tobacco - 4.7% Packaged Foods & Meats - 3.6% 70,267 Campbell Soup Co. $ 1,888,777 36,702 General Mills, Inc. 1,744,446 45,065 Hershey Foods Corp. 2,085,158 59,465 H.J. Heinz Co., Inc. 2,331,028 61,629 Sara Lee Corp. 1,416,851 ------------ $ 9,466,260 ------------ Soft Drinks - 1.1% 53,078 PepsiCo, Inc. $ 2,859,843 ------------ Total Food, Beverage & Tobacco $ 12,326,103 ------------ Household & Personal Products - 3.3% Household Products - 3.3% 12,405 Clorox Co. $ 667,141 53,543 Colgate-Palmolive Co. 3,129,588 19,005 Estee Lauder Co. 927,064 70,848 Procter & Gamble Co. 3,856,965 ------------ $ 8,580,758 ------------ Total Household & Personal Products $ 8,580,758 ------------
Shares Value Health Care Equipment & Services - 5.9% Health Care Distributors - 2.4% 47,967 Abbott Laboratories $ 1,955,135 75,610 Johnson & Johnson 4,211,477 ------------ $ 6,166,612 ------------ Health Care Equipment - 2.7% 58,653 Becton, Dickinson & Co. $ 3,038,225 35,076 Biomet, Inc. 1,558,777 26,639 Guidant Corp. 1,488,587 13,291 St. Jude Medical, Inc.* 1,005,464 ------------ $ 7,091,053 ------------ Managed Health Care - 0.8% 20,042 United Healthcare Group, Inc. $ 1,247,615 7,549 Wellpoint Health Networks, Inc.* 845,563 ------------ $ 2,093,178 ------------ Total Health Care Equipment & Services $ 15,350,843 ------------ Pharmaceuticals & Biotechnology - 6.1% Pharmaceuticals - 6.1% 33,785 Barr Laboratorie, Inc.* $ 1,138,555 35,772 Eli Lilly & Co. 2,500,821 55,400 Merck & Co., Inc. 2,631,500 67,544 Mylan Laboratories, Inc. 1,367,766 45,761 Novartis AG (A.D.R.) 2,036,364 62,253 Pfizer, Inc. 2,134,033 15,214 Roche Holdings AG (A.D.R.)* 1,508,088 145,764 Schering-Plough Corp. 2,693,719 ------------ $ 16,010,846 ------------ Total Pharmaceuticals & Biotechnology $ 16,010,846 ------------ Banks - 7.4% Diversified Banks - 2.2% 32,784 Charter One Financial, Inc. $ 1,448,725 85,656 U.S. Bancorp 2,360,679 35,519 Wells Fargo & Co. 2,032,752 ------------ $ 5,842,156 ------------ Regional Banks - 4.2% 28,340 First Horizon National Corp. $ 1,288,620 114,053 National City Corp. 3,992,996 38,351 SouthTrust Corp. 1,488,402 47,329 SunTrust Banks, Inc. 3,075,912 19,396 Zions Bancorporation 1,191,884 ------------ $ 11,037,814 ------------ Thrifts & Mortgage Finance - 1.0% 64,028 Washington Mutual, Inc. $ 2,474,042 ------------ Total Banks $ 19,354,012 ------------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Diversified Financials - 5.6% Asset Management & Custody Banks - 3.8% 52,067 The Bank of New York Co., Inc. $ 1,534,935 37,051 Federated Investors Inc. 1,124,127 62,368 State Street Corp. 3,058,527 81,766 T. Rowe Price Associates, Inc. 4,121,006 ------------ $ 9,838,595 ------------ Consumer Finance - 0.8% 38,211 American Express Co. $ 1,963,281 ------------ Investment Banking & Brokerage - 1.0% 49,593 Merrill Lynch & Co., Inc. $ 2,677,030 ------------ Total Diversified Financials $ 14,478,906 ------------ Insurance - 3.5% Multi - Line Insurance - 1.0% 37,283 American International Group, Inc. $ 2,657,532 ------------ Property & Casualty Insurance - 2.5% 46,109 Chubb Corp. $ 3,143,712 26,583 Safeco Corp. 1,169,652 52,652 St. Paul Travelers Companies, Inc. 2,134,512 ------------ $ 6,447,876 ------------ Total Insurance $ 9,105,408 ------------ Software & Services - 4.7% Application Software - 2.4% 35,888 Adobe Systems, Inc. $ 1,668,792 119,628 Microsoft Corp. 3,416,576 26,017 Symantec Corp.* 1,139,024 ------------ $ 6,224,392 ------------ Data Processing & Outsourced Services - 2.3% 39,373 Automatic Data Processing, Inc. $ 1,648,941 32,311 Computer Sciences Corp.* 1,500,200 21,836 DST Systems, Inc.* 1,050,093 25,494 Fiserv, Inc.* 991,462 32,184 SunGard Data Systems, Inc.* 836,784 ------------ $ 6,027,480 ------------ Total Software & Services $ 12,251,872 ------------ Technology Hardware & Equipment - 5.4% Communications Equipment - 2.0% 182,952 Motorola, Inc. $ 3,338,874 128,455 Nokia Corp (A.D.R.) 1,867,736 ------------ $ 5,206,610 ------------
Shares Value Computer Hardware - 3.4% 17,403 Apple Computer, Inc.* $ 566,294 60,976 Dell, Inc.* 2,184,160 22,881 Diebold, Inc. 1,209,718 72,740 Hewlett-Packard Co. 1,534,814 24,634 IBM Corp.* 2,171,487 252,670 Sun Microsystems, Inc.* 1,096,588 ------------ $ 8,763,061 ------------ Total Technology Hardware & Equipment $ 13,969,671 ------------ Semiconductors - 3.4% Semiconductor Equipment - 0.9% 120,790 Applied Materials, Inc.* $ 2,369,900 ------------ Semiconductors - 2.5% 126,597 Intel Corp. $ 3,494,077 118,406 Texas Instruments, Inc. 2,863,057 ------------ $ 6,357,134 ------------ Total Semiconductors $ 8,727,034 ------------ Telecommunication Services - 3.2% Integrated Telecommunication Services - 3.2% 18,815 Alltel Corp. $ 952,415 116,841 BellSouth Corp. 3,063,571 176,887 SBC Communications, Inc. 4,289,510 ------------ $ 8,305,496 ------------ Total Telecommunication Services $ 8,305,496 ------------ Utilities - 2.0% Electric Utilities - 1.3% 26,945 American Electric Power Co., Inc. $ 862,240 29,268 Consolidated Edison, Inc. 1,163,696 46,790 Southern Co. 1,363,929 ------------ $ 3,389,865 ------------ Gas Utilities - 0.6% 22,532 KeySpan Energy Corp. (a) $ 826,924 31,011 Vectren Corp. 778,065 ------------ $ 1,604,989 ------------ Water Utilities - 0.1% 14,953 Aqua America, Inc. $ 299,808 ------------ Total Utilities $ 5,294,662 ------------ TOTAL COMMON STOCKS (Cost $224,336,202) $251,286,474 ------------
6 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount Value TEMPORARY CASH INVESTMENTS - 3.7% Repurchase Agreement - 3.4% $ 8,800,000 UBS Warburg, Inc., 1.25%, dated 6/30/04, repurchase price of $8,800,000 plus accrued interest on 7/1/04 collateralized by $8,068,000 U.S. Treasury Bill, 7.0%, 7/15/06 $ 8,800,000 ------------
Shares Security Lending Collateral - 0.3% 766,159 Securities Lending Investment Fund, 1.29% $ 766,159 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $9,566,159) $ 9,566,159 ------------ TOTAL INVESTMENT IN SECURITIES - 100.2% (Cost $233,902,361) (a) $260,852,633 ------------ OTHER ASSETS AND LIABILITIES - (0.2)% $ (506,268) ------------ TOTAL NET ASSETS - 100.0% $260,346,365 ============
* Non-income producing security. (A.D.R.) American Depositary Receipt (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 20,707 KeySpan Energy Corp. $751,043
The accompanying notes are an integral part of these financial statements. 7 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Year Year Year 5/1/00 (a) Ended Ended Ended Ended to Class II 6/30/04 12/31/03 12/31/02 12/31/01 12/31/00 Net asset value, beginning of period $ 18.66 $ 15.25 $ 19.05 $ 22.65 $23.28 -------- ------- ------- ------- ------ Increase (decrease) from investment operations: Net investment income $ 0.07 $ 0.14 $ 0.13 $ 0.14 $ 0.12 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.29 3.42 (3.78) (2.59) (0.45) -------- ------- ------- ------- ------ Net increase (decrease) from investment operations $ 0.36 $ 3.56 $ (3.65) $ (2.45) $(0.33) Distributions to shareowners: Net investment income (0.08) (0.15) (0.15) (0.13) (0.17) Net realized gain -- -- -- (1.02) (0.13) -------- ------- ------- ------- ------ Net increase (decrease) in net asset value $ 0.28 $ 3.41 $ (3.80) $ (3.60) $(0.63) -------- ------- ------- ------- ------ Net asset value, end of period $ 18.94 $ 18.66 $ 15.25 $ 19.05 $22.65 ======== ======= ======= ======= ====== Total return* 1.93% 23.44% (19.25)% (11.09)% (1.61)% Ratio of net expenses to average net assets+ 0.96%** 1.00% 1.06% 1.04% 0.93%** Ratio of net investment income (loss) to average net assets+ 0.78%** 0.87% 0.84% 0.49% 0.47%** Portfolio turnover rate 25%** 11% 11% 7% 19%** Net assets, end of period (in thousands) $110,781 $87,488 $36,218 $12,674 $2,894 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.96%** 1.00% 1.06% 1.04% 0.93%** Net investment income (loss) 0.78%** 0.87% 0.84% 0.49% 0.47%**
(a) Class 2 shares were first publicly offered on May 1, 2000. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period.) ** Annualized. + Ratios with no reduction for fees paid indirectly. 8 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $751,043) (Cost $233,902,361) $260,852,633 Cash 63,820 Foreign currencies, at value -- Receivables -- Investment securities sold -- Fund shares sold 150,340 Dividends, interest and foreign taxes withheld 264,315 Other 622 ------------ Total assets $261,331,730 ------------ LIABILITIES: Payables -- Investment securities purchased $ -- Fund shares repurchased 14,838 Dividends -- Upon return for securities loaned 766,159 Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 184,570 Accrued expenses 19,798 Other -- ------------ Total liabilities $ 985,365 ------------ NET ASSETS: Paid-in capital $268,906,525 Accumulated net investment income (loss) (75,908) Accumulated undistributed net realized gain (loss) (35,434,524) Net unrealized gain (loss) on: Investments 26,950,272 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $260,346,365 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $149,564,869 Shares outstanding 7,879,911 ------------ Net asset value per share $ 18.98 Class II: No par value (unlimited number of shares authorized) Net assets $110,781,496 Shares outstanding 5,850,266 ------------ Net asset value per share $ 18.94
The accompanying notes are an integral part of these financial statements. 9 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $19,683) $ 2,102,920 Interest 57,470 Income on securities loaned, net 7,876 Other -- ----------- Total investment income $ 2,168,266 EXPENSES: Management fees $ 811,005 Transfer agent fees 1,223 Distribution fees (Class II) 123,119 Administrative fees 15,324 Custodian fees 20,922 Professional fees 26,346 Printing 3,962 Fees and expenses of nonaffiliated trustees -- Miscellaneous 3,740 ----------- Total expenses $ 1,005,641 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ----------- Net expenses $ 1,005,641 Net investment income (loss) $ 1,162,625 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $(1,304,040) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (3,646) ----------- $(1,307,686) ----------- Change in net unrealized gain or loss from: Investments $ 5,111,020 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $ 5,111,020 ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ 3,803,334 =========== Net increase (decrease) in net assets resulting from operations $ 4,965,959 ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 1,162,625 $ 2,086,873 Net realized gain (loss) on investments (1,307,686) (8,525,302) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 5,111,020 49,662,141 ------------ ------------ Net increase (decrease) in net assets resulting from operations $ 4,965,959 $ 43,223,712 ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (793,149) $ (1,580,150) Class II (445,384) (520,900) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ------------ ------------ Total distributions to shareowners $ (1,238,533) $ (2,101,050) ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 33,243,901 $ 58,651,489 Reinvestment of distributions 1,238,553 2,101,050 Cost of shares repurchased (20,190,548) (37,658,369) ------------ ------------ Net increase (decrease) in net assets resulting from fund share transactions $ 14,291,886 $ 23,940,170 ------------ ------------ Net increase (decrease) in net assets $ 18,019,312 $ 64,216,832 ------------ ------------ NET ASSETS: Beginning of period $242,327,053 $178,110,221 ------------ ------------ End of period $260,346,365 $242,327,053 ============ ============ Accumulated/(distributions in excess of) net investment income (loss) $ (75,908) $ -- ============ ============
The accompanying notes are an integral part of these financial statements. 11 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Fund VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen seperarate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Fund Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004 there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total 12 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Fund Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Fund VCT Portfolio had a capital loss carryforward of $33,944,745, of which the following amounts will expire between 2009 and 2011 if not utilized: $6,699,261 in 2009, $14,227,957 in 2010 and $13,017,527 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 13 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- - ------------------------------------------------
Pioneer Fund VCT Portfolio 2003 -------------- Distributions paid from: Ordinary Income $ 2,101,050 Long- Term capital gain -- ------------ $ 2,101,050 Return of Capital -- ------------ Total distributions $ 2,101,050 ============ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/ (Capital loss carryforward) (33,944,745) Unrealized appreciation (depreciation) 21,657,159 ------------ Total $(12,287,586) ============
- ------------------------------------------------ The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $159,258 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito 14 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $25,055 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------- Net Gross Gross Appreication/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------------- Fund Portfolio $234,084,454 $39,850,461 $ (13,082,282) $26,768,179 ------------ ----------- ------------- ----------- - ----------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $50,667,140 and $30,168,567, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ---------------------------------------------------------------------------------------------- Fund Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ---------------------------------------------------------------------------------------------- CLASS II: Shares sold 184,697 $ 3,484,043 519,126 $ 8,479,870 Reinvestment of distributions 42,211 793,149 94,945 1,580,150 Shares repurchased (628,636) (11,825,399) (1,616,113) (25,664,887) ---------------------------------------------------------- Net increase (401,728) $ (7,548,207) (1,156,042) $(15,504,867) ========================================================== CLASS II: Shares sold 1,580,694 $ 29,759,858 3,031,681 $ 50,171,619 Reinvestment of distributions 23,726 445,384 30,685 520,900 Shares repurchased (443,565) (8,365,149) (747,392) (12,093,482) ---------------------------------------------------------- Net increase 1,160,855 $ 21,840,093 2,314,974 $ 38,599,037 ========================================================== - -------------------------------------------------------------------------------------------------
15 [PIONEER LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our web site www.pioneerfunds.com. 16068-00-0804 [logo] Pioneer Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Value VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 7 Notes to Financial Statements 11
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 92.3% Depository Receipts for International Stocks 6.0% International Common Stocks 1.7%
Sector Distribution Portfolio (As a percentage of equity holdings) [THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Financials 31.3% Energy 12.4% Industrials 10.6% Consumer Discretionary 9.6% Health Care 9.1% Information Technology 7.7% Consumer Staples 6.1% Telecommunication Services 6.1% Materials 5.9% Utilities 1.2%
Five Largest Holdings (As a percentage of equity holdings) 1. Bank of America Corp. 4.90% 2. Citigroup, Inc. 4.73 3. Freddie Mac 3.43 4. HCA, Inc. 2.50 5. Time Warner, Inc. 2.35
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 5/1/03 Net Asset Value per Share $ 12.41 $ 10.00
Distributions per Share Short-Term Long-Term (5/1/03 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.010 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Value VCT Portfolio at net asset value, compared to that of the Russell 1000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Russell 1000 Pioneer Value Value Index VCT Portfolio 5/03 $10,000 $10,000 6/04 11,800 11,633
The Russell 1000 Value Index measures the performance of the value-oriented stocks in the Russell 1000 Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 20.40% (5/1/03)
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In this semiannual report to shareowners, Portfolio Manager J. Rodman Wright describes the economic background and investment strategies that affected results for Pioneer Value VCT Portfolio over the first half of 2004. Q. What was the investment background and how did the Portfolio perform during the period? A. The market rode the momentum of economic recovery until the expansion's strength brought fears of inflation and higher interest rates, driving equity prices down. Stocks later rebounded on the basis of strong corporate earnings, but many companies remained cautious about future profits. That caution, coming atop high energy prices and fears of geopolitical disruptions, caused stocks to decline in May only to rebound in June. The net effect of the swings was to leave broad market indicators little changed from year-end levels. For the six months ending June 30, 2004, Class II shares of Pioneer Value VCT Portfolio returned 3.17% at net asset value. That result trailed the 3.94% return on the Russell 1000 Value Index, the Portfolio's benchmark, for the same period. Q. Which sectors or stocks had a favorable impact on results? A. Buyouts of two holdings boosted results in the first half of the year: Cingular's acquisition of AT&T Wireless was our biggest success story; and the merger of Charter One into Citizen's Bank was another. Good stock selection also aided results among other financial services companies. Mortgage lender Countrywide Financial enjoyed good business volume, both before interest rates began to rise and later, when eager homebuyers rushed to secure financing before borrowing costs moved even higher. Credit-card issuer Providian also contributed, as efforts by new management to correct the company's course began to pay off with a stronger balance sheet and increasing revenues. Strong earnings pushed shares of Bank of America higher, but Citigroup stock declined. Technology holdings were modest contributors overall. Shares of Motorola rose as the company returned to profitability. First Data, which processes credit card transactions, saw volumes increase with the recovering economy. Avoiding the weak semiconductor industry also aided returns. The Portfolio outperformed its benchmark in energy, with high oil prices aiding offshore driller Transocean as well as Conoco Phillips, an integrated energy company. Elsewhere, a rise in Pepsico's shares reflected continued growth in earnings and sales. Tyco International, an industrial conglomerate, continues to execute a successful turnaround strategy. Cost-cutting moves have proved effective and added to the bottom line. Tyco has also cut its debt load sharply and resolved outstanding regulatory concerns. Q. What were some areas of disappointment? A. Media stocks, including Clear Channel and Viacom, were weak. Advertising commitments, especially for radio, have failed to meet expectations despite the expanding economy, political campaigns and upcoming Olympics. We took advantage of the market's indifference to add to these positions. Freeport-McMoRan, which mines copper and gold, saw shares fall when gold prices retreated. Demand for copper, the larger part of Freeport's business, remained strong. HCA suffered with the rest of the hospital industry when the slow economy brought large numbers of uninsured patients to its emergency rooms, adding to uncollectable accounts. We bought additional shares when the price fell because the valuation was attractive and we expect revenues to stabilize in the economic recovery. Q. What is your outlook for the months ahead? A. We believe corporate earnings will continue to grow, a circumstance that normally favors stocks. But how much of that growth is already reflected in stock prices remains to be seen. In addition, the market seems likely to remain directionless as external variables such as Iraq, threats of terrorism and the presidential election play out. An up-and-down, uncertain market environment like this one tends to favor our value-focused, opportunistic style of stock picking. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 98.5% Energy - 12.2% Integrated Oil & Gas - 5.8% 1,005 BP Amoco Plc (A.D.R.) $ 53,838 783 ChevronTexaco Corp. 73,688 1,352 ConocoPhillips 103,144 1,389 Occidental Petroleum Corp. 67,241 ------------ $ 297,911 ------------ Oil & Gas Drilling - 2.9% 2,070 ENSCO International, Inc. $ 60,237 714 Nabors Industries, Inc. * 32,287 2,035 Transocean Offshore, Inc. * 58,893 ------------ $ 151,417 ------------ Oil & Gas Exploration & Production - 3.5% 917 Anadarko Petroleum Corp. $ 53,736 1,091 Devon Energy Corp. 72,006 2,027 Suncor Energy, Inc. 51,911 ------------ $ 177,653 ------------ Total Energy $ 626,981 ------------ Materials - 5.9% Commodity Chemicals - 1.0% 1,348 Praxair, Inc. $ 53,799 ------------ Diversified Chemical - 0.9% 772 PPG Industries, Inc. $ 48,242 ------------ Diversified Metals & Mining - 1.7% 1,275 Freeport-McMoRan Copper & Gold, Inc. (Class B) $ 42,266 552 Phelps Dodge Corp. * 42,786 ------------ $ 85,052 ------------ Metal & Glass Containers - 0.9% 646 Ball Corp. $ 46,544 ------------ Paper Products - 1.4% 1,015 Weyerhaeuser Co. $ 64,067 ------------ Total Materials $ 297,704 ------------ Capital Goods - 5.6% Aerospace & Defense - 1.2% 1,117 Northrop Grumman Corp. $ 59,983 ------------ Industrial Conglomerates - 4.4% 566 Donaldson Co., Inc. $ 16,584 3,169 Tyco International Ltd. 105,021 1,167 United Technologies Corp. 106,757 ------------ $ 228,362 ------------ Total Capital Goods $ 288,345 ------------ Shares Value Commercial Services & Supplies - 2.0% Environmental Services - 2.0% 3,333 Waste Management, Inc. $ 102,156 ------------ Total Commercial Services & Supplies $ 102,156 ------------ Transportation - 2.8% Airlines - 1.1% 3,215 Southwest Airlines Co. $ 53,916 ------------ Railroads - 0.8% 977 Canadian National Railway Co. $ 42,587 ------------ Trucking - 0.9% 646 United Parcel Service $ 48,560 ------------ Total Transportation $ 145,063 ------------ Hotels, Restaurants & Leisure - 1.6% Restaurants - 1.6% 3,159 McDonald's Corp. $ 82,134 ------------ Total Hotels, Restaurants & Leisure $ 82,134 ------------ Media - 6.9% Broadcasting & Cable TV - 2.3% 1,512 Clear Channel Communications, Inc. $ 55,868 2,253 Comcast Corp. * 63,152 ------------ $ 119,020 ------------ Movies & Entertainment - 3.6% 6,745 Time Warner, Inc. * $ 118,577 1,884 Viacom, Inc. (Class B) 67,296 ------------ $ 185,873 ------------ Publishing - 1.0% 588 Gannett Co. $ 49,892 ------------ Total Media $ 354,785 ------------ Retailing - 1.0% Department Stores - 1.0% 1,186 Kohl's Corp. * $ 50,144 ------------ Total Retailing $ 50,144 ------------ Food & Drug Retailing - 2.1% Food Retail - 2.1% 2,776 Kroger Co. * $ 50,523 223 Nestle SA (Registered Shares) 59,586 ------------ $ 110,109 ------------ Total Food & Drug Retailing $ 110,109 ------------ Food, Beverage & Tobacco - 2.9% Packaged Foods & Meats - 1.2% 2,661 Sara Lee Corp. $ 61,176 ------------
4 The accompanying notes are an integral part of these financial statements. Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Soft Drinks - 1.7% 1,617 PepsiCo, Inc. $ 87,124 ------------ Total Food, Beverage & Tobacco $ 148,300 ------------ Household & Personal Products - 1.0% Personal Products - 1.0% 779 Kimberly-Clark Corp. $ 51,321 ------------ Total Household & Personal Products $ 51,321 ------------ Health Care Equipment & Services - 5.2% Health Care Distributors - 0.7% 956 Wyeth, Inc. $ 34,569 ------------ Health Care Facilities - 3.2% 3,038 HCA, Inc. $ 126,350 2,586 Tenet Healthcare Corp. * 34,678 ------------ $ 161,028 ------------ Managed Health Care - 1.3% 614 Wellpoint Health Networks, Inc. * $ 68,774 ------------ Total Health Care Equipment & Services $ 264,371 ------------ Pharmaceuticals & Biotechnology - 3.8% Pharmaceuticals - 3.8% 2,009 Merck & Co., Inc. $ 95,428 2,911 Pfizer, Inc. 99,789 ------------ $ 195,217 ------------ Total Pharmaceuticals & Biotechnology $ 195,217 ------------ Banks - 11.9% Diversified Banks - 7.3% 2,925 Bank of America Corp. $ 247,514 2,141 U.S. Bancorp 59,006 1,182 Wells Fargo & Co. 67,646 ------------ $ 374,166 ------------ Regional Banks - 0.4% 576 North Fork Bancorporation, Inc. $ 21,917 ------------ Thrifts & Mortgage Finance - 4.2% 590 Countrywide Financial Corp $ 41,448 2,740 Freddie Mac 173,442 ------------ $ 214,890 ------------ Total Banks $ 610,973 ------------ Diversified Financials - 11.6% Asset Management & Custody Banks - 1.4% 2,398 The Bank of New York Co., Inc. $ 70,693 ------------ Consumer Finance - 1.7% 6,123 Providian Financial Corp. * $ 89,824 ------------ Shares Value Investment Banking & Brokerage - 3.9% 690 Goldman Sachs Group, Inc. $ 64,970 917 Lehman Brothers Holdings, Inc. 69,004 1,176 Merrill Lynch & Co., Inc. 63,480 ------------ $ 197,454 ------------ Diversified Financial Services - 4.7% 5,140 Citigroup, Inc. $ 239,010 ------------ Total Diversified Financials $ 596,981 ------------ Insurance - 7.3% Insurance Brokers - 1.0% 1,145 Marsh & McLennan Co., Inc. $ 51,960 ------------ Multi-Line Insurance - 1.5% 1,036 American International Group, Inc. $ 73,846 ------------ Property & Casualty Insurance - 4.8% 1,674 Allstate Corp. $ 77,925 811 Ambac Financial Group, Inc. 59,560 37 Berkshire Hathaway, Inc. (Class B) * 109,335 ------------ $ 246,820 ------------ Total Insurance $ 372,626 ------------ Software & Services - 2.7% Data Processing & Outsourced Services - 2.7% 658 Automatic Data Processing, Inc. $ 27,557 2,452 First Data Corp. 109,163 ------------ $ 136,720 ------------ Total Software & Services $ 136,720 ------------ Technology Hardware & Equipment - 4.9% Communications Equipment - 1.6% 2,519 Motorola, Inc. $ 45,972 2,532 Nokia Corp. (A.D.R.) 36,815 ------------ $ 82,787 ------------ Computer Hardware - 2.3% 5,552 Hewlett-Packard Co. $ 117,147 ------------ Electronic Equipment & Instruments - 1.0% 1,868 Koninklijke Philips Electronics $ 50,810 ------------ Total Technology Hardware & Equipment $ 250,744 ------------ Telecommunication Services - 6.0% Integrated Telecommunication Services - 2.8% 969 Alltel Corp. $ 49,051 1,659 AT&T Corp. 24,271 2,671 BellSouth Corp. 70,034 ------------ $ 143,356 ------------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Wireless Telecommunication Services - 3.2% 4,741 AT&T Wireless Services, Inc. * $ 67,892 12,999 Vodafone Group Plc 28,591 3,070 Vodafone Group Plc (A.D.R.) 67,847 ------------ $ 164,330 ------------ Total Telecommunication Services $ 307,686 ------------ Utilities - 1.1% Electric Utilities - 1.1% 904 Dominion Resources, Inc. $ 57,024 ------------ Total Utilities $ 57,024 ------------ TOTAL COMMON STOCKS (Cost $4,836,038) $ 5,049,384 ------------ TOTAL INVESTMENT IN SECURITIES - 98.5% (Cost $4,836,038) $ 5,049,384 ------------ OTHER ASSETS AND LIABILITIES - 1.5% $ 75,091 ------------ TOTAL NET ASSETS - 100.0% $ 5,124,475 ============
* Non-income producing security. (A.D.R.) American Depository Receipt 6 The accompanying notes are an integral part of these financial statements. Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 5/1/03 6/30/04 to Class II (a) (unaudited) 12/31/03 Net asset value, beginning of period $ 12.04 $ 10.00 ------- ------- Increase from investment operations: Net investment income $ -- $ 0.01 Net realized and unrealized gain on investments and foreign currency transactions 0.39 2.03 -------- ------- Net increase from investment operations $ 02.39 $ 2.04 Distributions to shareowners: Net investment income ( 0.01) -- -------- ------- Net realized gain ( 0.01) -- -------- ------- Net increase in net asset value $ 0.37 $ 2.04 -------- ------- Net asset value, end of period $ 12.41 $ 12.04 ======== ======= Total return* 3.17% 20.40% Ratio of net expenses to average net assets+ 1.50%** 1.50%** Ratio of net investment income to average net assets+ 0.24%** 0.27%** Portfolio turnover rate 46%** 24% Net assets, end of period (in thousands) $ 5,124 $ 1,695 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 5.42%** 10.93%** Net investment loss ( 3.68)%** (9.16)%**
(a) Class II shares were first publicly offered on May 1, 2003. * Assumes initial investment at net asset value at the beginning of the period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of the period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Value VCT Portfolio ASSETS: Investment in securities, at value (cost $4,836,038) $ 5,049,384 Cash 170,099 Receivables -- Investment securities sold 11,686 Fund shares sold 2,667 Dividends, interest and foreign taxes withheld 4,901 Due from Pioneer Investment Management, Inc. 19,985 Other 47 ----------- Total assets $ 5,258,769 ----------- LIABILITIES: Payables - Investment securities purchased $ 124,789 Fund shares repurchased 4 Due to affiliates 2,743 Accrued expenses 6,758 ----------- Total liabilities $ 134,294 ----------- NET ASSETS: Paid-in capital $ 4,894,898 Accumulated net investment income 2,285 Accumulated undistributed net realized gain 13,933 Net unrealized gain on: Investments 213,346 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 13 ----------- Total net assets $ 5,124,475 ----------- NET ASSET VALUE PER SHARE: Class II: No par value (Unlimited number of shares authorized) Net assets $ 5,124,475 Shares outstanding 413,048 ----------- Net asset value per share $ 12.41 -----------
8 The accompanying notes are an integral part of these financial statements. Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Value VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $243) $ 27,215 Interest 175 --------- Total investment income $ 27,390 --------- EXPENSES: Management fees $ 11,787 Transfer agent fees 628 Distribution fees (Class II) 3,929 Administrative fees 9,250 Custodian fees 16,088 Professional fees 32,017 Printing 9,808 Miscellaneous 1,726 --------- Total expenses $ 85,233 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (61,660) --------- Net expenses $ 23,573 --------- Net investment income (loss) $ 3,817 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 18,227 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies $ (384) --------- $ 17,843 --------- Change in net unrealized gain from: Investments $ 74,546 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies $ 11 --------- $ 74,557 --------- Net gain on investments and foreign currency transactions $ 92,400 ========= Net increase in net assets resulting from operations $ 96,217 =========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Value VCT Portfolio (Commencement Six Months of Operations) Ended 5/1/03 6/30/04 to (unaudited) 12/31/03 FROM OPERATIONS: Net investment income $ 3,817 $ 1,095 Net realized gain (loss) on investments 17,843 (2,039) Change in net unrealized gain on investments and foreign currency transactions 74,557 138,802 ---------- ---------- Net increase in net assets resulting from operations $ 96,217 $ 137,858 ---------- ---------- DISTRIBUTIONS TO SHAREOWNERS Net investment income: Class II $ (2,607) $ -- Net realized gain Class II (2,046) -- ---------- ---------- Total distributions to shareholders $ (4,653) $ -- ---------- ---------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $3,427,301 $1,646,040 Reinvestment of distributions 4,364 -- Cost of shares repurchased (94,213) (88,440) ---------- ---------- Net increase in net assets resulting from fund share transactions $3,337,453 $1,557,600 ---------- ---------- Net increase in net assets $3,429,017 $1,695,458 NET ASSETS: Beginning of period 1,695,458 -- ---------- ---------- End of period $5,124,475 $1,695,458 ========== ========== Accumulated net investment income, end of period $ 2,285 $ 1,075 ========== ==========
10 The accompanying notes are an integral part of these financial statements. Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Value VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The Value VCT Portfolio commenced operations on May 1, 2003. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Value Portfolio is to seek capital appreciation. The financial statements and financial highlights of all other portfolios are presented in separate books. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004 there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. 11 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Value Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the current fiscal year. There were no distributions paid during the period ended December 31, 2003. The following shows the components of distributable earnings on a federal income tax basis at December 31, 2003. - -------------------------------------------------------------------------------
Pioneer Value VCT Portfolio 2003 -------------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 2,543 Undistributed long-term gain/ (Capital loss carryforward) -- Unrealized appreciation (depreciation) 135,470 -------- Total $138,013 ======== - -------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is primarily attributable to the tax deferral of losses on wash sales. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), 12 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $1,542 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. Through June 30, 2004, PIM has agreed not to impose all or a portion of its management fee and, if necessary, to limit other ordinary operating expenses to the extent required to reduce Class II expenses to 1.50% of the average daily net assets attributable to class II shares. As of June 30, 2004, there were no Class I shares outstanding. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $128 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $1,073 payable to PFD at June 30, 2004. 13 Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) ------------- -------------- -------------- --------------- Value Portfolio $4,839,910 $266,164 $ (56,690) $209,474 ---------- -------- --------- -------- - --------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $4,024,831 and $713,810, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ----------------------------------------------------------------------------------------- Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ----------------------------------------------------------------------------------------- CLASS II: Shares sold 279,595 $3,427,401 148,910 $ 1,646,041 Reinvestment of distributions 353 4,364 -- -- Shares repurchased (7,743) (94,213) (8,066) (88,440) -------------------------------------------------------- Net increase 272,204 $3,337,453 140,844 $ 1,557,601 ======================================================== - -----------------------------------------------------------------------------------------
14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our web site www.pioneerfunds.com. 16081-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Small Cap Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Small Cap Value VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 8 Notes to Financial Statements 12 Trustees, Officers and Service Providers 18
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.] U.S. Common Stocks 87.0% Temporary Cash Investment 6.3% Depositary Receipts for International Stocks 4.0% Closed End Mutual Funds 1.3% Exchange Traded Fund 0.8% International Common Stocks 0.6%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.] Financials 23.7% Industrials 21.3% Consumer Discretionary 13.1% Materials 8.8% Information Technology 8.5% Health Care 7.9% Energy 7.0% Utilities 5.2% Consumer Staples 3.4% Telecommunication Services 1.1%
Five Largest Holdings (As a percentage of equity holdings) 1. Nu Skin Enterprises, Inc. 2.17% 2. Massey Energy Co. 1.79 3. Pediatrix Medical Group, Inc. 1.74 4. Insight Enterprises, Inc. 1.70 5. Wabtec Corp. 1.63
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $13.45 $12.47
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Small Cap Value VCT Portfolio at net asset value, compared to that of the Russell 2000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.] Pioneer Small Cap Value VCT Portfolio Russell 2000 Value Index ------------------------------------- ------------------------ 11/01 $10,000 $10,000 6/01 $10,572 $10,612 6/02 $ 8,980 $ 9,400 6/03 $12,132 $13,727 6/04 $13,086 $14,802 Index comparison begins 11/30/01. The Russell 2000 Value Index is a measure of the performance of the value-oriented stocks in the Russell 2000 Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
Net Asset Value Life-of-Class 11.88% (11/9/01) 1 Year 29.95%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In the following discussion, portfolio manager David Adams and assistant portfolio manager Jack McPherson review their investment strategies and the performance of Pioneer Small Cap Value VCT Portfolio. Q: How did the Portfolio perform over this period? A. For the six months ended June 30, 2004, Class II shares of Pioneer Small Cap Value VCT Portfolio returned 7.86% at net asset value. These results were in line with the 7.83% return on the Russell 2000 Value Index, the Portfolio's benchmark, for the same period. Q: What were conditions like over the first half of the year, and how did you respond? A. The U.S. economic recovery continued to take hold over the early months of the year. But as global demand drove up prices for key commodities, inflationary pressures led the Federal Reserve Board to raise short-term interest rates at its June meeting. Anticipation of higher rates had been a damper on the markets for several weeks prior to the Fed's move. The Portfolio's positive results over the period reflected our commitment to our established discipline. In contrast to last year when speculative issues were market leaders, the kind of companies we invest in - better-quality issues with strong financial characteristics and good earnings prospects - have been in favor for much of 2004. Q: Which sectors or stocks helped performance the most? A. Our overweight position in energy-related companies compared to our benchmark was the biggest positive over this period. Massey Energy benefited as global demand pushed up the price of Appalachian coal. The weak U.S. dollar also made domestic coal more competitive in foreign markets. In energy services, Maverick Tube saw orders for its oil well casings increase as drilling activity grew in response to higher energy prices. Unit Corporation benefited from higher prices at its own wells, as well as from increased activity in its equipment leasing business. Stelmar Shipping is experiencing firm pricing for its fleet of double-hulled tankers as existing tanker capacity is unable to meet the demands of an expanding world economy. Q: Which of your other decisions had a positive impact? A. In the financial sector, we found good value among commercial banks whose business customers tend to increase borrowings as business conditions improve. Shares of Texas Capital Bancshares and Cardinal Financial both rose; those regional banks are well positioned to capture market share if customers seek local alternatives in the wake of the J.P. Morgan-BankOne merger. Advanta, which supplies credit cards for small businesses, was a strong contributor, and Selective Insurance gained, thanks to favorable claims experience and higher premiums. Among industrial firms, we bought Wabtac, a maker of parts for rail cars, at a low point in its business cycle. Shares have moved higher as the expanding economy absorbs excess freight capacity and new cars are being built. In health care, Pediatrix Medical Group saw continued good results from its hospital-based neonatology services. Shares of Cross Country Healthcare gained as investors anticipated renewed demand for temporary nursing staff at hospitals seeking to fill vacancies following a period of cutbacks. Software makers Borland and SPSS were sluggish performers. Investors also grew cautious toward Rewards Network as it worked to implement a new business plan. Lower gold prices hurt results at Iamgold, which is also attempting to acquire another firm while being targeted as a merger partner. Q: What is your outlook for the upcoming months? A. Most businesses sectors are doing well in the economic recovery, but an apparent slowdown in job creation and a wave of cautious earnings forecasts may hint at a slower pace of expansion. Inflation, higher interest rates and world tensions may also give investors reasons to defer commitments, at least until the presidential election is decided. Against that background, good, attractively valued companies continue to emerge, creating opportunities for our value-oriented investment style. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Small-capitalization stocks, while offering the potential for higher returns, may be subject to greater short-term price fluctuations than securities of larger companies. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 86.1% Energy - 6.1% Oil & Gas Drilling - 1.6% 1,100 Atwood Oceanics, Inc.* $ 45,925 19,511 Key Energy Services, Inc.* 184,184 6,550 Todco* 101,329 ----------- $ 331,438 ----------- Oil & Gas Equipment & Services - 1.8% 10,125 Gulfmark Offshore, Inc.* $ 159,770 7,890 Maverick Tube Corp.* 207,191 ----------- $ 366,961 ----------- Oil & Gas Exploration & Production - 2.7% 4,550 Penn Virginia Corp. $ 164,301 9,370 Swift Energy Co.* 206,702 5,994 Unit Corp.* 188,511 ----------- $ 559,514 ----------- Total Energy $ 1,257,913 ----------- Materials - 7.6% Diversified Metals & Mining - 1.6% 11,314 Massey Energy Co. $ 319,168 ----------- Gold - 1.5% 9,150 Glamis Gold, Ltd.* $ 160,400 27,875 IAMGOLD Corp. (a) 155,543 ----------- $ 315,943 ----------- Metal & Glass Containers - 0.7% 3,962 Jarden Corp.* $ 142,592 ----------- Paper Products - 1.9% 12,093 Domtar, Inc. (a) $ 156,483 7,550 Flowserve Corp.* 188,297 3,425 Longview Fibre Co. 50,450 ----------- $ 395,230 ----------- Specialty Chemicals - 0.4% 2,900 Great Lakes Chemical Corp. $ 78,474 ----------- Steel - 1.5% 2,675 Carpenter Technology $ 91,084 21,693 Graftech International, Ltd.* 226,909 ----------- $ 317,993 ----------- Total Materials $ 1,569,400 ----------- Capital Goods - 7.7% Aerospace & Defense - 0.3% 3,450 Intrado, Inc.* $ 55,511 ----------- Construction, Farm Machinery & Heavy Trucks - 1.4% 16,150 Wabtec Corp. $ 291,346 ----------- Shares Value Construction & Engineering - 0.8% 3,795 Granite Construction, Inc. $ 69,183 5,800 Insituform Technologies, Inc.* 94,366 ----------- $ 163,549 ----------- Electrical Components & Equipment - 0.9% 16,004 Power-One, Inc.* $ 175,724 ----------- Industrial Conglomerates - 1.3% 14,760 Cornell Companies, Inc.* $ 200,736 6,021 NN, Inc. 76,527 ----------- $ 277,263 ----------- Industrial Machinery - 2.2% 8,062 Joy Global, Inc. $ 241,376 2,350 Kaydon Corp. 72,686 1,469 Nacco Industries, Inc. 139,555 ----------- $ 453,617 ----------- Trading Companies & Distributors - 0.8% 5,803 Applied Industrial Technologies, Inc. $ 174,786 ----------- Total Capital Goods $ 1,591,796 ----------- Commercial Services & Supplies - 7.1% Data Processing Services - 0.5% 7,725 Gartner Group, Inc.* $ 102,125 ----------- Commercial Printing - 0.8% 3,793 John H. Harland Co. $ 111,325 1,600 Valassis Communications, Inc.* 48,752 ----------- $ 160,077 ----------- Diversified Commercial Services - 4.9% 2,600 Arbitron, Inc.* $ 94,952 13,700 Central Parking Corp. 256,053 4,378 Chemed Corp. 212,333 2,570 FTI Consulting, Inc.* 42,405 10,685 Profit Recovery Group International* 58,447 20,105 Rent-Way, Inc.* 180,945 6,025 Watson Wyatt & Co. Holdings 160,566 ----------- $ 1,005,701 ----------- Employment Services - 0.9% 6,095 Korn/Ferry International* $ 118,060 11,575 On Assignment, Inc.* 68,293 ----------- $ 186,353 ----------- Total Commercial Services & Supplies $ 1,454,256 ----------- Transportation - 3.7% Marine - 0.8% 5,277 Stelmar Shipping Ltd. $ 174,933 ----------- Railroads - 1.2% 9,543 Genesee & Wyoming, Inc.* $ 226,169 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Trucking - 1.7% 12,950 Central Freight Lines, Inc.* $ 103,600 2,968 Dollar Thrifty Automotive Group* 81,442 4,375 Forward Air Corp.* 163,620 ----------- $ 348,662 ----------- Total Transportation $ 749,764 ----------- Automobiles & Components - 0.7% Auto Parts & Equipment - 0.7% 7,995 Federal Signal Corp. $ 148,787 ----------- Total Automobiles & Components $ 148,787 ----------- Consumer Durables & Apparel - 2.0% Apparel, Accessories & Luxury Goods - 1.3% 14,593 Charming Shoppes, Inc.* $ 130,315 2,950 Kellwood Co. 128,473 ----------- $ 258,788 ----------- Footwear - 0.7% 6,641 Maxwell Shoe Co., Inc.* $ 154,337 ----------- Total Consumer Durables & Apparel $ 413,125 ----------- Hotels, Restaurants & Leisure - 0.6% Restaurants - 0.6% 7,169 O'Charley's, Inc.* $ 123,235 ----------- Total Hotels, Restaurants & Leisure $ 123,235 ----------- Media - 2.0% Advertising - 1.6% 4,841 EMAK Worldwide, Inc.* $ 60,270 6,344 R.H. Donnelley Corp.+* 277,487 ----------- $ 337,757 ----------- Publishing - 0.4% 5,465 Advanced Marketing Services, Inc. $ 70,553 ----------- Total Media $ 408,310 ----------- Retailing - 6.1% Apparel Retail - 0.7% 3,695 Stage Stores, Inc.* $ 139,154 ----------- Catalog Retail - 1.5% 17,075 Insight Enterprises, Inc.* $ 303,252 ----------- General Merchandise Stores - 0.3% 1,615 Blyth Industries, Inc. $ 55,701 ----------- Specialty Stores - 3.6% 5,275 Claire's Stores, Inc. $ 114,468 5,502 Guitar Center, Inc.* 244,674 16,057 Hancock Fabrics, Inc. 204,727 4,923 School Specialty, Inc.* 178,754 ----------- $ 742,623 ----------- Total Retailing $ 1,240,730 ----------- Shares Value Food & Drug Retailing - 1.1% Food Retail - 1.1% 6,183 Fresh Del Monte Produce, Inc. (a) $ 156,244 4,875 Wild Oats Markets, Inc.* 68,591 ----------- $ 224,835 ----------- Total Food & Drug Retailing $ 224,835 ----------- Household & Personal Products - 1.9% Household Products - 1.9% 15,304 Nu Skin Enterprises, Inc. $ 387,497 ----------- Total Household & Personal Products $ 387,497 ----------- Health Care Equipment & Services - 6.3% Health Care Distributors - 2.3% 3,235 Amerigroup Corp.* $ 159,162 5,525 Chattem, Inc.* 159,507 8,375 Cross Country Healthcares, Inc.* (a) 152,003 ----------- $ 470,672 ----------- Health Care Equipment - 0.1% 600 Analogic Corp. $ 25,458 ----------- Health Care Facilities - 0.7% 1,675 Sunrise Senior Living, Inc. (a)* $ 65,560 2,133 Triad Hospitals, Inc.* 79,412 ----------- $ 144,972 ----------- Health Care Services - 1.9% 4,452 Pediatrix Medical Group, Inc.+* $ 310,972 4,550 Providence Service Corp.* 85,495 ----------- $ 396,467 ----------- Managed Health Care - 1.3% 6,830 PacifiCare Health Systems* $ 264,048 ----------- Total Health Care Equipment & Services $ 1,301,617 ----------- Pharmaceuticals & Biotechnology - 0.5% Biotechnology - 0.5% 14,105 Kendle International, Inc.* $ 109,314 ----------- Total Pharmaceuticals & Biotechnology $ 109,314 ----------- Banks - 6.6% Diversified Banks - 3.0% 9,655 BankAtlantic Bancorp, Inc. $ 178,135 3,231 Banner Corp. 93,893 55 International Bancshares Corp.* 2,230 6,600 Provident Financial Services, Inc. 115,830 13,875 Texas Capital Bancshares, Inc.* 230,325 ----------- $ 620,413 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Regional Banks - 3.2% 5,000 Alliance Bankshares Corp.* $ 75,250 19,325 Cardinal Financial Corp.* 174,891 2,400 City National Corp. 157,680 930 Irwin Financial Corp. 24,552 11,275 Sterling Bancshares, Inc. 159,992 1,280 Whitney Holding Corp. 57,178 ----------- $ 649,543 ----------- Thrifts & Mortgage Finance - 0.4% 7,075 First Niagara Financial Group, Inc. $ 84,900 ----------- Total Banks $ 1,354,856 ----------- Diversified Financials - 5.9% Consumer Finance - 2.8% 6,025 Advanta Corp. $ 132,128 5,778 Advanta Corp. (Class B) 132,432 20,406 Medallion Financial Corp. 162,228 15,100 Rewards Network, Inc. (a)* 135,900 ----------- $ 562,688 ----------- Investment Banking & Brokerage - 2.4% 4,150 A.G. Edwards, Inc. $ 141,225 17,975 Apollo Investment Corp.* 247,516 2,300 Piper Jaffray Co.* 104,029 ----------- $ 492,770 ----------- Specialized Finance - 0.7% 4,068 Financial Federal Corp. (a)* $ 143,438 ----------- Total Diversified Financials $ 1,198,896 ----------- Insurance - 3.5% Life & Health Insurance - 0.4% 3,231 FBL Financial Group, Inc. $ 91,308 ----------- Property & Casualty Insurance - 2.5% 3,175 American Safety Insurance Group, Ltd.* $ 47,657 5,251 IPC Holdings, Ltd. 193,919 11,400 Quanta Capital Holdings (144A)* 122,436 2,375 RLI Corp. 86,688 1,525 Selective Insurance Group, Inc. (a) 60,817 ----------- $ 511,517 ----------- Reinsurance - 0.6% 4,775 Odyssey Re Holdings Corp. (a) $ 114,600 ----------- Total Insurance $ 717,425 ----------- Real Estate - 3.9% Real Estate Management & Development - 0.8% 2,875 Corrections Corp. of America* $ 113,534 1,951 Levitt Corp.* 50,258 ----------- $ 163,792 ----------- Shares Value Real Estate Investment Trusts - 3.1% 3,610 Bedford Property Investors, Inc. $ 105,556 1,528 Entertainment Properties Trust 54,611 3,850 Reckson Associates Realty Corp. 105,721 8,215 Trizec Properties, Inc. 133,576 3,396 Universal Health Realty, Inc. 97,465 6,237 Ventas, Inc. 145,634 ----------- $ 642,563 ----------- Total Real Estate $ 806,355 ----------- Software & Services - 3.6% Application Software - 0.8% 8,779 SPSS, Inc.* $ 157,759 ----------- Data Processing & Outsourced Services - 0.9% 5,078 Lightbridge, Inc.* $ 28,437 11,967 Pegusus Systems, Inc.* 157,127 ----------- $ 185,564 ----------- Internet Software & Services - 0.8% 5,875 Internet Security Systems, Inc.* $ 90,123 6,800 PEC Solutions, Inc.* 81,124 ----------- $ 171,247 ----------- Systems Software - 1.1% 18,375 Borland Software Corp.* $ 156,004 5,275 Netiq Corp.* 69,630 ----------- $ 225,634 ----------- Total Software & Services $ 740,204 ----------- Technology Hardware & Equipment - 2.8% Communications Equipment - 1.0% 31,500 Remec, Inc.* $ 199,080 ----------- Computer Storage & Peripherals - 0.8% 2,575 Applied Films Corp.* $ 74,727 3,400 Electronics For Imaging, Inc.* 96,084 ----------- $ 170,811 ----------- Electronic Equipment & Instruments - 0.6% 8,800 Planar Systems, Inc.* $ 117,832 ----------- Technology Distributors - 0.4% 2,300 Tech Data Corp.* $ 89,999 ----------- Total Technology Hardware & Equipment $ 577,722 ----------- Semiconductors - 1.0% Semiconductor Equipment - 0.7% 2,768 Advanced Energy Industries, Inc.* $ 43,513 2,187 Brooks Automation, Inc.* 44,068 2,745 Photronics, Inc.* 51,990 ----------- $ 139,571 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Semiconductors - 0.3% 5,670 HI/FN, Inc. (a)* $ 67,757 ----------- Total Semiconductors $ 207,328 ----------- Telecommunication Services - 0.9% Wireless Telecommunication Services - 0.9% 18,803 Boston Communications Group, Inc.* $ 192,731 ----------- Total Telecommunication Services $ 192,731 ----------- Utilities - 4.5% Gas Utilities - 3.7% 4,175 AGL Resources, Inc. $ 121,284 11,800 NUI Corp. (a) 172,280 4,680 People's Energy Corp. 197,262 9,549 Southwestern Energy Co.* 273,770 ----------- $ 764,596 ----------- Multi-Utilities & Unregulated Power - 0.4% 1,750 Energen Corp. $ 83,983 ----------- Utilities - 0.4% 2,325 UGI Corp. $ 74,633 ----------- Total Utilities $ 923,212 ----------- TOTAL COMMON STOCKS (Cost $14,675,424) $17,699,308 ----------- EXCHANGE TRADED FUND - 0.7% 875 Russell 2000 Exchange Traded Fund $ 150,763 ----------- TOTAL EXCHANGE TRADED FUND (Cost $113,541) $ 150,763 ----------- Shares Value TEMPORARY CASH INVESTMENT - 5.9% Security Lending Collateral - 5.9% 1,202,726 Securities Lending Investment Fund, 1.29% $ 1,202,726 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,202,726) $ 1,202,726 ----------- TOTAL INVESTMENT IN SECURITIES - 92.7% (Cost $15,991,691) (a) $19,052,797 ----------- OTHER ASSETS AND LIABILITIES - 7.3% $ 1,504,180 ----------- TOTAL NET ASSETS - 100.0% $20,556,977 ===========
* Non-income producing security. + At May 31, 2004, the following securities have pledged to cover margin requirements for open futures contracts:
Shares Description Market Value 2,385 Pediatrix Medical Group, Inc.* $166,592 400 R.H. Donnelley Corp.* 17,496
144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $122,436 or 0.6% of net assets. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 3,735 Cross Country Healthcares, Inc.* $ 68,238 10,960 Domtar, Inc. 141,713 2,915 Financial Federal Corp.* 102,258 5,565 Fresh Del Monte Produce, Inc. 139,292 4,720 HI/FN, Inc.* 56,262 26,481 IAMGOLD Corp. 141,938 11,540 NUI Corp. 163,176 3,860 Odyssey Re Holdings Corp. 92,640 12,635 Rewards Network, Inc.* 116,874 1,425 Selective Insurance Group, Inc. 55,889 1,496 Sunrise Senior Living, Inc.* 58,254 ---------- Total $1,136,534 ==========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 5/1/03 6/30/04 to Class II (a) (unaudited) 12/31/03 Net asset value, beginning of period $12.47 $ 9.11 ------ ------ Increase (decrease) from investment operations: Net investment income (loss) $(0.03) $(0.00) Net realized and unrealized gain on investments and foreign currency transactions 1.01 3.37 ------ ------ Net increase from investment operations $ 0.98 $ 3.36 Distributions to shareowners: Net investment income -- -- Net realized gain -- -- ------ ------ Net increase in net asset value $ 0.98 $ 3.36 ------ ------ Net asset value, end of period $13.45 $12.47 ====== ====== Total return* 7.86% 36.88% Ratio of net expenses to average net assets+ 1.58%** 1.58%** Ratio of net investment income to average net assets+ (0.62)%** (0.15)%** Portfolio turnover rate 43%** 74% Net assets, end of period (in thousands) $6,014 $2,760 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.64%** 2.65%** Net investment income (loss) (0.68)%** (1.22)%** Ratios with waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.58%** 1.58%** Net investment income (loss) (0.62)%** (0.15)%**
(a) Class II shares were first publicly offered May 1, 2003. * Assumes initial investment at net asset value at the beginning of each period,reinvestment of all distriibutions and the complete redemption of the investment at the net asset value at the end of each period. ** Annualized + Ratios with no reduction for fees paid indirectly 8 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Small Cap Value VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $1,136,534) (Cost $15,991,691) $19,052,797 Cash 2,718,102 Foreign currencies, at value -- Receivables -- Investment securities sold 23,852 Fund shares sold 21,160 Variation margin 7,700 Dividends, interest and foreign taxes withheld 15,498 Forward foreign currency settlement contracts, net -- Due from Pioneer Investment Management, Inc. -- Other 584 ----------- Total assets $21,839,693 ----------- LIABILITIES: Payables -- Investment securities purchased $ 10,897 Fund shares repurchased 20,907 Dividends -- Upon return of securities loaned 1,202,726 Forward foreign currency settlement contracts, net -- Reserve for repatriation taxes -- Due to bank -- Due to affiliates 6,556 Accrued expenses 41,630 ----------- Total liabilities $ 1,282,716 ----------- NET ASSETS: Paid-in capital $17,643,559 Accumulated net investment income (loss) (32,380) Accumulated undistributed net realized gain (loss) (170,680) Net unrealized gain (loss) on: Investments 3,061,106 Futures contracts 55,372 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- Total net assets $20,556,977 ----------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $14,543,028 Shares outstanding 1,077,380 ----------- Net asset value per share $ 13.50 Class II: No par value (unlimited number of shares authorized) Net assets $ 6,013,949 Shares outstanding 447,131 ----------- Net asset value per share $ 13.45
The accompanying notes are an integral part of these financial statements. 9 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Small Cap Value VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $61) $ 74,837 Interest 4,917 Income on securities loaned, net 1,081 Other -- ---------- Total investment income $ 80,835 ---------- EXPENSES: Management fees $ 65,883 Transfer agent fees (1,877) Distribution fees (Class II) 5,351 Administrative fees 9,250 Custodian fees 18,376 Professional fees 22,386 Printing 2,274 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,004 ---------- Total expenses $ 122,647 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (5,786) ---------- Net expenses $ 116,879 ---------- Net investment income (loss) $ (36,044) ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 839,832 Futures contracts 26,278 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ 866,110 ---------- Change in net unrealized gain or loss from: Investments $ 481,469 Futures contracts 32,938 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ 514,407 ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $1,380,517 ========== Net increase (decrease) in net assets resulting from operations $1,344,473 ==========
10 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Small Cap Value VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ (36,044) $ 2,125 Net realized gain (loss) on investments 866,110 (334,168) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 514,407 3,353,942 ----------- ------------ Net increase (decrease) in net assets resulting from operations $ 1,344,473 $ 3,021,899 ----------- ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ -- $ -- Class II -- -- Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ----------- ------------ Total distributions to shareowners $ -- $ -- ----------- ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 6,450,844 $ 15,752,093 Reinvestment of distributions -- -- Cost of shares repurchased (2,046,639) (10,568,904) ----------- ------------ Net increase (decrease) in net assets resulting from fund share transactions $ 4,404,205 $ 5,183,189 ----------- ------------ Net increase (decrease) in net assets $ 5,748,678 $ 8,205,088 ----------- ------------ NET ASSETS: Beginning of period $14,808,299 $ 6,603,211 ----------- ------------ End of period $20,556,977 $ 14,808,299 =========== ============ Accumulated/(distributions in excess of) net investment income (loss) $ (32,380) $ 3,664 =========== ============
The accompanying notes are an integral part of these financial statements. 11 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Small Cap Value VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The Portfolio commenced operations on May 1, 2003. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Small Cap Value Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004 there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total 12 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Small Company Portfolio had the following open contracts:
- ---------------------------------------------------------------------------------------------------------------- Number of Contracts Settlement Market Unrealized Type Long/(Short) Month Value Gain/(Loss) - ---------------------------------------------------------------------------------------------------------------- Small Cap Value Portfolio Russell 2000 4 September 2004 $1,184,700 $55,372 - ----------------------------------------------------------------------------------------------------------------
C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Small Cap Value VCT Portfolio had a capital loss carryforward of $513,628, of which the following amounts will expire between 2010 and 2011 if not utilized: $508,141 in 2010 and $5,487 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 13 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Pioneer Small Cap Value VCT Portfolio 2003 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ -- Long-Term capital gain -- ---------- -- Return of Capital -- ---------- Total distributions $ -- ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 3,397 Undistributed long-term gain/ (Capital loss carryforward) (513,628) Unrealized appreciation (depreciation) 2,079,176 ---------- Total $1,568,945 ========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $5,022 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito 14 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $255 in transfer agent fees payable to PIMSS at June 30, 2004 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $1,279 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------------- Small Cap Value Portfolio $16,492,152 $2,915,941 $(355,296) $2,560,645 ----------- ---------- --------- ---------- - -------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $7,241,266 and $3,313,196, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ----------------------------------------------------------------------------------------------------- Small Cap Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ----------------------------------------------------------------------------------------------------- CLASS II: Shares sold 239,892 $ 3,132,677 1,276,588 $ 13,058,675 Reinvestment of distributions -- -- -- -- Shares repurchased (126,447) (1,650,422) (1,028,432) (10,409,382) ----------------------------------------------------------------------- Net increase 113,445 $ 1,482,255 248,156 $ 2,649,293 ======================================================================= CLASS II: Shares sold 255,800 $ 3,318,167 235,328 $ 2,693,418 Reinvestment of distributions -- -- -- -- Shares repurchased (29,908) (396,217) (14,089) (159,522) ----------------------------------------------------------------------- Net increase 255,892 $ 2,921,950 221,239 $ 2,533,896 ======================================================================= - ------------------------------------------------------------------------------------------------------
15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16067-00-0804 [PIONEER Logo] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- T a b l e o f C o n t e n t s - -------------------------------------------------------------------------------- Pioneer Balanced VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 5 Financial Statements 12 Notes to Financial Statements 16
PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] Portfolio Diversification (As a percentage of total investment portfolio) U.S. Common Stocks 65.0% Asset Backed Securities 0.4% U.S. Corporate Bonds 13.0% U.S. Government Securities 21.6% [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL] Sector Distribution (As a percentage of long-term holdings) Utilities 0.5% Telecommunication Services 1.1% Materials 3.5% Energy 6.0% Industrials 7.3% Health Care 9.3% Consumer Discretionary 10.3% Information Technology 11.8% Financials 12.2% Consumer Staples 17.1% Government 20.9% Five Largest Holdings (As a percentage of equity holdings) 1. Berkshire Hathaway, Inc. (Class B) 3.50% 2. First Data Corp. 3.35 3. Microsoft Corp. 3.29 4. Pfizer, Inc. 3.21 5. Northrop Grumman Corp. 3.21 Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions 6/30/04 12/31/03 Net Asset Value per Share $14.15 $14.02 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.120 $ - $ - - -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Balanced VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index and the Lehman Brothers Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL] Lehman Aggregate Bond Index+ S&P 500 Pioneer Balanced VCT Portfolio 3/95 10000 10000 10000 11279 12533 11825 6/96 11686 15406 13412 12817 20543 15535 6/98 13929 26417 15474 13812 31974 15825 6/00 15418 29068 16647 16720 25623 16230 6/02 18435 19961 14527 19192 25684 17258 6/04 19221 26567 18434 + Index comparison begins 2/28/95. The S&P 500 Index is an unmanaged measure of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market. The Lehman Brothers Aggregate Bond Index is a widely recognized market value-weighted measure of government and corporate securities, agency mortgage pass-through securities, asset-backed securities and commercial mortgage-based securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 6.44% (3/1/95) 5 Years 2.03% 1 Year 8.77% All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- While the economy grew and corporate profits rose during the first half of 2004, stock market returns were muted by worries about rising interest rates as well as geopolitical issues around the world. In the fixed income markets, the jump in market interest rates midway through the six months sent many bond prices lower, resulting in weak returns in most sectors. In the following interview, Timothy Mulrenan, who is responsible for the equity portfolio of Pioneer Balanced VCT Portfolio, and Richard Schlanger, who is responsible for the Portfolio's fixed income investments, discuss the markets and their investment strategies during the six months ended June 30, 2004. Q: How did the Portfolio perform during the first six months of 2004? A: Class II shares of Pioneer Balanced VCT Portfolio had a total return of 1.79% at net asset value during the six months ended June 30, 2004. In comparison, the Portfolio's benchmarks, the S&P 500 and the Lehman Brothers Aggregate Bond Index returned 3.44% and 0.15%, respectively. Q: What were the factors that affected performance? A: The domestic equity market produced generally positive returns for the six months, but those returns masked the underlying volatility and tensions between conflicting influences. Supporting equity valuations were an expanding economy and robust corporate profits. Reported earnings tended to be 25% higher than in the comparable period of 2003. The competing negative factors included the spike in market interest rates midway through the six months, as well as uncertainty brought on by concerns over issues such as energy prices, stability in Iraq and presidential election-year politics. In the fixed income markets, interest rates rose, with shorter-maturity rates rising more than longer-term rates. The price losses brought on by higher rates as well as the flattening of the yield curve - or difference between short-term and long-term yields - resulted in volatility in the bond market. The key factor was the widely anticipated announcement by the Federal Reserve Board on the final day of the period to begin tightening monetary policy by starting to raise the influential overnight lending rate - the Fed Funds rate. The initial hike was from 1.00% to 1.25%, but the expectation was that the Fed would raise rates further in the months to come in an effort to guard against inflationary pressures. Q: What were your principal equity strategies during the period? A: We kept the allocation between equities and bonds consistent during the six months. On June 30, about 64% of assets were invested in stocks - about the same percentage as at the start of the period. The remaining assets were invested in fixed income assets, including corporate bonds, government securities, and mortgage-backed securities, with a small allocation in foreign bonds and less than 2% in cash. There also were no major tactical changes in the equity allocation, although we did trim our energy position to take profits and to reduce our vulnerability to the area during a time when we expected increased price volatility. We remained overweighted in energy stocks, however, and are positive about the sector's longer-term fundamentals. We modestly increased the Fund's health care holdings, adding medical device company Guidant and pharmaceutical company Eli Lilly. We thought Guidant's stock price had become compellingly attractive after it fell because of an announcement about a delay in a new product introduction. We like Eli Lilly because it has well-developed research and development activities that should produce a flow of new products. In addition, we initiated a position in Liz Claiborne, the apparel company. We think it is attractive because of its strong distribution during a time when the industry was beginning to gain greater control over pricing. We substantially reduced our holdings in two stocks that had performed very well - software company Symantec and auto insurance company Progressive. We also eliminated our position in Devon Energy, an exploration and production company, because of our concerns about its internal cost structure. Q: How did you manage the fixed income portion of the Portfolio? A: In the fixed income allocation, we raised overall quality, with average credit quality moving from A+ to AA-. Interest-rate sensitivity - as measured by duration - was 3 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 (continued) about even with that of the benchmark Lehman Brothers Aggregate Bond Index, although it declined slightly during the six months to about 4.3 years. We increased our exposure to mortgage-backed securities - the best-performing part of the investment-grade market - from 40.3% of fixed income assets to 48.0%. Mortgages tend to be less vulnerable to declining prices than Treasuries and other government securities in a rising interest-rate environment. We reduced our exposure to corporates, taking profits when their yield advantage over Treasuries began to narrow. At the end of the period, 26.3% of the fixed income portfolio was invested in industrial and utility bonds, compared to 31.4% at the start of the period. At the same time, we also reduced our banking and financial services bond holdings from 10.7% to 9.3% of fixed income assets. When we invest in corporates, we tend to favor new issues, which had a greater yield advantage over Treasuries than existing issues available on the secondary market. When we invested in Treasury bonds, we tended to hold TIPS, or inflation-protected Treasuries, although we sold them near the end of the period when the Federal Reserve made it clear it intended to control inflationary pressures. Q: What types of investments had the greatest influence on performance? A: Among our equity investments, our emphasis on consumer staples companies helped considerably as stock investors began to recognize the value of higher-quality, stable growth companies that had been overlooked in the rally of 2003. Holdings such as Gillette, PepsiCo and Wrigley performed very well. Our technology positions also contributed to performance, led by Symantec, whose share price went up 27% during the six months. Detracting from performance, however, was security selection in the consumer discretionary sector. Family Dollar Stores had disappointing earnings, which may have been related to higher gasoline prices and the adverse effect on their largely lower-income customers, but we still favored the company and continued to hold it at the end of the period. Newmont Mining, which had been a strong contributor to Fund performance prior to the period, fell 20% during the period in response to slumping gold prices. However, we still believe the company is attractive and continue to hold a position in it. In the fixed income portfolio, our overweight position in mortgages helped substantially, as did our exposure to corporate bonds - both high yield and investment-grade. Performance was held back, however, by our concentration in intermediate-term securities, as short- and intermediate-term interest rates rose more than the rates on long-term bonds during the six months. Q: What is your investment outlook? A: We believe the June 30 announcement by the U.S. Federal Reserve that it was starting to raise short-term rates is the start of a long process of interest-rate hikes that is likely to continue at least through the end of 2005. We anticipate moving to a barbell strategy over time with respect to maturity allocations, concentrating on both short-term securities and long-term bonds while de-emphasizing intermediate-term bonds that we think are most vulnerable in the present environment. We believe the equity market will continue to be choppy, with no major trends either up or down in stock price averages. The outlooks for gross domestic product (GDP) and for corporate earnings both are favorable, although the rate of corporate profit growth may slow somewhat. The big question that will be on investors' minds will be what happens to interest rates. In addition, uncertainty about geopolitical events and the outcome of the presidential election will influence investor psychology. We think the most likely scenario is that the major stock averages will show moderate growth over the next several months. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 4 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- Shares Value COMMON STOCKS - 63.8% Energy - 5.5% Integrated Oil & Gas - 0.3% 3,900 Exxon Mobil Corp. $ 173,199 ----------- Oil & Gas Drilling - 4.2% 8,700 Encana Corp. $ 375,492 35,200 ENSCO International, Inc. 1,024,320 22,000 Varco International, Inc.* 481,580 ----------- $ 1,881,392 ----------- Oil & Gas Exploration & Production - 0.9% 11,400 Pioneer Natural Resources Co. $ 399,912 ----------- Total Energy $ 2,454,503 ----------- Materials - 2.4% Precious Metals & Minerals - 2.4% 27,000 Newmont Mining Corp. $ 1,046,520 ----------- Total Materials $ 1,046,520 ----------- Capital Goods - 3.7% Aerospace & Defense - 3.1% 26,000 Northrop Grumman Corp. $ 1,396,200 ----------- Electrical Component & Equipment - 0.5% 8,500 Molex, Inc. $ 231,880 ----------- Total Capital Goods $ 1,628,080 ----------- Commercial Services & Supplies - 0.5% Diversified Commercial Services - 0.5% 5,100 Cintas Corp. $ 243,117 ----------- Total Commercial Services & Supplies $ 243,117 ----------- Transportation - 2.2% Trucking - 2.2% 12,900 United Parcel Service $ 969,693 ----------- Total Transportation $ 969,693 ----------- Shares Value Media - 2.9% Broadcasting & Cable TV - 1.1% 5,800 Clear Channel Communications, Inc. $ 214,310 10,200 Comcast Corp. (Special)* 281,622 ----------- $ 495,932 ----------- Movies & Entertainment - 1.8% 21,840 Viacom, Inc. (Class B) $ 780,125 ----------- Total Media $ 1,276,057 ----------- Retailing - 3.1% Apparel Retail - 0.5% 6,400 Liz Claiborne, Inc. $ 230,272 ----------- General Merchandise Stores - 2.6% 37,800 Family Dollar Stores, Inc. $ 1,149,876 ----------- Total Retailing $ 1,380,148 ----------- Food & Drug Retailing - 6.7% Drug Retail - 0.8% 8,200 CVS Corp. $ 344,564 ----------- Food Distributors - 1.9% 12,300 Cardinal Health, Inc. $ 861,615 ----------- Food Retail - 2.9% 20,600 Wm. Wrigley Jr. Co. $ 1,298,830 ----------- Hypermarkets & Supercenters - 1.1% 8,900 Wal-Mart Stores, Inc. $ 469,564 ----------- Total Food & Drug Retailing $ 2,974,573 ----------- Food Beverage & Tobacco - 6.3% Distillers & Vintners - 2.7% 22,400 Anheuser-Busch Companies, Inc. $ 1,209,600 ----------- Soft Drinks - 3.6% 12,600 The Coca-Cola Co. $ 636,048 17,900 PepsiCo, Inc. 964,452 ----------- $ 1,600,500 ----------- Total Food Beverage & Tobacco $ 2,810,100 ----------- The accompanying notes are an integral part of these financial statements. 5 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- Shares Value Household & Personal Products - 4.1% Household Products - 1.0% 9,300 Estee Lauder Co. $ 453,654 ----------- Personal Products - 3.1% 32,400 Gillette Co. $ 1,373,760 ----------- Total Household & Personal Products $ 1,827,414 ----------- Health Care Equipment & Services - 3.5% Health Care Distributors - 1.4% 17,800 Wyeth, Inc. $ 643,648 ----------- Health Care Equipment - 2.1% 17,300 Biomet, Inc. $ 768,812 2,900 Guidant Corp. 162,052 ----------- $ 930,864 ----------- Total Health Care Equipment & Services $ 1,574,512 ----------- Pharmaceuticals & Biotechnology - 5.0% Biotechnology - 0.5% 4,316 Amgen, Inc.* $ 235,524 ----------- Pharmaceuticals - 4.4% 4,000 Eli Lilly & Co. $ 279,640 6,500 Merck & Co., Inc. 308,750 40,788 Pfizer, Inc. 1,398,213 ----------- $ 1,986,603 ----------- Total Pharmaceuticals & Biotechnology $ 2,222,127 ----------- Diversified Financials - 2.4% Asset Management & Custody Banks - 1.0% 14,100 The Bank of New York Co., Inc. $ 415,668 ----------- Consumer Finance - 1.4% 12,300 American Express Co. $ 631,974 ----------- Total Diversified Financials $ 1,047,642 ----------- Shares Value Insurance - 5.2% Property & Casualty Insurance - 5.2% 515 Berkshire Hathaway, Inc. (Class B)* $ 1,521,825 9,000 Progressive Corp.* 767,700 ----------- $ 2,289,525 ----------- Total Insurance $ 2,289,525 ----------- Software & Services - 8.4% Application Software - 5.1% 50,100 Microsoft Corp. $ 1,430,856 19,200 Symantec Corp.* 840,576 ----------- $ 2,271,432 ----------- Data Processing & Outsourced Services - 3.3% 32,700 First Data Corp. $ 1,455,804 ----------- Total Software & Services $ 3,727,236 ----------- Technology Hardware & Equipment - 1.5% Computer Hardware - 1.5% 32,022 Hewlett-Packard Co. $ 675,664 ----------- Total Technology Hardware & Equipment $ 675,664 ----------- Semiconductors - 0.4% 5,800 Intel Corp. $ 160,080 ----------- Total Semiconductors $ 160,080 ----------- TOTAL COMMON STOCKS (Cost $24,340,428) $28,306,991 ----------- 6 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value ASSET BACKED SECURITIES - 0.4% Diversified Financials - 0.2% Diversified Financial Services - 0.2% $ 89,819 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 88,571 ----------- $ 88,571 ----------- Real Estate - 0.2% Real Estate Investment Trusts - 0.2% 100,000 BBB-/Baa3 Global Signal Trust, 5.395%, 1/15/34 (144A) $ 96,087 ----------- Total Real Estate $ 96,087 ----------- TOTAL ASSET BACKED SECURITIES (Cost $189,819) $ 184,658 ----------- CORPORATE BONDS - 12.7% Energy - 0.3% Integrated Oil & Gas - 0.1% 30,000 BBB+/Baa1 Occidental Petroleum, 7.65%, 2/15/06 $ 32,169 40,000 BBB+/Baa1 Occidental Petroleum, 6.75%, 1/15/12 44,054 ----------- $ 76,223 ----------- Oil & Gas Refining Marketing & Transportation - 0.1% 65,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%, 6/1/14 $ 65,292 ----------- Total Energy $ 141,515 ----------- Materials - 1.3% Commodity Chemicals - 0.2% 100,000 BB+/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ 98,500 ----------- Diversified Metals & Mining - 0.3% 125,000 BBB-/Baa3 Inco, Ltd., 7.2%, 9/15/32 $ 131,707 ----------- Metal & Glass Containers - 0.1% 40,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 47,508 ----------- Paper Products - 0.2% 100,000 BB/Ba2 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 101,300 ----------- Specialty Chemicals - 0.3% 100,000 BBB-/Baa3 Ferro Corp., 9.125%, 1/1/09 $ 114,836 ----------- Steel - 0.2% 75,000 BB/Ba3 International Steel Group, 6.5%, 4/15/14 (144A) $ 70,313 ----------- Total Materials $ 564,164 ----------- Capital Goods - 0.8% Aerospace & Defense - 0.1% 25,000 B/B3 K&F Industries, 9.625%, 12/15/10 $ 27,406 ----------- Electrical Components & Equipment - 0.2% 75,000 BBB-/Ba1 Thomas & Betts Corp., 7.25%, 6/1/13 $ 79,441 ----------- Industrial Conglomerates - 0.2% 55,000 AAA/Aaa General Electric Capital Corp., 6.125%, 2/22/11 $ 58,902 30,000 AAA/Aaa General Electric Capital Corp., 6.75%, 3/15/32 32,250 ----------- $ 91,152 -----------
The accompanying notes are an integral part of these financial statements. 7 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Industrial Machinery - 0.3% $150,000 BBB-/Ba1 Timken Co., 5.75%, 2/15/10 $ 150,314 ----------- Total Capital Goods $ 348,313 ----------- Automobiles & Components - 0.8% Automobile Manufacturers - 0.8% 200,000 BBB/Baa1 General Motors, 7.2%, 1/15/11 $ 209,559 50,000 BBB-/A3 Ford Motor Credit Co., 9.14%, 12/30/14 51,464 100,000 BB+/Ba1 Hyundai Motor Co., Ltd., 5.3%, 12/19/08 98,409 ----------- $ 359,432 ----------- Total Automobiles & Components $ 359,432 ----------- Hotels, Restaurants & Leisure - 0.5% Casinos & Gaming - 0.0% 25,000 B+/B1 Turning Stone, 9.125%, 12/15/10 (144A) $ 26,125 ----------- Hotels, Resorts & Cruise Lines - 0.5% 200,000 BBB-/Ba1 Hilton Hotels, 7.625%, 12/1/12 $ 215,000 ----------- Total Hotels, Restaurants & Leisure $ 241,125 ----------- Media - 2.2% Broadcasting & Cable TV - 1.5% 250,000 BBB/Baa3 Comcast Cable Corp., 7.125%, 6/15/13 $ 273,265 240,000 BBB/Baa2 Cox Communications, 7.125%, 10/1/12 263,028 160,000 BB-/Ba3 Echostar DBS Corp., 6.375%, 10/1/11 (144A) 157,600 ----------- $ 693,893 ----------- Movies & Entertainment - 0.2% 100,000 BBB+/Baa1 AOL Time Warner, Inc., 6.875%, 5/1/12 $ 108,059 ----------- Publishing - 0.4% 170,000 BBB-/Baa3 News America Inc., 7.3%, 4/30/28 $ 184,346 ----------- Total Media $ 986,298 ----------- Retailing - 0.2% Specialty Stores - 0.2% 100,000 BB/Ba2 Toys "R" Us, 7.875%, 4/15/13 $ 100,375 ----------- Total Retailing $ 100,375 ----------- Food, Beverage & Tobacco - 0.3% Tobacco - 0.3% 150,000 BBB/Baa2 Altria Group, Inc., 7.0%, 11/4/13 $ 152,748 ----------- Total Food, Beverage & Tobacco $ 152,748 ----------- Health Care Equipment & Services - 0.7% Health Care Facilities - 0.5% 100,000 BBB-/Ba1 HCA, Inc., 6.3%, 10/1/12 $ 200,103 ----------- Health Care Supplies - 0.2% 100,000 BBB-/Ba1 Bausch & Lomb, 7.125%, 8/1/28 $ 100,118 ----------- Total Health Care Equipment & Services $ 300,221 -----------
8 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Pharmaceuticals & Biotechnology - 0.1% Pharmaceuticals - 0.0% $ 40,000 AAA/Aaa Pharmacia Corp., 6.6%, 12/1/28 $ 43,322 ----------- Total Pharmaceuticals & Biotechnology $ 43,322 ----------- Banks - 0.5% Diversified Banks - 0.3% 50,000 NR/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 $ 48,936 75,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 84,955 ----------- $ 133,891 ----------- Thrifts & Mortgage Finance - 0.2% 100,000 BBB-/Baa3 Sovereign Bank, 5.125%, 3/15/13 $ 95,060 ----------- Total Banks $ 228,951 ----------- Diversified Financials - 0.9% Investment Banking & Brokerage - 0.1% 75,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11 (144A) $ 74,625 ----------- Diversified Financial Services - 0.4% 100,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 102,848 100,000 BBB/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) 92,754 ----------- $ 195,602 ----------- Specialized Finance - 0.2% 100,000 B/B2 MDP Acquistions, 9.625%, 10/1/12 $ 109,500 ----------- Total Diversified Financials $ 379,727 ----------- Insurance - 1.3% Life & Health Insurance - 0.2% 100,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 $ 95,231 ----------- Multi - Line Insurance - 0.1% 50,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 46,598 ----------- Property & Casualty Insurance - 0.8% 150,000 BBB+/Baa2 Berkley (WR), 5.875%, 2/15/13 $ 153,089 85,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 83,538 100,000 BBB-/Baa3 Arch Capital Group, Ltd., 7.35%, 5/1/34 100,662 ----------- $ 337,289 ----------- Reinsurance - 0.2% 100,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 107,497 ----------- Total Insurance $ 586,615 ----------- Real Estate - 0.6% Real Estate Investment Trusts - 0.5% 150,000 BBB-/Baa3 Hospitality Properties Trust, 6.75%, 2/15/13 $ 155,727 100,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 101,603 ----------- $ 257,330 ----------- Total Real Estate $ 257,330 ----------- Technology Hardware & Equipment - 1.3% Computer Hardware - 0.8% 250,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 273,454 100,000 BB+/Ba1 UNISYS Corp., 6.875%, 3/15/10 103,000 ----------- $ 376,454 -----------
The accompanying notes are an integral part of these financial statements. 9 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Electronic Manufacturing Services - 0.2% $ 75,000 BB+/Baa3 Jabil Circuit, Inc., 5.875%, 7/15/10 $ 77,475 ----------- Technology Distributors - 0.2% 100,000 BBB-/Baa3 Arrow Electronic Inc., 6.875%, 7/1/13 $ 104,456 ----------- Total Technology Hardware & Equipment $ 558,385 ----------- Telecommunication Services - 0.4% Integrated Telecommunication Services - 0.4% 100,000 BBB+/Baa3 Intelsat, Ltd. 6.5%, 11/1/13 $ 88,343 100,000 BBB+/Baa2 Telecom Italia S.p.A., 5.25%, 11/15/13 (144A) 96,785 ----------- $ 185,128 ----------- Total Telecommunication Services $ 185,128 ----------- Utilities - 0.5% Electric Utilities - 0.2% 95,000 BBB-/Baa3 FLP Energy American Wind Llc, 6.639%, 6/20/23 (144A) $ 96,999 ----------- Multi-Utilities & Unregulated Power - 0.3% 100,000 B/B1 Reliant Energy Inc., 9.5%, 7/15/13 $ 107,750 ----------- Total Utilities $ 204,749 ----------- TOTAL CORPORATE BONDS (Cost $5,493,563) $ 5,638,398 ----------- U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.2% Government - 21.2% 396,360 AAA/Aaa Federal Home Loan Mortgage Corp., 5.0%, 4/1/34 $ 383,027 475,466 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 1/1/34 474,100 216,149 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 9/1/17 221,401 173,487 AAA/Aaa Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 177,830 123,088 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 1/1/32 126,103 273,687 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 11/1/33 279,878 50,005 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0% , 6/1/34 51,135 1,329,244 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 1,360,078 45,587 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 48,248 30,235 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 31,537 91,645 AAA/Aaa Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 95,957 63,104 AAA/Aaa Federal National Mortgage Association, 6.5%, 10/1/32 65,753 150,000 AAA/Aaa Federal National Mortgage Association, 5.0%, 6/1/34 145,071 237,310 AAA/Aaa Federal National Mortgage Association, 5.5%, 11/1/33 236,860 221,223 AAA/Aaa Federal National Mortgage Association, 5.5%, 2/1/17 227,041 137,933 AAA/Aaa Federal National Mortgage Association, 5.5%, 3/1/34 137,452 249,122 AAA/Aaa Federal National Mortgage Association, 5.5%, 4/1/34 248,253 144,591 AAA/Aaa Federal National Mortgage Association, 6.%, 12/1/33 147,784 110,000 AAA/Aaa Federal National Mortgage Association, 6.125%, 3/15/12 118,615 20,007 AAA/Aaa Federal National Mortgage Association, 6.5%, 10/1/32 20,847 83,029 AAA/Aaa Federal National Mortgage Association, 6.5%, 4/1/29 87,034 180,906 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/32 188,502 120,726 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/32 125,900 25,302 AAA/Aaa Federal National Mortgage Association, 6.5%, 8/1/13 26,784 74,676 AAA/Aaa Federal National Mortgage Association, 6.5%, 9/1/32 78,006 82,862 AAA/Aaa Federal National Mortgage Association, 6.5%, 12/1/21 86,794 24,907 AAA/Aaa Federal National Mortgage Association, 6.5%, 8/1/14 26,343 10,000 AAA/Aaa Federal National Mortgage Association, 7.125%, 6/15/10 11,353
10 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value (U.S. Government And Agency Obligations Cont.) $ 40,082 AAA/Aaa Federal National Mortgage Association, 9.0%, 4/1/33 $ 44,559 300,000 AAA/Aaa Freddie Mac, 3.25%, 2/25/08 293,859 150,000 AAA/Aaa Freddie Mac, 5.75%, 1/15/12 158,248 545,023 AAA/Aaa Government National Mortgage Association, 6.0%, 9/15/33 559,458 195,356 AAA/Aaa Government National Mortgage Association II, 5.5%, 2/20/34 195,193 34,489 AAA/Aaa Government National Mortgage Association II, 7.5%, 9/20/29 37,185 66,055 AAA/Aaa Government National Mortgage Association, 5.5%, 9/15/33 66,197 311,211 AAA/Aaa Government National Mortgage Association, 5.5%, 6/15/33 311,511 242,819 AAA/Aaa Government National Mortgage Association, 5.5%, 7/15/33 243,053 167,714 AAA/Aaa Government National Mortgage Association, 5.5%, 8/15/33 167,875 169,178 AAA/Aaa Government National Mortgage Association, 6.0%, 9/15/32 173,715 347,177 AAA/Aaa Government National Mortgage Association, 6.0%, 10/20/33 357,148 166,809 AAA/Aaa Government National Mortgage Association, 6.5%, 5/15/33 174,599 68,834 AAA/Aaa Government National Mortgage Association, 6.5%, 10/15/28 72,111 470,000 AAA/Aaa U.S. Treasury Notes, 4.0%, 11/15/12 455,037 500,000 AAA/Aaa U.S. Treasury Notes, 5.625%, 5/15/08 538,203 300,000 AAA/Aaa U.S. Treasury Notes, 4.75%, 11/15/08 313,314 ----------- $ 9,388,951 ----------- TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $9,433,069) $ 9,388,951 ----------- TOTAL INVESTMENT IN SECURITIES - 98.1% (Cost $39,456,879) $43,518,998 ----------- OTHER NET ASSETS - 1.9% $ 835,231 ----------- TOTAL NET ASSETS - 100.0% $44,354,229 ===========
N/R Not rated by either S&P or Moddy's (144A) Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $799,859 or 1.8% of total net assets. The accompanying notes are an integral part of these financial statements. The accompanying notes are an integral part of these financial statements. 11 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 5/1/03 Class II (a) 6/30/04 to (unaudited) 12/31/03 Net asset value, beginning of period $ 14.02 $ 12.67 ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.10 $ 0.14 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.15 1.40 ------- ------ Net increase (decrease) from investment operations $ 0.25 $ 1.54 Distributions to shareowners: Net investment income ( 0.12) ( 0.19) Net realized gain -- -- ------- ------- Net increase (decrease) in net asset value $ 0.13 $ 1.35 ------- ------- Net asset value, end of period $ 14.15 $ 14.02 ======= ======= Total return* 1.79% 12.17% Ratio of net expenses to average net assets+ 1.19%** 1.11%** Ratio of net investment income (loss) to average net assets+ 1.50%** 1.12%** Portfolio turnover rate 35%** 37% Net assets, end of period (in thousands) $ 6,713 $ 3,390 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.19%** 1.11%** Net investment income (loss) 1.50%** 1.12%**
(a) Class II shares were first publicly offered on May 1, 2003. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period.) ** Annualized. + Ratios with no reduction for fees paid indirectly. 12 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- Pioneer Balanced VCT Portfolio ASSETS: Investment in securities, at value (Cost $39,456,879) $ 43,518,998 Cash 935,566 Foreign currencies, at value -- Receivables -- Investment securities sold 242,436 Fund shares sold 1,060 Dividends, interest and foreign taxes withheld 160,986 Other 427 ------------ Total assets $ 44,859,473 ------------ LIABILITIES: Payables -- Investment securities purchased $ 452,482 Fund shares repurchased 1,345 Dividends -- Upon return for securities loaned -- Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 29,685 Accrued expenses 21,732 Other -- ------------ Total liabilities $ 505,244 ------------ NET ASSETS: Paid-in capital $ 45,716,039 Accumulated net investment income (loss) (5,493) Accumulated undistributed net realized gain (loss) (5,418,436) Net unrealized gain (loss) on: Investments 4,062,119 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $ 44,354,229 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 37,640,853 Shares outstanding 2,654,818 ------------ Net asset value per share $ 14.18 Class II: No par value (unlimited number of shares authorized) Net assets $ 6,713,376 Shares outstanding 474,365 ------------ Net asset value per share $ 14.15 The accompanying notes are an integral part of these financial statements. 13 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- Pioneer Balanced VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $341) $ 135,243 Interest 451,405 Income on securities loaned, net -- Other -- ---------- Total investment income $ 586,648 ---------- EXPENSES: Management fees $ 144,037 Transfer agent fees 1,475 Distribution fees (Class II) 6,237 Administrative fees 9,250 Custodian fees 8,120 Professional fees 26,333 Printing 5,838 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,694 ---------- Total expenses $ 202,984 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ---------- Net expenses $ 202,984 ---------- Net investment income (loss) $ 383,664 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 934,310 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ 934,310 ---------- Change in net unrealized gain or loss from: Investments $ (500,826) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ (500,826) ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ 433,484 ========== Net increase (decrease) in net assets resulting from operations $ 817,148 ========== 14 The accompanying notes are an integral part of these financial statements. PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- Pioneer Balanced VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 383,664 $ 718,572 Net realized gain (loss) on investments 934,310 336,352 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (500,826) 5,309,842 ------------ ------------ Net increase (decrease) in net assets resulting from operations $ -- $ 6,364,766 ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (353,982) $ (800,491) Class II (47,983) (20,067) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ------------ ------------ Total distributions to shareowners $ (401,965) $ (820,558) ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 4,614,728 $ 4,068,440 Reinvestment of distributions 401,960 820,551 Cost of shares repurchased (5,240,015) (9,119,455) ------------ ------------ Net increase (decrease) in net assets resulting from fund share transactions $ (223,327) $ (4,230,464) ------------ ------------ Net increase (decrease) in net assets $ 191,856 $ 1,313,744 ------------ ------------ NET ASSETS: Beginning of period $ 44,162,373 $ 42,848,629 ------------ ------------ End of period $ 44,354,229 $ 44,162,373 ------------ ------------ Accumulated/(distributions in excess of) net investment income (loss) $ (5,493) $ 12,808 ============ ============ The accompanying notes are an integral part of these financial statements. 15 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Balanced VCT Portfolio is a portfolio of the Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The Portfolio commenced operations on May 1, 2003. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objectives of Balanced Portfolio are capital growth and current income. Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset value for the portfolio is computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. As of June 30, 2004, there were no securities fair valued. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income 16 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realizes a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, the portfolio had no open futures contracts. C. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Balanced VCT Portfolio had a capital loss carryforward of $6,275,373, of which will the following amounts expire between 2006 and 2011 if not utilized: $985,646 in 2006, $2,699,582 in 2010, and $2,590,145, in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. - ------------------------------------------------------------------------------- Pioneer Balanced VCT Portfolio 2003 - ------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 820,558 Long-Term capital gain -- ----------- $ 820,558 Return of Capital -- ----------- Total distributions $ 820,558 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 400 Undistributed long-term gain/ (capital loss carryforward) (6,275,373) Unrealized appreciation/(depreciation) 4,497,980 ----------- Total $(1,776,993) =========== - ------------------------------------------------------------------------------- The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. D. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment 17 PIONEER VARIABLE CONTRACTS TRUST Pioneer Balanced VCT Portfolio - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. E. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. F. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $27,997 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $259 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $1,429 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows: [LOGO] PIONEER Investments (R) PIONEER VARIABLE CONTRACTS TRUST Pioneer High Yield VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - --------------------------------------------------- Pioneer High Yield VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 10 Notes to Financial Statements 14
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment in securities) [THE FOLLOWING DATA WAS PRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.] U.S. Corporate Bonds 57.7% Convertible Corporate Bonds 35.4% Temporary Cash Investment 4.1% Convertible Preferred Stocks 2.8%
Maturity Distribution (As a percentage of total investment in securities) [THE FOLLOWING DATA WAS PRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.] 0-1 years 2.5% 1-3 years 16.6% 3-4 years 18.6% 4-6 years 44.9% 6-8 years 10.4% 8+ years 7.0%
Five Largest Holdings (As a percentage of long-term holdings) 1. Bowater, Inc., 6.5%, 6/15/13 3.71% 2. CMS Energy Corp., 7.75%, 8/1/10 2.97 3. Freeport-Mc Corp., 5.5% (144A) 2.87 4. Forest City Enterprises, 7.625%, 6/1/15 2.83 5. Meristar Hospitality Corp., 9.125%, 1/15/11 2.69
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $11.12 $11.46
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.2994 $ - $0.047
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch (ML) High Yield Master II Index and of the ML Index of Convertible Bonds (Speculative Quality). Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS PRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.] ML Convertible Pioneer ML Bonds High Yield High Yield Speculative VCT Portfolio+ Master II Quality 5/00 $10,000 $10,000 $10,000 $10,608 $9,770 $8,424 $12,390 $10,207 $7,882 6/02 $12,090 $10,013 $7,744 $16,022 $12,830 $10,529 6/04 $16,042 $13,006 $11,090 + Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a broad-based measure of the performance of the non-investment grade U.S. domestic bond market. The ML Index of Convertible Bonds (Speculative Quality) is a market-capitalization weighted index including mandatory and non-mandatory domestic corporate convertible securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
Net Asset Value Life-of-Class 11.46% (5/1/00) 1 Year 9.43%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- High-yield bonds offered slightly positive returns during the first half of 2004. In the following report, portfolio manager Margaret Patel describes the market backdrop and why the Portfolio slightly underperformed its benchmark index. Q: How did the Portfolio perform? A: During the six months ended June 30, 2004, the Portfolio's Class II shares had a total return based on net asset value of 0.12%. By comparison, the Merrill Lynch High Yield Master II Index returned 1.36%. The 30-day SEC yield on June 30, 2004, was 3.64%. Q: What was the environment like for the high-yield market during the first six months of 2004? A: Rising interest rates significantly dampened returns for all segments of the fixed-income market. Signs of a strengthening economy and the increased possibility of sustained inflationary pressures caused market yields to rise in anticipation of an increase in short-term interest rates by the Federal Reserve Board. That hike came to pass on the last day of the period. Bond prices move in the opposite direction of interest rates and within such an environment Treasury bonds suffered the worst relative price declines. Steady economic growth helped high-yield bonds perform better than Treasuries, but high-yield bonds still suffered price declines due to rising market yields. Lower-quality securities outperformed higher-quality issues during the period, as investors became more comfortable taking on riskier investments within a strengthening economy. Q. Why did the Portfolio's performance slightly lag that of the Merrill Lynch High Yield Master II Index? A. The Portfolio had a higher overall credit quality than the index during a period when lower-rated bonds led the market. We favored higher-quality securities because we felt that they offered better value and risk profiles. We also increased the Portfolio's economic sensitivity during the period, including adding investments in the basic materials sector. Companies in this sector had performed well due to torrid demand from China. However, during the period the Chinese government took steps to slow economic growth to reduce inflationary pressures from building. Investors, in turn, became concerned that the moves would soften demand for basic materials, and so these investments suffered. Finally, the Portfolio's allocation to convertible securities - about 40% at the end of the period - also dampened performance somewhat. Convertibles underperformed generic high-yield bonds because of declines in the underlying stock prices, particularly in two of our areas of focus - basic materials and technology. Q: Which investments proved to be some of the top performers during the fiscal year? Which disappointed? A: Two energy holdings, Tom Brown and Nuevo Energy, offered significant price appreciation when they were each acquired by investment-grade companies. Convertible bonds issued by Kaydon - which manufactures ball bearings, hydraulic gear and filters for the aerospace, electronics and heavy construction industries - rose in concert with the underlying stock price due to an improving business outlook. Real estate firm LNR Properties continued to perform well despite the risk that higher interest rates might hurt its business. On the down side, three commodity-based companies - Freeport Mac MoRan, Coeur d'Alene Mining and Graftech, underperformed because of fears that slower growth in the U.S. and China would reduce demand for basic materials. Q: What is your outlook? A: The Fed's rate hike at the end of the period was widely expected, and the Board indicated its willingness to implement any further rate increases in a slow, measured manner. The U.S. economy remains relatively healthy, so we believe that the overall outlook for corporate earnings should be positive. It is possible that Treasury yields could continue to rise during the rest of 2004, but we feel that the extent of any such increases should be relatively muted. Within such an environment, high-yield bonds could continue to attract investors who are more comfortable taking on more risk within a healthy economy and who are looking for more attractive yields than either those offered in the Treasury or other lower-yielding segments of the fixed-income markets. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio invests in below investment-grade securities, which may be more volatile and subject to greater price fluctuations than investment-grade securities. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
S&P/Moody's Shares Ratings Value CONVERTIBLE PREFERRED STOCKS - 2.8% Materials - 2.8% Construction Materials - 0.0% 1,750 B-/B3 TXI Capital Trust I, 5.5%, 6/30/28 $ 80,325 ----------- Diversified Metals & Mining - 2.8% 3,000 CCC/NR Freeport-McCorp., 5.5% (144A) $ 2,688,750 ----------- Total Materials TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $3,077,338) $ 2,769,075 ----------- Principal Amount CONVERTIBLE CORPORATE BONDS - 35.4% Materials - 5.4% Commodity Chemicals - 0.3% $ 200,000 BB-/B1 Millenium Chemicals, Inc., 4.0%, 11/15/23 (144A) $ 311,000 ----------- Diversified Metals & Mining - 1.6% 500,000 B+/B1 Massey Energy Co., 4.75% 5/15/23 $ 850,625 500,000 B-/NR Freeport McMoran Copper & Gold, Inc., 7.0%, 2/11/11 697,500 ----------- $ 1,548,125 ----------- Gold - 1.1% 1,000,000 NR/NR Coeur D'Alene Mines Corp. 1.25%, 1/15/24 $ 827,500 250,000 BBB+/Baa2 Placer Dome, Inc., 2.75%, 10/15/23 (144A) 282,500 ----------- $ 1,110,000 ----------- Specialty Chemicals - 0.5% 1,000,000 BBB/Baa3 RPM International, Inc., 1.389%, 5/13/33 $ 521,250 ----------- Steel - 1.9% 2,000,000 B-/NR Graftech International, 1.625%, 1/15/24 (144A) (a) $ 1,800,000 ----------- Total Materials $ 5,290,375 ----------- Capital Goods - 5.1% Aerospace & Defense - 2.2% 400,000 NR/NR EDO Corp., 5.25%, 4/15/07 $ 418,500 1,725,000 B/B2 Alliant Technology Systems, 2.75%, 2/15/24 (144A) 1,785,375 ----------- $ 2,203,875 ----------- Constuction & Engineering - 1.3% 875,000 NR/NR Quanta Services, Inc., 4.0%, 7/1/07 $ 796,250 500,000 B/NR Quanta Services, 4.5%, 10/1/23 493,125 ----------- $ 1,289,375 ----------- Electrical Component & Equipment - 1.2% 2,595,000 NR/B1 Roper Industries, Inc., 1.4813%, 1/15/34 (a) $ 1,164,506 ----------- Industrial Machinery - 0.4% 300,000 BB-/Ba3 Kaydon Corp., 4.0%, 5/23/23 (144A) $ 361,125 ----------- Total Capital Goods $ 5,018,881 ----------- Media - 1.4% Advertising - 1.4% 1,000,000 BB+/Baa3 Interpublic Group Companies, 4.5%, 3/15/23 $ 1,360,000 ----------- Total Media $ 1,360,000 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Retailing - 0.5% Specialty Stores - 0.5% $ 500,000 B+/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 (a) $ 484,375 ----------- Total Retailing $ 484,375 ----------- Health Care Equipment & Services - 2.1% Health Care Equipment - 0.6% 300,000 NR/NR Wilson Greatbatch Technology, 2.25%, 6/15/13 $ 284,625 375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) 358,125 ----------- $ 642,750 ----------- Health Care Facilities - 1.5% 1,400,000 B-/B3 Community Health Systems, 4.25%, 10/15/08 $ 1,457,750 ----------- Total Health Care Equipment & Services $ 2,100,500 ----------- Pharmaceuticals & Biotechnology - 6.8% Biotechnology - 1.9% 800,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 750,000 850,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 860,625 300,000 NR/NR Cubist Pharmaceuticals, 5.5%, 11/1/08 279,750 ----------- $ 1,890,375 ----------- Pharmaceuticals - 4.9% 400,000 NR/NR Vertex Pharmaceuticals, Inc., 5.75%, 2/15/11 (144A) $ 402,000 2,000,000 NR/NR Ivax Corp., 4.5%, 5/15/08 1,980,000 2,500,000 BB-/B1 Valeant Pharmaceuticals, 3.0%, 8/16/10 (144A) 2,381,250 ----------- $ 4,763,250 ----------- Total Pharmaceuticals & Biotechnology $ 6,653,625 ----------- Real Estate - 0.7% Real Estate Management & Development - 0.7% 500,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 $ 698,750 ----------- Total Real Estate $ 698,750 ----------- Software & Services - 1.1% Application Software - 0.8% 200,000 NR/NR Mentor Graphics, 6.875%, 6/15/07 $ 211,500 500,000 NR/NR Serena Software, 1.5%, 12/15/23 (144A) 537,500 ----------- $ 749,000 ----------- IT Consulting & Other Services - 0.3% 400,000 NR/NR Safeguard Scientifics, 2.625%, 3/15/24 (144A) $ 296,500 ----------- Total Software & Services $ 1,045,500 ----------- Technology Hardware & Equipment - 6.0% Communications Equipment - 3.0% 1,500,000 B-/NR Adaptec, Inc., 0.75%, 12/22/23 $ 1,481,250 1,020,000 BB+/Ba2 Corning, Inc., 3.5%, 11/1/08 1,435,650 ----------- $ 2,916,900 ----------- Computer Storage & Peripherals - 0.8% 700,000 NR/B2 Maxtor Corp., 6.8%, 4/30/10 $ 738,500 ----------- Electronic Equipment & Instruments - 0.4% 300,000 B+/NR Flir Systems, Inc., 3.0%, 6/1/23 (a) $ 427,125 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Electronic Manufacturing Services - 1.4% $ 1,500,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 1,402,500 ----------- Technology Distributors - 0.4% 400,000 NR/NR Bell Microproducts, Inc., 3.75%, 3/5/24 (144A) $ 397,500 ----------- Total Technology Hardware & Equipment $ 5,882,525 ----------- Semiconductors - 6.3% Semiconductor Equipment - 3.5% 700,000 B-/NR Advanced Energy Industries, Inc., 5.25%, 11/15/06 $ 693,000 1,700,000 B-/NR FEI Co., 5.5%, 8/15/08 1,731,875 700,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 682,500 200,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 198,250 ----------- $ 3,305,625 ----------- Semiconductors - 2.8% 1,825,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 1,747,438 1,000,000 NR/NR Triquint Semiconductor, 4.0%, 3/1/07 (a) 957,500 ----------- $ 2,704,938 ----------- Total Semiconductors $ 6,010,563 ----------- TOTAL CONVERTIBLE CORPORATE BONDS (Cost $33,516,548) $34,545,094 ----------- CORPORATE BONDS - 57.7% Energy - 3.9% Oil & Gas Equipment And Services - 0.3% 100,000 B+/B3 Transmontaigne, Inc., 9.125%, 6/1/10 $ 103,000 200,000 BB-/Ba3 Grant Prideco Escrow, 9.0%, 12/15/09 217,500 ----------- $ 320,500 ----------- Oil & Gas Refining Marketing & Transportation - 3.6% 1,255,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 1,374,225 1,900,000 B/B3 Tesoro Petroleum Corp., 9.625%, 4/1/12 2,132,750 ----------- $ 3,506,975 ----------- Total Energy $ 3,827,475 ----------- Materials - 13.9% Commodity Chemicals - 4.6% 1,100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 1,078,000 2,500,000 BB+/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,375,000 1,000,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,045,000 ----------- $ 4,498,000 ----------- Diversified Metals & Mining - 1.3% 1,375,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 (a) $ 1,258,125 ----------- Metal & Glass Containers - 1.5% 1,000,000 B+/B1 Crown Holdings, 9.5%, 3/1/11 $ 1,090,000 500,000 B/B3 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 415,000 ----------- $ 1,505,000 ----------- Paper Products - 4.3% 685,000 BB/Ba2 Bowater Canada Finance, 7.95%, 11/15/11 $ 707,589 3,700,000 BB/Ba2 Bowater, Inc., 6.5%, 6/15/13 3,480,849 ----------- $ 4,188,438 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Specialty Chemicals - 2.2% $ 1,200,000 BB-/B1 Millenium America, Inc., 7.625%, 11/15/26 $ 1,026,000 1,000,000 BB-/B1 Millennium America, Inc., 9.25%, 6/15/08 1,075,000 ----------- $ 2,101,000 ----------- Total Materials $13,550,563 ----------- Capital Goods - 7.3% Aerospace & Defense - 5.1% 1,000,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 1/15/14 $ 955,000 2,500,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 2,437,500 1,525,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 1,570,750 ----------- $ 4,963,250 ----------- Industrial Machinery - 2.2% 800,000 B+/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 (a) $ 800,000 517,000 BBB+/Ba3 SPX Corp., 7.5%, 1/1/13 529,925 800,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 814,000 ----------- $ 2,143,925 ----------- Total Capital Goods $ 7,107,175 ----------- Transportation - 0.5% Air Freight & Couriers - 0.5% 500,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 525,000 ----------- Total Transportation $ 525,000 ----------- Automobiles & Components - 0.4% Auto Parts & Equipment - 0.4% 400,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 360,000 ----------- Total Automobiles & Components $ 360,000 ----------- Consumer Durables & Apparel - 1.4% Homebuilding - 1.4% 400,000 BB/Ba2 Beazer Homes USA, 8.375%, 4/15/12 $ 422,000 1,000,000 BB/Ba2 Beazer Homes USA, 6.5%, 11/15/13 945,000 ----------- $ 1,367,000 ----------- Total Consumer Durables & Apparel $ 1,367,000 ----------- Media - 2.2% Advertising - 2.2% 2,000,000 BB+/Baa3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,139,558 ----------- Total Media $ 2,139,558 ----------- Retailing - 1.0% Department Stores - 1.0% 1,000,000 BB+/Ba3 J.C. Penney Co., Inc., 7.625%, 3/1/97 $ 1,025,000 ----------- Total Retailing $ 1,025,000 ----------- Health Care Equipment & Services - 0.8% Health Care Facilities - 0.5% 500,000 BBB-/Ba1 HCA, Inc., 6.25%, 2/15/13 $ 497,008 ----------- Health Care Supplies - 0.3% 350,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 357,875 ----------- Total Health Care Equipment & Services $ 854,883 -----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Pharmaceuticals & Biotechnology - 1.4% Pharmaceuticals - 1.3% $ 1,375,000 B/NR Valeant Pharmaceuticals, 7.0%, 12/15/11 (144A) $ 1,340,625 ----------- Total Pharmaceuticals & Biotechnology $ 1,340,625 ----------- Real Estate - 11.9% Real Estate Management & Development - 6.4% 510,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 (144A) $ 712,725 800,000 B+/Ba3 LNR Property Corp., 7.625%, 7/15/13 796,000 2,115,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 2,062,125 2,635,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 2,648,175 ----------- $ 6,219,025 ----------- Real Estate Investment Trusts - 5.5% 500,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 495,000 2,300,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 2,403,500 2,500,000 CCC+/B2 Meristar Hospitality Corp., 9.125%, 1/15/11 2,525,000 ----------- $ 5,423,500 ----------- Total Real Estate $11,642,525 ----------- Technology Hardware & Equipment - 5.5% Communications Equipment - 0.6% 700,000 BB+/Ba2 Corning, Inc., 6.2%, 3/15/16 $ 649,250 ----------- Electronic Equipment & Instruments - 2.0% 1,835,000 B/B2 General Cable Corp, 9.5%, 11/15/10 $ 1,972,625 ----------- Technology Distributors - 2.9% 1,550,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 $ 1,550,547 1,200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 1,253,473 ----------- $ 2,804,020 ----------- Total Technology Hardware & Equipment $ 5,425,895 ----------- Utilities - 7.4% Electric Utilities - 7.5% 1,000,000 B+/B3 CMS Energy Corp., 7.5%, 1/15/09 $ 995,000 2,800,000 B+/B3 CMS Energy Corp., 7.75%, 8/1/10 2,786,000 2,000,000 CCC+/B3 Allegheny Energy Supply, 7.8%, 3/15/11 1,955,000 1,500,000 CCC+/B3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,483,125 ----------- $ 7,219,125 ----------- Total Utilities $ 7,219,125 ----------- TOTAL CORPORATE BONDS (Cost $56,297,175) $56,384,824 -----------
8 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value TEMPORARY CASH INVESTMENT - 4.1% Security Lending Collateral - 4.1% $ 3,990,710 Securities Lending Investment Fund, 1.29% $ 3,990,710 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $3,990,710) $ 3,990,710 ----------- TOTAL INVESTMENT IN SECURITIES - 101.7% (Cost $96,881,771) (a) $97,689,703 ----------- OTHER ASSETS AND LIABILITIES - (1.7)% $(1,635,148) ----------- TOTAL NET ASSETS - 100% $96,054,555 ===========
144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $15,138,100 or 15.8% of net assets. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 285,000 Flir Systems Inc., 3.0%, 6/1/23 $ 403,251 1,306,250 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 1,225,358 329,000 Graftech International, 1.625%, 1/15/24 (144A) 295,568 760,000 Manitowoc Co. Inc., 7.125%, 11/1/13 768,875 404,000 Roper Industries Inc., 1.4813%, 1/15/34 184,681 100,000 Sonic Automotive Inc., 5.25%, 5/7/09 97,648 950,000 Triquint Semiconductor, 4.0%, 3/1/07 920,998 ---------- Total $3,896,379 ==========
The accompanying notes are an integral part of these financial statements. 9 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 6/30/04 Year Ended Year Ended 5/1/01 to Class II (unaudited) 12/31/03 12/31/02 12/31/01(a) Net asset value, beginning of period $ 11.46 $ 9.28 $10.33 $10.51 ------- ------- ------ ------ Increase (decrease) from investment operations: Net investment income (loss) $ 0.30 $ 0.76 $ 0.80 $ 0.60 Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.29) 2.17 (1.05) (0.07) ------- ------- ------ ------ Net increase (decrease) from investment operations $ 0.01 $ 2.93 $(0.25) $ 0.53 Distributions to sharowners: Net investment income (0.30) (0.75) (0.80) (0.60) Net realized gain (0.05) -- -- (0.11) ------- ------- ------ ------ Net increase (decrease) in net asset value $ (0.34) $ 2.18 $(1.05) $(0.18) ------- ------- ------ ------ Net asset value, end of period $ 11.12 $ 11.46 $ 9.28 $10.33 ======= ======= ====== ====== Total return* 0.12% 32.64% (2.42)% 5.39% Ratio of net expenses to average net assets+ 1.02%** 1.09% 1.82% 1.39%** Ratio of net investment income (loss) to average net assets+ 5.26%** 6.33% 8.67% 8.94%** Portfolio turnover rate 67%** 48% 42% 36%** Net assets, end of period (in thousands) $32,680 $17,601 $ 228 $ 28 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.02%** 1.09% 1.82% 1.50%** Net investment income (loss) 5.26%** 6.33% 8.67% 8.83%** Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.02%** 1.09% 0.97% 0.85%** Net investment income (loss) 5.26%** 6.33% 0.01% 0.07%**
(a) Class II shares were first publicly offered on May 1, 2001. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. 10 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer High-Yield VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $3,896,379) (Cost $96,881,771) $ 97,689,703 Cash 4,966,498 Foreign currencies, at value -- Receivables -- Investment securities sold 1,251,309 Fund shares sold 129,186 Dividends, interest and foreign taxes withheld 1,389,274 Other 240 ------------ Total assets $105,426,210 ------------ LIABILITIES: Payables -- Investment securities purchased $ 5,290,138 Fund shares repurchased 22 Dividends -- Upon return for securities loaned 3,990,710 Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 62,907 Accrued expenses 27,878 Other -- ------------ Total liabilities $ 9,371,655 ------------ NET ASSETS: Paid-in capital $ 92,183,318 Accumulated net investment income (loss) 42,466 Accumulated undistributed net realized gain (loss) 3,020,839 Net unrealized gain (loss) on: Investments 807,932 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $ 96,054,555 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 63,375,020 Shares outstanding 5,697,234 ------------ Net asset value per share $ 11.12 Class II: No par value (unlimited number of shares authorized) Net assets $ 32,679,535 Shares outstanding 2,937,735 ------------ Net asset value per share $ 11.12
The accompanying notes are an integral part of these financial statements. 11 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer High Yield VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends $ 25,646 Interest (net of foreign taxes withheld of $2,145) 2,986,213 Income on securities loaned, net 2,414 Other -- ----------- Total investment income $ 3,014,273 EXPENSES: Management fees $ 311,486 Transfer agent fees 293 Distribution fees (Class II) 34,430 Administrative fees 9,604 Custodian fees 9,660 Professional fees 26,244 Printing 8,162 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,996 ----------- Total expenses $ 401,875 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ----------- Net expenses $ 401,875 ----------- Net investment income (loss) $ 2,612,398 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 3,020,965 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $ 3,020,965 ----------- Change in net unrealized gain or loss from: Investments $(6,002,478) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $(6,002,478) ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $(2,981,513) ----------- Net increase (decrease) in net assets resulting from operations $ (369,115) -----------
12 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer High Yield VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 2,612,398 $ 4,106,902 Net realized gain (loss) on investments 3,020,965 1,124,588 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (6,002,478) 10,301,474 ------------ ------------ Net increase (decrease) in net assets resulting from operations $ (369,115) $ 15,532,964 ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (1,887,530) $ (3,817,405) Class II (724,685) (279,944) Net realized gain Class I (265,040) -- Class II (135,300) -- Tax return of capital Class I -- -- Class II -- -- ------------ ------------ Total distributions to shareowners $ (3,012,555) $ (4,097,349) ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 40,007,704 $ 45,609,360 Reinvestment of distributions 2,994,517 4,059,022 Cost of shares repurchased (27,753,753) (18,254,761) ------------ ------------ Net increase (decrease) in net assets resulting from fund share transactions $ 15,248,468 $ 31,413,621 ------------ ------------ Net increase (decrease) in net assets $ 11,866,798 $ 42,849,236 ------------ ------------ NET ASSETS: Beginning of period $ 84,187,757 $ 41,338,521 ------------ ------------ End of period $ 96,054,555 $ 84,187,757 ------------ ------------ Accumulated/(distributions in excess of) net investment income (loss) $ 42,466 $ 42,283 ------------ ------------
The accompanying notes are an integral part of these financial statements. 13 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer High Yield VCT Portfolio (The Portfolio) is a portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of High Yield Portfolio is to maximize total return through a combination of income and capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. As of June 30, 2004 there were no securities fair valued. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable 14 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. The High Yield Portfolio invests in below investment grade (high yield) debt securities and preferred stocks. These high yield securities may be convertible into equity securities of the issuer. Debt securities rated below investment grade are commonly referred to as "junk bonds" and are considered speculative. These securities involve greater risk of loss, are subject to greater price volatility, and are less liquid, especially during years of economic uncertainty or change, than higher rated debt securities. The Portfolio is not diversified, which means that it can invest a higher percentage of its asset in any one issuer than a diversified fund. Being non-diversified may magnify the fund's losses from adverse events affecting a particular issuer. In addition, the non-diversified Portfolios have concentrations in certain asset types, which may subject the Portfolios to additional risks. Further description of these risks is included in the Trust's Prospectus. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. D. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the six months ended June 30, 2004, the no such taxes were paid. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 15 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Pioneer High-Yield VCT Portfolio 2003 - --------------------------------------------------------- Distributions paid from: Ordinary Income $4,097,349 Long-Term capital gain -- ---------- $4,097,349 Return of Capital -- ---------- Total distributions $4,097,349 ---------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 42,283 Undistributed long-term gain/ (Capital loss carryforward) 400,214 Unrealized appreciation (depreciation) 6,810,410 ---------- Total $7,252,907 ----------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. The portion of the Portfolios' expenses attributable to Class II (or Class I for shares in the case of High Yield Portfolios) will be reduced only to the extent such expenses are reduced for Class I shares (or Class II shares). Pioneer may subsequently recover reimbursed expenses (within three years of being incurred) from certain Portfolios if the expense ratio of the Class I (or Class II) shares would otherwise be less than the expense limitation of the class. $7,270 was reimbursed by High Yield Portfolio under this 16 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- arrangement and is included in miscellaneous expense. Each class will reimburse PIM no more than the amount by which that class' expenses were reduced. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $56,197 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $255 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $6,455 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------------- High Yield Portfolio $96,881,771 $3,691,838 $(2,883,906) $807,932 ----------- ---------- ----------- --------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $47,769,685 and $31,032,220, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
High Yield Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------------- CLASS I: Shares sold 1,201,971 $ 13,743,588 2,515,726 $ 26,817,319 Reinvestment of distributions 187,908 2,134,532 357,809 3,779,086 Shares repurchased (1,508,494) (17,051,802) (1,491,103) (15,895,254) ------------------------------------------------------------ Net increase (decrease) (118,615) $ (1,173,682) 1,382,432 $ 14,701,151 ============================================================ CLASS II: Shares sold 2,297,852 $ 26,264,116 1,708,526 $ 18,792,041 Reinvestment of distributions 75,932 859,985 25,089 279,836 Shares repurchased (972,496) (10,701,951) (221,726) (2,359,726) ------------------------------------------------------------ Net increase 1,401,288 $ 16,422,150 1,511,889 $ 16,712,470 ============================================================
17 [LOGO] PIONEER Investments (R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16069-00-0804 [logo] Pioneer Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Papp Small and Mid Cap Growth VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Papp Small and Mid Cap Growth VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 5 Financial Statements 7 Notes to Financial Statements 11
Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 97.1% Depositary Receipts for International Stocks 2.9%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Health Care 28.8% Industrials 21.7% Consumer Discretionary 16.6% Information Technology 15.5% Financials 10.8% Consumer Staples 6.6%
Five Largest Holdings (As a percentage of equity holdings) 1. ResMed, Inc. 4.07% 2. Patterson Dental Co. 4.07 3. UCBH Holdings, Inc. 3.79 4. C.R. Bard, Inc. 3.56 5. Tiffany & Co. 3.53
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 3/15/04 Net Asset Value per Share $ 10.86 $ 10.00
Distributions per Share Short-Term Long-Term (3/15/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Papp Small and Mid Cap Growth VCT Portfolio at net asset value, compared to that of the Russell 2500 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Papp Russell 2500 Small and Mid Cap Growth Growth VCT Portfolio ------------ --------------------- 3/04 $10,000 $10,000 6/04 10,014 10,742
The Russell 2500 Growth Index measures the performance of the 2,500 smallest companies with higher price-to-book ratios and higher forecasted earnings values in the Russell 3000 Index, which represents approximately 17% of the total market capitalization of the Russell 3000 Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 8.60% (3/15/04)
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- Domestic equity values experienced great volatility during the six-month period ending June 30, 2004, as market sentiment changed rapidly because of a succession of concerns about factors such as rising interest rates, higher oil prices and violence in Iraq. Small- and mid-cap stocks tended to turn in better performance during the period. In the following interview, Rose Papp, Fund co-manager since inception, and Harry Papp, Partner, of L. Roy Papp & Associates, which is responsible for the Fund's management, discuss the factors that influenced the performance of Pioneer Papp Small and Mid Cap Growth VCT Portfolio during the first six months of 2004. Q: How did the Portfolio perform during the period? A: Class II shares of Pioneer Papp Small and Mid Cap Growth Fund had a total return of 8.60%, at net asset value, during abbreviated period from March 15, 2004 through June 30, 2004. During the period from March 31, 2004 through June 30, 2004, the Russell 2500 Growth Index, a benchmark for small- and mid-sized companies, returned 0.13% and the Russell Midcap Growth Index had a return of 5.94%. Q: What were some of the factors that influenced performance? A: This was a period during which small- and mid-cap stocks outperformed large-company stocks. However, our emphasis on technology companies, hurt performance when many technology companies gave back some of the gains they achieved during 2003. Nevertheless, we believe we experienced a normal, short-term correction. As a result, we stayed with our commitment to technology because of the sector's long-term potential. While corporate earnings trends were positive, concerns about rising interest rates, higher oil prices and the situation in Iraq often took attention away from favorable news about economic growth and corporate profitability. Q: How would you describe the overall investment style of the Portfolio's management team? A: We take a long-term focus and emphasize quality companies with strong balance sheets, consistent earnings over long periods, healthy earnings growth and relatively little debt in relation to cash. Most of our holdings are mid-cap companies, although we do invest in small-cap companies that meet our quality criteria and have good, long-term operating histories, ideally at least 15 to 20 years. By emphasizing quality companies, we are able to invest in stocks that we can hold for long periods of time. Because we focus on companies with consistent earnings, we also tend to avoid cyclical companies, whose fortunes rise and fall with movements in the business cycle, including financial services companies such as commercial banks that are exposed to credit risk. We also avoid companies in fundamentally unhealthy industries, such as the automobile and airline areas, which are weakened either by intense competition, regulatory issues or high debt and capital costs. We try to take advantage of three, long-term themes that have major influences on the economy and stock performance: the aging of the baby boomer generation, which has created new demands for products and services, including those in the health care and financial services industries; technological development, which spurs innovation and increases incentives for corporations to invest in new technologies to control their cost structures to become more productive and competitive; and globalization, which creates opportunities in markets that transcend national borders. Q: What are some of the investments that particularly influenced performance during the period? A: Healthy earnings gains translated into strong performance by several holdings, led by Expeditors International, a specialist in logistics and shipping which has taken advantage of increased global trade. Health care, the Portfolio's second largest area of emphasis after technology, was a sector that had several top performers, including Stryker, a producer of medical equipment, Patterson Dental, which manufactures dental supplies including products used in cosmetic dentistry, and C.R. Bard, manufacturer of medical supplies used in the vascular, urology and oncology markets. Another health care holding that performed well was ResMed, which specializes in respiratory system therapies, such as treatments for sleep disorders. The Portfolios's investments in consumer staples also helped, with Alberto Culver performing particularly well as the result of the market's favorable response to corporate governance reforms. Choice Point, which provides risk management assessment services to the insurance industry, also had strong performance as the insurance business improved. Small- and mid-cap stocks, while offering the potential for higher returns, may be subject to greater short-term price fluctuations than securities of larger companies. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 (continued) - -------------------------------------------------------------------------------- While many interest-rate sensitive financial companies performed poorly during the period, one financial holding that was a standout was UCBH, a small California bank with a strong presence in the fast-growing Asian-American market. The general correction in the technology sector affected the Fund adversely, however. Among the technology holdings that detracted from performance were semiconductor equipment companies KLA-Tencor and Novellus Systems. Other disappointments included Entercom, an owner and operator of radio stations nationwide, which was held back by the slow recovery of advertising revenues, and American Italian Pasta Company, which was hurt by the popularity of low-carb diets. Q: What is your investment outlook for small- and mid-cap stocks? A: Performance improved substantially in the second quarter of 2004, and we believe we are seeing a turnaround in market trends that should continue to favor the established small- and mid-cap growth stocks that we emphasize. Many of these companies had excellent earnings growth in early 2004, and we believe those earnings trends should begin to translate into improved stock price performance. While value stocks have outperformed growth stocks for the past four years, we believe the conditions are present for growth stocks again to do well. With the onset of rising interest rates, we expect growth-oriented stocks to outperform for the next several years. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. 4 Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 93.1% Capital Goods - 5.2% Electrical Components & Equipment - 5.2% 642 Mettler-Toledo International, Inc.* $ 31,548 1,414 Molex, Inc. 38,574 ---------- Total Capital Goods $ 70,122 ---------- Commercial Services & Supplies - 12.0% Data Processing Services - 2.4% 1,760 Forrester Research, Inc.* $ 32,824 ---------- Diversified Commercial Services - 9.6% 322 Apollo Group, Inc.* $ 28,429 714 ChoicePoint, Inc.* 32,601 798 Cintas Corp. 38,041 1,076 DeVry, Inc.* 29,504 ---------- $ 128,575 ---------- Total Commercial Services & Supplies $ 161,399 ---------- Transportation - 3.0% Air Freight & Couriers - 3.0% 820 Expeditors International of Washington, Inc. $ 40,516 ---------- Total Transportation $ 40,516 ---------- Hotels, Restaurants & Leisure - 2.3% Restaurants - 2.3% 912 Brinker International, Inc.* $ 31,117 ---------- Total Hotels, Restaurants & Leisure $ 31,117 ---------- Media - 7.9% Advertising - 4.2% 858 Harte-Hanks, Inc. $ 20,944 700 WPP Group Plc (A.D.R.)* 35,861 ---------- $ 56,805 ---------- Broadcasting & Cable TV - 3.7% 500 Entercom Communications Corp.* $ 18,650 1,708 Saga Communications, Inc.* 31,171 ---------- $ 49,821 ---------- Total Media $ 106,626 ---------- Retailing - 5.2% General Merchandise Stores - 1.9% 830 Family Dollar Stores, Inc. $ 25,249 ---------- Specialty Stores - 3.3% 1,200 Tiffany & Co. $ 44,220 ---------- Total Retailing $ 69,469 ---------- Food, Beverage & Tobacco - 0.5% Packaged Foods & Meats - 0.5% 200 American Italian Pasta Co. $ 6,096 ---------- Total Food, Beverage & Tobacco $ 6,096 ---------- Shares Value Household & Personal Products - 5.7% Household Products - 2.4% 600 Clorox Co. $ 32,268 ---------- Personal Products - 3.3% 880 Alberto-Culver Co. (Class B) $ 44,123 ---------- Total Household & Personal Products $ 76,391 ---------- Health Care Equipment & Services - 26.8% Health Care Distributors - 3.8% 666 Patterson Dental Co.* $ 50,942 ---------- Health Care Equipment - 17.2% 786 C. R. Bard, Inc. $ 44,527 682 Dentsply International, Inc. 35,532 2,000 Molecular Devices Corp.* 35,560 1,000 ResMed, Inc.* 50,960 384 Stryker Corp. 21,120 1,006 Techne Corp.* 43,711 ---------- $ 231,410 ---------- Health Care Services - 5.8% 460 Express Scripts, Inc.* $ 36,446 1,300 IMS Health, Inc. 30,472 300 Medco Health Solutions, Inc.* 11,250 ---------- $ 78,168 ---------- Total Health Care Equipment & Services $ 360,520 ---------- Banks - 3.5% Regional Banks - 3.5% 1,200 UCBH Holdings, Inc. $ 47,424 ---------- Total Banks $ 47,424 ---------- Diversified Financials - 6.6% Asset Management & Custody Banks - 6.6% 1,150 Federated Investors, Inc. $ 34,891 586 Investors Financial Services Corp. 25,538 552 T. Rowe Price Associates, Inc. 27,821 ---------- $ 88,250 ---------- Total Diversified Financials $ 88,250 ---------- Software & Services - 4.3% Data Processing & Outsourced Services - 4.3% 1,022 Fiserv, Inc.* $ 39,746 700 SunGard Data Systems, Inc.* 18,200 ---------- $ 57,946 ---------- Total Software & Services $ 57,946 ----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Technology Hardware & Equipment - 1.4% Electronic Equipment & Instruments - 1.4% 400 Waters Corp.* $ 19,112 ---------- Total Technology Hardware & Equipment $ 19,112 ---------- Semiconductors - 8.7% Semiconductor Equipment - 4.9% 500 KLA-Tencor Corp.* $ 24,690 1,300 Novellus Systems, Inc.* 40,871 ---------- $ 65,561 ---------- Semiconductors - 3.8% 514 Linear Technology Corp. $ 20,288 998 Microchip Technology 31,477 ---------- $ 51,765 ---------- Total Semiconductors $ 117,326 ---------- TOTAL COMMON STOCKS (Cost $1,222,072) $1,252,314 ---------- TOTAL INVESTMENT IN SECURITIES - 93.1% (Cost $1,222,072) $1,252,314 ---------- OTHER ASSETS AND LIABILITIES - 6.9% $ 92,770 ---------- TOTAL NET ASSETS - 100.0% $1,345,084 ==========
* Non-income producing security. (A.D.R.) American Depository Receipt 6 The accompanying notes are an integral part of these financial statements. Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
3/15/04 to 6/30/04 Class II (a) (unaudited) Net asset value, beginning of period $ 10.00 ------- Increase from investment operations: Net investment income $ (0.01) Net realized and unrealized gain on investments 0.87 ------- Net increase from investment operations $ 0.86 Net increase in net asset value $ 0.86 ------- Net asset value, end of period $ 10.86 ======= Total return* 8.60% Ratio of net expenses to average net assets+ 1.00%** Ratio of net investment loss to average net assets+ (0.50)%** Portfolio turnover rate 0%** Net assets, end of period (in thousands) $ 1,345 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 11.27%** Net investment loss (10.77)%** Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.00%** Net investment loss (0.50)%**
(a) Class II shares were fist publicly offered on March 15, 2004. * Assumes initial investment at net asset value at the beginning of the period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investment in securities, at value (Cost $1,222,072) $1,252,314 Cash 63,102 Futures collateral Foreign currencies, at value -- Receivables -- Investment securities sold -- Fund shares sold 71,725 Variation margin Dividends, interest and foreign taxes withheld 608 Forward foreign currency settlement contracts, net Forward foreign currency portfolio hedge contracts, open-net Due from Pioneer Investment Management, Inc. 7,769 Other 5 ---------- Total assets $1,395,523 ---------- LIABILITIES: Payables -- Investment securities purchased $ 32,026 Fund shares repurchased -- Dividends -- Upon return of securities loaned -- Forward foreign currency settlement contracts, net -- Forward foreign currency portfolio hedge contracts, open-net Variation margin Due to bank Due to affiliates 1,938 Accrued expenses 16,475 ---------- Total liabilities $ 50,439 ---------- NET ASSETS: Paid-in capital $1,316,059 Accumulated net investment income (loss) (1,217) Accumulated undistributed net realized gain (loss) -- Net unrealized gain (loss) on: Investments 30,242 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies ---------- Total net assets $1,345,084 ---------- NET ASSET VALUE PER SHARE: Class I: No par value (Unlimited number of shares authorized) Net assets $ -- Shares outstanding -- ---------- Net asset value per share $ -- Class II: No par value (Unlimited number of shares authorized) Net assets $1,345,084 Shares outstanding 123,829 ---------- Net asset value per share $ 10.86
8 The accompanying notes are an integral part of these financial statements. Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Papp Small and Mid Cap Growth VCT Portfolio For the period from 3/15/04 (Commencement of Operations) to 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $28) $ 1,133 Interest 89 Income on securities loaned, net -- Other -- --------- Total investment income $ 1,222 --------- EXPENSES: Management fees $ 1,829 Transfer agent fees 504 Distribution fees (Class II) 610 Administrative fees 4,625 Custodian fees 7,072 Professional fees 9,068 Printing 3,743 Fees and expenses of nonaffiliated trustees 36 Miscellaneous -- --------- Total expenses $ 27,487 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (25,048) Less fees paid indirectly -- --------- Net expenses $ 2,439 --------- Net investment income (loss) $ (1,217) --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ -- Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- --------- $ -- --------- Change in net unrealized gain or loss from: Investments $ 30,242 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- --------- $ 30,242 --------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ 30,242 ========= Net increase (decrease) in net assets resulting from operations $ 29,025 =========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
Pioneer Papp Small and Mid Cap Growth VCT Portfolio For the period from 3/15/04 (Commencement of Operations) to 6/30/04 FROM OPERATIONS: Net investment loss $ (1,217) Net realized gain (loss) on investments -- Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 30,242 ---------- Net increase (decrease) in net assets resulting from operations $ 29,025 ---------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ -- Class II -- Net realized gain Class I -- Class II -- Tax return of Capital Class I -- Class II -- ---------- Total distributions to shareowners $ -- ---------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $1,422,011 Reinvestment of distributions -- Cost of shares repurchased (105,952) ---------- Net increase in net assets resulting from fund share transactions $1,316,059 ---------- Net increase in net assets $1,345,084 NET ASSETS: Beginning of period $ -- ---------- End of period $1,345,084 ---------- Accumulated net investment income (loss), end of period $ (1,217) ==========
10 The accompanying notes are an integral part of these financial statements. Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Papp Small and Mid Cap Growth VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The Papp Small and Mid Cap Growth VCT Portfolio commenced operations on March 15, 2004. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Papp Small and Mid Cap Growth Portfolio is long term capital growth. The financial statements and financial highlights of all other portfolios are presented in separate books. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total 11 Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- return. Upon entering into futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Papp Small and Mid Cap Growth Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. 12 Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $1,542 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $128 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $268 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) ------------- -------------- -------------- --------------- Papp Small and Mid Cap Growth Portfolio $1,222,072 $59,184 $ (28,942) $30,242 ============= ============== ============== =============== - --------------------------------------------------------------------------------------------------------------
13 Pioneer Papp Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the period ended June 30, 2004, were $1,222,072 and $0, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- -------------------------------------------------------------------------------- Papp Small & Mid Cap Growth Portfolio '04 Shares '04 Amount - -------------------------------------------------------------------------------- CLASS II: Shares sold 134,291 $1,422,011 Reinvestment of distributions -- -- Shares repurchased (10,462) (105,952) ------------------------- Net increase 123,829 $1,316,059 ========================= - --------------------------------------------------------------------------------
14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our web site www.pioneerfunds.com. 16083-00-0804 [PIONEER LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Papp America-Pacific Rim VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Papp America-Pacific Rim VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 5 Notes to Financial Statements 9
Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [REPRESENTATION OF PIE CHART] U.S. Common Stocks 94.0% Depositary Receipts for International Stocks 6.0%
Sector Distribution (As a percentage of equity holdings) [REPRESENTATION OF PIE CHART] Information Technology 30.5% Health Care 19.9% Industrials 14.3% Consumer Staples 12.8% Financials 11.8% Consumer Discretionary 7.6% Energy 3.1%
Five Largest Holdings (As a percentage of equity holdings) - ---------------------------------------- 1. Wm. Wrigley Jr. Co. 4.80% - ---------------------------------------- 2. Colgate-Palmolive Co. 4.79 - ---------------------------------------- 3. Expeditors International of Washington, Inc. 4.66 - ---------------------------------------- 4. Stryker Corp. 4.62 - ---------------------------------------- 5. Johnson & Johnson 4.61 - ----------------------------------------
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 3/15/04 Net Asset Value per Share $ 10.23 $ 10.00
Distributions per Share Short-Term Long-Term (3/15/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Papp America-Pacific Rim VCT Portfolio at net asset value, compared to that of the Russell 1000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [REPRESENTATION OF LINE CHART]
Pioneer Papp Russell America-Pacific Rim VCT 1000 Growth Portfolio 3/31/04 10000 10000 6/04 10194 10109
The Russell 1000 Growth Index contains those Russell 1000 securities with a greater-than-average growth orientation. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Fund 2.30% (3/15/04)
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- During the period from the Portfolio's inception on March 15, 2004 through June 30, 2004, investors were caught in a quandary balancing their concerns about higher interest rates, rising oil prices and the turmoil in Iraq on the one hand and positive earnings growth on the other. In the following interview, Rosellen Papp, co-manager since inception, discusses the Portfolio's unique global strategy and the team's research efforts to capture growth in today's rather conflicted markets. Q: Was the market and economic environment favorable for the Portfolio's investment strategy? A: Given the myriad factors and uncertainty influencing the financial markets over the past six months, investors were presented with a complicated investment environment no matter what their investment strategy. On June 30, the Portfolio was composed of 28 large capitalization U.S. growth companies that derive at least 15% of their earnings or revenues from the Pacific Rim. We have such strong convictions about these high-caliber holdings that we buy companies with the intention of holding them for the long term. This approach, in turn, keeps the Portfolio's turnover rate well below the industry average and minimizes the tax consequences for our shareowners. The stock market swings in unpredictable cycles, favoring styles of investing at different times. Your Portfolio follows a growth approach, which identifies companies with earnings that are growing at a faster rate than the market, as opposed to a value style of investing, which uncovers companies with improving prospects but not necessarily high growth. Both styles are concerned with valuation, but a value strategy places more emphasis on the relative price of a stock while a growth strategy prizes higher growth and consistent growth of earnings. Historically, growth and value styles have tended to exert influence over the markets at different times. For the four years from 1996 through 1999, growth stocks were in favor, outperforming value stocks. The following four years from 2000 through 2003, value stocks were in favor. We can't forecast precisely when the pendulum will swing back again, but we think growth stocks are due once again for their day in the sun. Q: How did the Portfolio perform during the semiannual period? A: From its inception on March 15, 2004 through June 30, 2004, the Portfolio made modest gains. The Portfolio's Class II shares returned 2.3% at net asset value. In comparison, the Standard & Poor's 500 Index increased 1.72% and the Russell 1000 Growth Index climbed 1.94% from March 30, 2004, to June 30, 2004. In response to our main investment themes, the Portfolio's assets are concentrated in three broad business segments -- financial services, health care, and technology. The Portfolio's underperformance relative to the benchmarks is due to its emphasis on two of these major sectors of the economy -- financial services and technology, which lagged the overall market. The potential for higher interest rates, which overshadowed the stock market for much of the reporting period, depressed the near-term outlook for the financial services sector. After their strong appreciation in 2003, technology stocks retreated during the first half of 2004. We believe many of the technology and financial services holdings in the Portfolio were unfairly tarnished in the rush to judgment and believe they will recover when investors become more discerning. Incidentally, the third main area of investment concentration for the Portfolio is the health care sector, which did relatively well during the period under review. It's important to note that the limited number of holdings in the Portfolio makes it more susceptible to swings in the market. We minimize that risk by investing in a diverse group of large, well established companies with a history of profitability and financial strength. Q: What investments hurt performance during the six months? A: Given the correction in the technology sector, stock prices of Intel and Applied Materials Technology fell in response to investors' perception that the tech rally had gotten ahead of itself, and companies had become overvalued. We remain confident about their prospects and expect their stock prices to recover. Telecommunications equipment provider Nokia proved to be a disappointment, however. Having misjudged the appeal of the clamshell designed phone, Nokia has been losing market share to competitors, which are producing more sophisticated, less expensive products. We are monitoring the situation closely to see if they can remain competitive. After months of speculation the Federal Reserve Board raised its key short-term interest rate for the first time in more than four years at its June meeting. Of course, the action was preceded by months of speculation, which depressed stock prices of financial services companies. We think the Portfolio's financial holdings were unjustly targeted, especially State Street, which provides custodial services to mutual fund managers worldwide. Since the Portfolio invests in companies that derive at least 15% of their earnings from the Pacific Rim, we decided to sell Clorox, which is de-emphasizing its foreign operations. Proceeds from the sale were invested in Wrigley's, which is expanding its investment in Asia and derives 60% of its business from overseas. We also sold the entire position in Royal Dutch Petroleum Company when it became clear that it had been overstating its oil reserves for some time -- something we found unethical and unacceptable. Q: What investments helped performance during the six months? A: Health care stocks, another area of considerable investment for your Portfolio, represented one of the better performing sectors for the six months, relatively speaking. Stryker, a developer and manufacturer of orthopedic and surgical devices, was a notable contributor to performance and is benefiting from effective pricing in its markets. Given the market's anticipation of potential stock buy-back program, Microsoft managed to avoid the fate of most technology companies during the six months and performed very well. Like many well-managed technology companies, Microsoft is carrying huge amounts of cash on its balance sheet. The company, which was the Portfolio's largest holding on June 30, is expected to announce in July whether they will implement the buyback, which is already having a very favorable impact on its stock price. Another strong performer, Expeditors International of Washington, is an international airfreight forwarding company that is profiting from increased trade volume between Asia and the United States. The company posted very strong revenue growth in the first quarter of 2004. Q: What is your outlook for the balance of the fiscal year? A: We are upbeat about prospects for the companies in your Portfolio for the balance of fiscal 2004 and beyond. We think higher-quality, growth-oriented companies, such as those included in your portfolio, that exhibit good earnings performance should be rewarded. In 2003, investors favored smaller companies and lower priced, poorer-quality stocks. Their performance gains were considerable, doubling in value in many cases. Many of these stocks have become overvalued in our estimation, and it's hard to imagine that they will repeat last year's performance for a second year in a row. We think that high-quality growth companies, such as those in your Portfolio, are well positioned to meet growing global demand for their premium, brand-name products. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. International investing may involve special risks, including differences in accounting and currency, as well as economic and political instability. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 96.5% Energy - 3.0% Integrated Oil & Gas - 3.0% 120 ChevronTexaco Corp. $ 11,293 -------- Total Energy $ 11,293 -------- Capital Goods - 9.3% Electrical Components & Equipment - 9.3% 263 American Power Conversion Corp. $ 5,168 498 General Electric Co. 16,135 508 Molex, Inc. 13,858 -------- $ 35,161 -------- Total Capital Goods $ 35,161 -------- Transportation - 4.5% Air Freight & Couriers - 4.5% 342 Expeditors International of Washington, Inc. $ 16,898 -------- Total Transportation $ 16,898 -------- Media - 3.7% Advertising - 3.7% 269 WPP Group Plc (A.D.R.) * $ 13,781 -------- Total Media $ 13,781 -------- Retailing - 3.6% Specialty Stores - 3.6% 370 Tiffany & Co. $ 13,635 -------- Total Retailing $ 13,635 -------- Food & Drug Retailing - 4.6% Food Retail - 4.6% 276 Wm. Wrigley Jr. Co. $ 17,402 -------- Total Food & Drug Retailing $ 17,402 -------- Food, Beverage & Tobacco - 3.1% Soft Drinks - 3.1% 230 The Coca-Cola Co. $ 11,610 -------- Total, Food Beverage & Tobacco $ 11,610 -------- Household & Personal Products - 4.6% Household Products - 4.6% 297 Colgate-Palmolive Co. $ 17,360 -------- Total Household & Personal Products $ 17,360 -------- Health Care Equipment & Services - 16.0% Health Care Distributors - 4.5% 300 Johnson & Johnson $ 16,710 -------- Health Care Equipment - 8.0% 276 Medtronic, Inc. * $ 13,447 305 Stryker Corp. 16,775 -------- $ 30,222 -------- Health Care Services - 3.5% 560 IMS Health, Inc. $ 13,126 -------- Total Health Care Equipment & Services $ 60,058 -------- Pharmaceuticals & Biotechnology - 3.3% Pharmaceuticals - 3.3% 357 Pfizer, Inc. $ 12,238 -------- Total Pharmaceuticals & Biotechnology $ 12,238 --------
Shares Value Diversified Financials - 7.1% Asset Management & Custody Banks - 7.1% 270 State Street Corp. $ 13,241 270 T. Rowe Price Associates, Inc. 13,608 -------- $ 26,849 -------- Total Diversified Financials $ 26,849 -------- Insurance - 4.2% Multi-Line Insurance - 4.2% 223 American International Group, Inc. $ 15,895 -------- Total Insurance $ 15,895 -------- Software & Services - 3.1% Application Software - 3.1% 409 Microsoft Corp. $ 11,681 -------- Total Software & Services $ 11,681 -------- Technology Hardware & Equipment - 16.4% Communications Equipment - 5.0% 467 Cisco Systems, Inc. * $ 11,068 547 Nokia Corp. (A.D.R.) 7,953 -------- $ 19,021 -------- Computer Hardware - 6.0% 442 Hewlett-Packard Co. $ 9,326 151 IBM Corp. * 13,312 -------- $ 22,638 -------- Computer Storage & Peripherals - 2.7% 878 EMC Corp. * $ 10,009 -------- Electronic Manufacturing Services - 2.7% 329 National Instruments Corp. $ 10,084 -------- Total Technology Hardware & Equipment $ 61,752 -------- Semiconductors - 9.9% Semiconductor Equipment - 3.5% 662 Applied Materials, Inc. * $ 12,988 -------- Semiconductors - 6.4% 486 Intel Corp. $ 13,414 273 Linear Technology Corp. 10,775 -------- $ 24,189 -------- Total Semiconductors $ 37,177 -------- TOTAL COMMON STOCKS (Cost $357,664) $362,790 -------- TOTAL INVESTMENT IN SECURITIES - 96.5% (Cost $357,664) $362,790 -------- OTHER ASSETS AND LIABILITIES - 3.5% $ 13,268 -------- TOTAL NET ASSETS - 100.0% $376,058 ========
* Non-income producing security. (A.D.R.) American Depositary Receipt 4 The accompanying notes are an integral part of these financial statements. Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
3/15/04 to 6/30/04 Class II (a) (unaudited) Net asset value, beginning of period $ 10.00 ------- Increase from investment operations: Net investment income $ 0.01 Net realized and unrealized gain on investments 0.22 ------- Net increase from investment operations $ 0.23 ------- Net increase in net asset value $ 0.23 ------- Net asset value, end of period $ 10.23 ======= Total return* 2.30% Ratio of net expenses to average net assets + 0.95%** Ratio of net investment income to average net assets + 0.42%** Portfolio turnover rate 12%** Net assets, end of period (in thousands) $ 376 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 51.41%* * Net investment loss (50.04)%**
(a) Class II shares were first publicly offered on March 15, 2004 * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 5 Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Papp America- Pacific Rim VCT Portfolio ASSETS: Investment in securities, at value (cost $357,664) $ 362,790 Cash 12,343 Receivables -- Fund shares sold 10,745 Dividends, interest and foreign taxes withheld 316 Due from Pioneer Investment Management, Inc. 8,489 Other 16 --------- Total assets $ 394,699 --------- LIABILITIES: Payables -- Due to affiliates $ 1,732 Accrued expenses 16,909 --------- Total liabilities $ 18,641 --------- NET ASSETS: Paid-in capital $ 370,561 Accumulated net investment income 212 Accumulated undistributed net realized gain 159 Net unrealized gain on investments 5,126 --------- Total net assets $ 376,058 --------- NET ASSET VALUE PER SHARE: Class II: No Par Value (Unlimited number of shares authorized) Net assets $ 376,058 Shares outstanding 36,767 --------- Net asset value per share $ 10.23 ---------
6 The accompanying notes are an integral part of these financial statements. Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Papp America- Pacific Rim VCT Portfolio For the period from 3/15/04 (Commencement of Operations) to 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $29) $ 647 Interest 40 Income on securities loaned, net -- Other -- --------- Total investment income $ 687 --------- EXPENSES: Management fees $ 375 Transfer agent fees (Class II) 504 Distribution fees (Class II) 125 Administrative fees 4,625 Custodian fees 7,216 Professional fees 9,090 Printing 3,743 Fees and expenses of nonaffiliated trustees 36 Miscellaneous -- --------- Total expenses $ 25,714 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (25,239) --------- Net expenses $ 475 --------- Net investment income (loss) $ 212 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 159 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- --------- $ 159 --------- Change in net unrealized gain or loss from: Investments $ 5,126 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies --------- $ 5,126 --------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ 5,285 --------- Net increase (decrease) in net assets resulting from operations $ 5,497 =========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Papp America- Pacific Rim VCT Portfolio For the period from 3/15/04 (Commencement of Operations) to 6/30/04 FROM OPERATIONS: Net investment income $ 212 Net realized gain (loss) on investments 159 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 5,126 -------- Net increase (decrease) in net assets resulting from operations $ 5,497 -------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income: Class I $ -- Class II -- Net realized gain Class I -- Class II -- Tax return of Capital Class I -- Class II -- -------- Total distributions to shareholders $ -- -------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $371,268 Reinvestment of distributions -- Cost of shares repurchased (707) -------- Net increase in net assets resulting from fund share transactions $370,561 -------- Net increase in net assets $376,058 -------- NET ASSETS: Beginning of period $ -- -------- End of period $376,058 ======== Accumulated net investment income (loss), end of period $ 212 ========
8 The accompanying notes are an integral part of these financial statements. Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Papp America-Pacific Rim VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The Papp America-Pacific Rim VCT Portfolio commenced operations on March 15, 2004. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Papp America-Pacific Rim Portfolio is to seek capital appreciation. The financial statements and financial highlights of all other portfolios are presented in separate books. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. 9 Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Papp America-Pacific Rim Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. 10 Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $1,542 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $129 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $61 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------------------ Net Gross Gross Appreciation/ Portfolio Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------------------ Papp America-Pacific Rim Portfolio $357,664 $9,085 $ (3,959) $5,126 - ------------------------------------------------------------------------------------------------------
11 Pioneer Papp America-Pacific Rim VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the period ended June 30, 2004, were $364,161 and $6,657, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- -------------------------------------------------------------------------------- Papp America-Pacific Rim Portfolio '04 Shares '04 Amount - -------------------------------------------------------------------------------- CLASS II: Shares sold 36,837 $371,268 Reinvestment of distributions -- -- Shares repurchased (70) (707) ------ -------- Net increase 36,767 $370,561 ====== ========
12 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 13 [PIONEER LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16084-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Europe VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents Pioneer Europe VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 7 Notes to Financial Statements 11
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] Financials 29.3% Health Care 11.0% Energy 10.7% Telecommunication Services 10.1% Consumer Staples 8.5% Industrials 8.4% Materials 7.4% Consumer Discretionary 6.7% Information Technology 4.9% Utilities 3.0%
Geographical Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] United Kingdom 29.6% France 23.6% Switzerland 13.6% Germany 9.4% Italy 6.1% Netherlands 5.8% Spain 4.2% Ireland 2.8% Belgium 2.0% Sweden 1.9% Finland 1.0%
Five Largest Holdings (As a percentage of equity holdings) 1. BP Amoco Plc 4.53% 2. Vodafone Group Plc 4.08 3. Total SA 3.28 4. Nestle SA (Registered Shares) 3.09 5. Eni S.p.A. 2.84
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $8.94 $8.89 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.0583 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Europe VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) Europe Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.]
Date Pioneer Europe MSCI Europe VCT Portfolio Index 10/31/1998 $10,000 $10,000 $10,596 $10,992 $13,571 $12,741 12/31/2000 $11,030 $11,671 $8,445 $9,349 12/31/2002 $6,835 $7,629 $9,085 $10,570 6/30/2004 $9,196 $10,891
The MSCI Europe Index is an unmanaged, capitalization-weighted index of the 15 European country indices included in the MSCI EAFE (Europe, Australasia, Far East) Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class -1.47% (10/30/98) 5 Years -2.44% 1 Year 23.26%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- European stocks posted modest gains during the six months ended June 30, 2004. During this time, we saw signs of renewed interest in and a rotation back toward higher-quality investments. However, the pace of economic recovery is being tempered by higher oil prices and expectations of rising interest rates. In the following interview, Stan Pearson, a member of the Portfolio's management team, discusses the overarching factors facing investors during the reporting period and his efforts to position the Portfolio for positive growth. Q: Was the economic environment favorable for the Portfolio's investment strategy? A: The economic environment was generally favorable for European stocks. Stock price valuations are fair and supported by strong dividend yields. Growth across Europe is more moderate than outside the region, and this fact is discounted in stock prices. The strength of the euro eased a bit during the six months, but it continues to be a risk for European exporters. For the six months ended June 30, 2004, the Portfolio's Class II shares rose 1.22% at net asset value. In comparison, the Morgan Stanley Capital International (MSCI) Europe Index posted a return of 3.04% for the same period. Q: What investments hurt performance during the six months? A: Several factors contributed to the Portfolio's underperformance. First, mobile phone and network manufacturer Nokia (Finland) surprised the market with two profit warnings and disappointing results. Secondly, unlike the benchmark, the Portfolio didn't own pharmaceutical Aventis, which rose sharply after a takeover bid from Sanofi. The Portfolio did hold Sanofi (France), but investors penalized the company for its decision to bid for Aventis. We think this situation is temporary and will hold on to Sanofi, because we believe the merger will create appreciation potential. Elsewhere in the pharmaceutical sector, investments in GlaxoSmithKline (United Kingdom) underperformed when the company released disappointing first quarter results. The company was recovering in the final months of the reporting period. Finally, while our decision to overweight investments in the capital goods sector proved successful, our stock selection was a bit disappointing. Swedish engineering companies Sandvik, Atlas Copco and SKF had absolute positive performance, but underperformed other companies in the capital goods sector that rallied more strongly on optimism about restructuring programs. Q: What investments helped performance during the six months? A: One of the more positive contributors to performance was Zurich Financial (Switzerland), which we purchased during the reporting period. This company, which is benefiting from an improving outlook for the insurance sector, had an attractive valuation at the time of purchase and outperformed both the sector and the broader equity market. In the energy sector, we sold investments in Royal Dutch Petroleum (Holland) and Shell Transport & Trading (United Kingdom) and reinvested the proceeds in BP Amoco (United Kingdom) - a decision that proved successful. BP is benefiting from its substantial production growth thanks to past investments. Furthermore, the company is carrying a lot of cash, which it may use to increase returns to its shareholders through dividends or share buy-back programs. Food giant Nestle (Switzerland) appreciated strongly as a result of market share growth and rising profit margins. European small-sized companies outperformed during the six months. An overweight position in the capital goods sector made a positive contribution. EADS (France), the maker of the Airbus, was particularly strong in the second quarter. The company is benefiting from signs of recovery in the commercial aerospace sector earlier than expected. In the utilities sector, E.ON (Germany) benefited from higher electricity prices and strong cash flow. We are optimistic that the company may return some of its extra cash to investors through a special dividend or share buy backs. In the pharmaceuticals sector, Schering (Germany) did well in the second quarter, thanks to investors' positive reaction to its plans to increase its profit margins and for a new cancer product it is developing with Novartis (Switzerland). Q: Given current market conditions in European markets, how are you positioning the Portfolio? A: We continue to emphasize investments in the capital goods sector, because we think it will benefit from increasing levels of capital expenditure, as global demand increases and companies become more confident. We're limiting positions in the technology hardware and software sector, because we believe stock prices of many of these companies are inflated and already reflecting future growth. In the telecommunications sector, we've uncovered interesting companies but prefer operators with a high level of exposure to the European mobile market, which continues to generate attractive growth. Q: What is your outlook? A: We think European equities are poised to continue to perform well versus other asset classes. The global economic recovery is well underway, led by the strong U.S. economy. The European economy continues to demonstrate a less robust pace of economic growth, but stock price valuations in Europe's equity markets remain attractive and fully reflect the moderate pace of growth in the region. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. International investing may involve special risks, including differences in accounting and currency, as well as economic and political instability. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCK - 1.2% Automobiles & Components - 1.2% Automobile Manufacturers - 1.2% 250 Porsche AG $ 168,171 ----------- Total Automobiles & Components $ 168,171 ----------- TOTAL PREFERRED STOCK (Cost $83,104) $ 168,171 ----------- COMMON STOCKS - 96.7% Energy - 10.4% Integrated Oil & Gas - 7.2% 72,851 BP Amoco Plc $ 646,674 20,351 Eni S.p.A. 405,664 ----------- $ 1,052,338 ----------- Oil & Gas Refining Marketing & Transportation - 3.2% 2,446 Total SA $ 468,764 ----------- Total Energy $ 1,521,102 ----------- Materials - 7.1% Commodity Chemicals - 1.2% 3,611 BASF India, Ltd. $ 194,454 ----------- Construction Materials - 4.4% 9,648 CRH Plc $ 204,756 1,610 Italcementi S.p.A.* 21,639 3,384 Lafarge SA 303,469 1,070 Vinci SA 108,236 ----------- $ 638,100 ----------- Diversified Metals & Mining - 1.5% 5,596 Rio Tinto Plc $ 135,150 2,544 Sandvik AB 87,158 ----------- $ 222,308 ----------- Total Materials $ 1,054,862 ----------- Capital Goods - 6.9% Aerospace & Defense - 1.7% 37,685 Bae Systems $ 150,674 3,195 European Aeronautic Defence 89,543 ----------- $ 240,217 ----------- Construction & Engineering - 2.6% 11,469 ACS, Actividades de Construccion y Servicios, SA $ 193,903 3,804 Compagnie de Saint Gobain 190,868 ----------- $ 384,771 ----------- Electrical Components & Equipment - 1.4% 3,012 Schneider Electric SA $ 206,592 ----------- Shares Value Industrial Machinery - 1.2% 1,976 Atlas Copco AB $ 73,630 2,843 AB SKF 104,848 ----------- $ 178,478 ----------- Total Capital Goods $ 1,010,058 ----------- Commercial Services & Supplies - 1.3% Diversified Commercial Services - 1.3% 8,308 TNT Post Group NV $ 190,718 ----------- Total Commercial Services & Supplies $ 190,718 ----------- Automobiles & Components - 1.0% Auto Parts & Equipment - 1.0% 2,594 Compagnie Generale des Etablissements Michelin $ 144,247 ----------- Total Automobiles & Components $ 144,247 ----------- Hotels, Restaurants & Leisure - 1.6% Restaurants - 1.6% 17,111 Compass Group Plc $ 104,877 8,438 Gus Plc 130,372 ----------- $ 235,249 ----------- Total Hotels, Restaurants & Leisure $ 235,249 ----------- Media - 2.8% Advertising - 0.6% 2,942 Publicis SA $ 87,652 ----------- Publishing - 2.2% 7,545 Elsevier NV $ 106,401 7,505 Vivendi Universal* 209,672 ----------- $ 316,073 ----------- Total Media $ 403,725 ----------- Food & Drug Retailing - 5.9% Drug Retail - 0.6% 6,888 Boots Co., Plc* $ 86,141 ----------- Food Retail - 5.3% 13,588 Koninklijke Ahold NV* $ 107,363 1,649 Nestle SA (Registered Shares) 441,222 45,427 Tesco Plc 220,619 ----------- $ 769,204 ----------- Total Food & Drug Retailing $ 855,345 ----------- Food, Beverage & Tobacco - 2.5% Tobacco - 2.5% 2,313 Altadis SA* $ 71,759 18,370 British American Tobacco Plc 285,962 ----------- $ 357,721 ----------- Total Food, Beverage & Tobacco $ 357,721 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Health Care Equipment & Services - 0.9% Health Care Distributors - 0.9% 2,279 Celesio AG $ 136,601 ----------- Total Health Care Equipment & Services $ 136,601 ----------- Pharmaceuticals & Biotechnology - 9.9% Pharmaceuticals - 9.9% 7,494 AstraZeneca Plc $ 337,721 13,196 GlaxoSmithKline Plc 269,229 3,103 Novartis 137,485 3,123 Roche Holdings AG 310,402 4,338 Sanofi-Synthelabo SA 275,980 1,796 Schering AG 106,369 ----------- $ 1,437,186 ----------- Total Pharmaceuticals & Biotechnology $ 1,437,186 ----------- Banks - 14.6% Diversified Banks - 14.6% 8,696 Allied Irish Banks Plc $ 134,767 10,567 Banco Bilbao Vizcaya Argentaria, SA 141,941 32,459 Barclays Plc 278,005 5,468 BNP Paribas SA 338,177 6,739 Credit Agricole SA 164,819 7,061 CS Group* 252,092 4,600 Depfa Bank Plc 67,090 4,223 Dexia 70,228 23,715 HSBC Holding Plc 355,583 11,268 Royal Bank of Scotland Group Plc 326,779 ----------- $ 2,129,481 ----------- Total Banks $ 2,129,481 ----------- Diversified Financials - 8.6% Asset Management & Custody Banks - 0.5% 2,630 Man Group Plc* $ 68,365 ----------- Diversified Financial Services - 8.1% 3,406 Deutsche Boerse AG $ 173,841 6,390 ING Groep NV 152,033 1,735 Lagardere S.C.A. 109,014 3,616 Societe Generale 309,152 1,489 Swiss Re 97,134 4,893 UBS AG 346,529 ----------- $ 1,187,703 ----------- Total Diversified Financials $ 1,256,068 ----------- Shares Value Insurance - 5.5% Life & Health Insurance - 0.8% 4,009 Assicurazioni Generali $ 108,714 ----------- Multi-Line Insurance - 4.0% 10,463 AXA SA $ 232,122 2,217 Zurich Financial Services* 351,799 ----------- $ 583,921 ----------- Reinsurance - 0.7% 3,097 Hannover Rueckversicheru $ 104,114 ----------- Total Insurance $ 796,749 ----------- Software & Services - 0.6% IT Consulting & Other Services - 0.6% 1,364 Atos Origin* $ 88,246 ----------- Total Software & Services $ 88,246 ----------- Technology Hardware & Equipment - 4.2% Semiconductors - 1.3% 6,783 Philips Electronics NV $ 184,096 ----------- Communications Equipment - 1.0% 10,079 Nokia Oyj $ 146,254 ----------- Computer Hardware - 0.8% 38,933 Dixons Group Plc $ 116,952 ----------- Electronic Equipment & Instruments - 1.1% 2,201 Siemens AG $ 159,583 ----------- Total Technology Hardware & Equipment $ 606,885 ----------- Telecommunication Services - 9.9% Alternate Carriers - 0.9% 4,989 France Telecom SA $ 130,883 ----------- Integrated Telecommunication Services - 5.0% 7,122 Belgacom SA* $ 217,656 25,747 Telecom Italia Mobile S.p.A. 146,594 59,202 Telecom Italia S.p.A. 184,922 12,569 Telefonica SA 186,877 ----------- $ 736,049 ----------- Wireless Telecommunication Services - 4.0% 263,946 Vodafone Group Plc $ 582,271 ----------- Total Telecommunication Services $ 1,449,203 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Utilities - 3.0% Electric Utilities - 3.0% 4,077 E.On AG $ 295,674 17,458 National Grid Transco Plc 136,027 ----------- $ 431,701 ----------- Total Utilities $ 431,701 ----------- TOTAL COMMON STOCKS (Cost $11,851,998) $14,105,147 ----------- TOTAL INVESTMENT IN SECURITIES - 97.9% (Cost $11,935,102) (a) $14,273,318 ----------- OTHER ASSETS AND LIABILITIES - 2.1% $ 311,386 ----------- TOTAL NET ASSETS - 100.0% $14,584,704 ===========
* Non-income producing security. (a) Distributions of investments by country of issue, as a percentage of total equity holdings (excluding temporary cash investments) is as follows: United Kingdom 29.6% France 23.6 Switzerland 13.6 Germany 9.4 Italy 6.1 Netherlands 5.8 Spain 4.2 Ireland 2.8 Belgium 2.0 Sweden 1.9 Finland 1.0 ----- 100.0% =====
6 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 1/2/01 6/30/04 Year Ended Year Ended to Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01 (a) Net asset value, beginning of period $ 8.89 $ 6.71 $ 8.29 $11.07 ------ ------ ------ ------ Increase (decrease) from investment operations: Net investment income $ 0.07 $ 0.03 $ 0.01 $ 0.08 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.04 2.17 (1.59) (2.71) ------ ------ ------ ------- Net increase (decrease) from investment operations $ 0.11 $ 2.20 $(1.58) $ (2.63) Distributions to shareowners: Net investment income (0.06) (0.02) -- (0.15) Net realized gain -- -- -- -- ------ ------ ------ ------- Net increase (decrease) in net asset value $ 0.05 $ 2.18 $(1.58) $ (2.78) ------ ------ ------ ------- Net asset value, end of period $ 8.94 $ 8.89 $ 6.71 $ 8.29 ====== ====== ====== ======= Total return* 1.22% 32.92% (19.06)% (23.44) % Ratio of net expenses to average net assets+ 1.76%** 1.79% 1.86% 3.22%* * Ratio of net investment income (loss) to average net assets+ 2.01%** 0.56% 0.25% (2.56)%** Portfolio turnover rate 74%** 52% 95% 73% Net assets, end of period (in thousands) $6,022 $5,005 $1,829 $ 398 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 2.21%** 2.75% 2.66% 4.57%* * Net investment income (loss) 1.55%** (0.40)% (0.54)% (3.90)%**
(a) Class II shares were first publicly offered on January 2, 2001. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Europe VCT Portfolio ASSETS: Investment in securities, at value (Cost $11,935,102) $14,273,318 Cash 295,005 Foreign currencies, at value -- Receivables -- Investment securities sold 47,786 Fund shares sold 37,989 Variation margin -- Dividends, interest and foreign taxes withheld 45,476 Forward foreign currency settlement contracts, net -- Due from Pioneer Investment Management, Inc. 2,606 Other 369 ----------- Total assets $14,702,549 ----------- LIABILITIES: Payables -- Investment securities purchased $ 71,100 Fund shares repurchased 3,968 Dividends -- Upon return of securities loaned -- Forward foreign currency settlement contracts, net 437 Reserve for repatriation taxes -- Due to bank -- Due to affiliates 10,679 Accrued expenses 31,661 ----------- Total liabilities $ 117,845 ----------- NET ASSETS: Paid-in capital $20,406,813 Accumulated net investment income (loss) 155,154 Accumulated undistributed net realized gain (loss) (8,317,054) Net unrealized gain (loss) on: Investments 2,338,216 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 1,575 ----------- Total net assets $14,584,704 ----------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 8,562,896 Shares outstanding 940,919 ----------- Net asset value per share $ 9.10 Class II: No par value (unlimited number of shares authorized) Net assets $ 6,021,808 Shares outstanding 673,287 ----------- Net asset value per share $ 8.94
8 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Europe VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $40,379) $ 264,706 Interest 1,946 Income on securities loaned, net -- Other -- --------- Total investment income $ 266,652 --------- EXPENSES: Management fees $ 72,527 Transfer agent fees 1,536 Distribution fees (Class II) 7,024 Administrative fees 9,250 Custodian fees 28,760 Professional fees 25,032 Printing 2,983 Fees and expenses of nonaffiliated trustees -- Miscellaneous 735 --------- Total expenses $ 147,847 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (31,868) --------- Net expenses $ 115,979 --------- Net investment income (loss) $ 150,673 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 706,240 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (3,507) --------- $ 702,733 --------- Change in net unrealized gain or loss from: Investments $(667,025) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (5,768) $(672,793) --------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ 29,940 ========= Net increase (decrease) in net assets resulting from operations $ 180,613 =========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Europe VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 150,673 $ 110,674 Net realized gain (loss) on investments 702,733 (108,393) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (672,793) 3,419,238 ----------- ----------- Net increase (decrease) in net assets resulting from operations $ 180,613 $ 3,421,519 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (65,952) $ (36,322) Class II (38,910) (9,367) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ----------- ----------- Total distributions to shareowners $ (104,862) $ (45,689) ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 1,713,293 $ 6,502,123 Reinvestment of distributions 104,862 45,689 Cost of shares repurchased (1,644,175) (6,113,517) ----------- ----------- Net increase (decrease) in net assets resulting from fund share transactions $ 173,980 $ 434,295 ----------- ----------- Net increase (decrease) in net assets $ 249,731 $ 3,810,125 ----------- ----------- NET ASSETS: Beginning of period $14,334,973 $10,524,848 ----------- ----------- End of period $14,584,704 $14,334,973 =========== =========== Accumulated/(distributions in excess of) net investment income (loss) $ 155,154 $ 109,343 =========== ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Europe Portfolio (the Portfolio) is a Portfolio of the Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objective of Europe VCT Portfolio is to seek long-term capital growth. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. At June 30, 2004, there were no fair valued securities except as follows. All securities that trade in foreign markets whose closing prices are as of times prior to the close of the New York Stock Exchange ("NYSE") and that are held by Europe Portfolio are fair valued using vendor-supplied pricing updates for each security to the time of the close of the NYSE. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums 11 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicableportfolios are computed once daily, on each day the New York Stock Exchange B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. D. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The Portfolio elected to defer $49,695 in capital losses recognized between November 1, 2003 and December 31, 2003 to its fiscal year ending December 31, 2004. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Europe VCT Portfolio had a capital loss carryforward of $7,882,463 of which the following amounts will expire between 2008 and 2011 if not utilized: $837,566 in 2008, $4,365,566 in 2009 and $1,896,288 in 2010 and $783,043 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003.
- -------------------------------------------------------------------------------- Pioneer Europe VCT Portfolio 2003 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 45,689 Long-Term capital gain -- ----------- $ 45,689 Return of Capital -- ----------- Total distributions $ 45,689 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 104,830 Undistributed long-term gain/ (Capital loss carryforward) (7,882,463) Unrealized appreciation (depreciation) 1,929,468 ----------- Total $(5,848,165) =========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. 12 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- E. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. F. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. G. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $9,045 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $1,376 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows: 13 Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Portfolio Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------- Europe Portfolio $13,022,731 $1,297,351 $(46,764) $1,250,587 =========== ========== ========= ========== - -------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $5,352,378 and $5,238,860, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ------------------------------------------------------------------------------------------- Europe Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------- CLASS I: Shares sold 13,195 $ 121,336 59,876 $ 462,031 Reinvestment of distributions 7,232 65,952 4,817 36,322 Shares repurchased (110,796) (1,006,213) (308,777) (2,225,749) -------------------------------------------------------- Net increase (decrease) (90,369) $ (818,925) (244,084) $(1,727,396) ======================================================== CLASS II: Shares sold 176,925 $ 1,591,957 836,602 $ 6,040,092 Reinvestment of distributions 4,343 38,910 1,262 9,367 Shares repurchased (70,861) (637,962) (547,441) (3,887,768) -------------------------------------------------------- Net increase (decrease) 110,407 $ 992,905 290,423 $ 2,161,691 ======================================================== - -------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts During the six months ended June 30, 2004, certain Portfolios had entered into various contracts that obligate the Portfolios to deliver currencies at specified future dates. At the maturity of a contract, the Portfolios must make delivery of the foreign currency. Alternatively, prior to the settlement date of a portfolio hedge, the Portfolio may close out such contracts by entering into an offsetting hedge contract. As of June 30, 2004, the Portfolio had no outstanding portfolio hedges. Outstanding forward currency settlement contracts were as follows:
- ------------------------------------------------------------------------------------------- Net Gross Settlement Gross Receivable/ Portfolio Receivable Date Payable (Payable) - ------------------------------------------------------------------------------------------- Europe Portfolio $(39,985) 7/1/04 $(40,379) $(394) Europe Portfolio $ 42,274 7/1/04 $ 42,317 $ (43) - -------------------------------------------------------------------------------------------
14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelly, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16074-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Equity Income VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Equity Income VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 7 Notes to Financial Statements 11
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [The following table was depicted as a pie chart in the printed material.] U.S. Common Stocks 94.2% Temporary Cash Investment 4.4% Convertible Preferred Stocks 1.3% Convertible Corporate Bonds 0.1%
Sector Distribution (As a percentage of equity holdings) [The following table was depicted as a pie chart in the printed material.] Financials 22.4% Utilities 16.1% Energy 12.0% Consumer Discretionary 10.9% Industrials 9.3% Health Care 7.5% Consumer Staples 7.1% Telecommunication Services 6.9% Materials 5.3% Information Technology 2.5%
Five Largest Holdings (As a percentage of equity holdings) 1. ChevronTexaco Corp. 4.15% 2. ConocoPhillips 3.93 3. PACCAR, Inc. 3.78 4. Exxon Mobil Corp. 3.21 5. Charter One Financial, Inc. 3.07
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 18.62 $ 18.09
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.180 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Equity Income VCT Portfolio at net asset value, compared to that of the Russell 1000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [The following table was depicted as a line chart in the printed material.]
Russell 1000 Value Index Pioneer Equity Income VCT Portfolio* ------------------------ ------------------------------------ 3/95 10000 10000 12632 12025 12/96 15366 13852 20773 18732 12/98 24021 22816 25787 23092 12/00 27597 26522 26054 24673 12/02 22010 20770 28620 25466 12/04 29745 26470
Index comparison begins 2/28/95. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 11.31% (3/1/95) 5 Years 1.54% 1 Year 17.83%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 (UNAUDITED) In the following discussion, portfolio manager John Carey reviews the performance of Pioneer Equity Income VCT Portfolio over the six months ended June 30, 2004. Q: How did the portfolio fare over the past six months? A: Stock prices generally showed gains during the period. The Russell 1000 Value Index rose by 3.94%, and Pioneer Equity Income VCT Portfolio rose by exactly the same amount, 3.94% at net asset value. After the market of 2003, when the prices of many highly cyclical stocks moved dramatically, the first six months of 2004 saw investors return to steadier companies. Information technology, which had been the strongest performing sector in 2003 with the sharp recovery of many deeply depressed stocks, was one of the weakest areas of the market through June of this year. On the other hand, consumer staples, energy, and industrials all performed above the benchmark average as investors looked more favorably on companies with substantial earnings and also dividends. While financials actually underperformed the benchmark Russell 1000 Value Index, our Portfolio experienced the largest contribution to total return from our investments there. Two of our holdings, Charter One Financial and South Trust, received take-over bids from other banks at substantial premiums to their current share prices (and also to our average cost on the shares), producing sharp gains in the market value of those positions. We also did not own any shares of the lackluster performer Citigroup, a major component of the Russell index. Offsetting results came from our weightings and stock selection in telecommunications services and utilities. In telecomm, our AT&T stock declined as investors worried about mounting price competition amid slower growth. Further affecting our relative performance in that sector was our lack of ownership of AT&T Wireless, the cellular provider operating independently of its former parent since late 2001. That company received an acquisition offer from Cingular, a joint venture between two companies that we did own, BellSouth and SBC Communications. The stocks of those companies fell on concerns about the acquisition price, while stock in AT&T Wireless rose in recognition of the premium price to be paid. With regard to our holdings in the utilities sector, we have continued to favor the strong utilities with well-supported and consistent dividend-paying records. It so happened that some of the best-performing utility stocks during the period were the so-called turnaround stories, some of which had even sharply reduced or eliminated their dividends. We shall stick with our long-term strategy and emphasis on financial strength and business stability. Q: What changes did you make to the Portfolio in the first half of the period? A: Overall we added seven positions and liquidated nine. With the high oil prices and positive outlook for energy, we thought it reasonable to enlarge our exposure somewhat in that sector and added Occidental Petroleum. A specialist in coatings and other chemical products, Valspar shows good earnings potential as the economy improves. J. C. Penney has re-focused on its department stores after negotiating the sale of its sagging drugstore operation, and the results show it. Clorox, is benefiting from better management. Ameren and Equitable Resources were two additions in utilities, and U. S. Bancorp is a strong regional bank headquartered in Minneapolis. Little bespeaks quality and reliability better than a long dividend-paying record, and here is how our new holdings compare in that regard: Occidental Petroleum, payments every year since 1975; Valspar, each year since 1964; J. C. Penney, continuous payments starting in 1922; Clorox, without interruption since 1968; Ameren and Equitable Resources, since 1906 and 1950, respectively; and U. S. Bancorp, through its predecessor companies, an unbroken record going back all the way to the year of the Battle of Gettysburg, 1863. The list of names leaving the Portfolio in the period included Deere, Illinois Tool Works, Norfolk Southern, Tribune, Biomet, Bank of America, Merrill Lynch, Equity Office Properties, and Electronic Data Systems. Q: What is your outlook on the stock market and the economy for the remainder of 2004? A: At the midpoint of 2004, the market appears in disarray. Truth be told, interest rates have not really moved very much at all, but there appears great anxiety about greater moves to come. Inflation is not a current problem, yet the high oil prices provide the worriers a reason to focus on the risk of inflation. Corporate earnings are generally very strong and also strongly up from last year, but the expressed concern is with respect to slowing of the wonderful comparisons. And so it goes as well when it comes to discussion of international events and corporate-governance issues and much else: the glass is half empty, not half full, as the common expression goes. From our point of view, the market remains quite attractive, and especially the good companies with good records. Betting which way the market might go on a short-term basis has never seemed to us like a particularly fruitful endeavor. So our intention is to stay invested over the coming months, and to stay invested in the solid kinds of companies we always aim to own. Thank you for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
Shares Value CONVERTIBLE PREFERRED STOCKS - 1.4% Automobiles & Components - 1.4% Automobile Manufacturers - 1.4% 2,600 General Motors, 5.25%, 3/6/32 $ 64,025 55,600 Ford Capital Trust, 6.5%, 1/15/32 3,033,536 ------------ $ 3,097,561 ------------ Total Automobiles & Components $ 3,097,561 ------------ TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $2,691,323) $ 3,097,561 ------------ Principal Amount CONVERTIBLE CORPORATE BOND - 0.0% Retailing - 0.0% Apparel Retail - 0.0% $200,000 Gap Inc., 5.75%, 3/15/09 $ 311,000 ------------ Total Retailing $ 311,000 ------------ TOTAL CONVERTIBLE CORPORATE BOND (Cost $200,000) $ 311,000 ------------ Shares COMMON STOCKS - 95.5% Energy - 11.7% Integrated Oil & Gas - 11.7% 98,300 ChevronTexaco Corp. $ 9,251,013 114,865 ConocoPhillips 8,763,051 161,066 Exxon Mobil Corp. 7,152,941 35,000 Occidental Petroleum Corp. 1,694,350 ------------ $ 26,861,355 ------------ Total Energy $ 26,861,355 ------------ Materials - 5.2% Commodity Chemicals - 1.7% 50,300 Air Products & Chemicals, Inc. $ 2,638,235 27,341 E.I. du Pont de Nemours and Co. 1,214,487 ------------ $ 3,852,722 ------------ Construction Materials - 0.7% 35,000 Vulcan Materials Co. $ 1,664,250 ------------ Diversified Chemical - 0.7% 25,300 PPG Industries, Inc. $ 1,580,997 ------------ Paper Products - 0.8% 62,400 Meadwestvaco Corp. $ 1,833,936 ------------ Specialty Chemicals - 0.3% 15,000 Valspar Corp. $ 755,850 ------------ Steel - 1.0% 24,700 Nucor Corp. $ 1,895,972 20,050 Roanoke Electric Steel Corp. 272,680 ------------ $ 2,168,652 ------------ Total Materials $ 11,856,407 ------------
Shares Value Capital Goods - 8.6% Aerospace & Defense - 3.0% 51,600 Boeing Co. $ 2,636,244 43,200 General Dynamics Corp. 4,289,760 ------------ $ 6,926,004 ------------ Electrical Components & Equipment - 1.6% 59,000 Emerson Electric Co. $ 3,749,450 ------------ Industrial Conglomerates - 2.7% 58,100 Johnson Controls, Inc. $ 3,101,378 32,700 United Technologies Corp. 2,991,396 ------------ $ 6,092,774 ------------ Industrial Machinery - 1.3% 22,000 Gorman-Rupp Co. $ 597,740 92,200 The Timken Co. 2,442,378 ------------ $ 3,040,118 ------------ Total Capital Goods $ 19,808,346 ------------ Transportation - 0.4% Railroads - 0.4% 26,500 Burlington Northern, Inc. $ 929,355 ------------ Total Transportation $ 929,355 ------------ Automobiles & Components - 3.7% Automobile Manufacturers - 3.7% 145,175 PACCAR, Inc. $ 8,418,698 ------------ Total Automobiles & Components $ 8,418,698 ------------ Media - 3.2% Movies & Entertainment - 1.8% 132,400 Cedar Fair, L.P. (a) $ 4,177,220 ------------ Publishing - 1.4% 40,500 McGraw-Hill Co., Inc. $ 3,101,085 ------------ Total Media $ 7,278,305 ------------ Retailing - 2.3% Department Stores - 1.6% 30,000 J.C. Penney Co., Inc. $ 1,132,800 92,825 May Department Stores Co. 2,551,759 ------------ $ 3,684,559 ------------ General Merchandise Stores - 0.7% 40,300 Sears, Roebuck and Co. $ 1,521,728 ------------ Total Retailing $ 5,206,287 ------------ Food, Beverage & Tobacco - 5.4% Packaged Foods & Meats - 4.4% 147,500 Campbell Soup Co. $ 3,964,800 47,300 General Mills, Inc. 2,248,169 73,700 H.J. Heinz Co., Inc. 2,889,040 46,900 Sara Lee Corp. 1,078,231 ------------ $ 10,180,240 ------------
4 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - --------------------------------------------------------------------------------
Shares Value Soft Drinks - 1.0% 12,900 The Coca-Cola Co. $ 651,192 28,600 PepsiCo, Inc. 1,540,968 ------------ $ 2,192,160 ------------ Total Food, Beverage & Tobacco $ 12,372,400 ------------ Household & Personal Products - 1.5% Household Products - 1.5% 20,000 Clorox Co. $ 1,075,600 39,200 Colgate-Palmolive Co. 2,291,240 ------------ $ 3,366,840 ------------ Total Household & Personal Products $ 3,366,840 ------------ Health Care Equipment & Services - 3.7% Health Care Distributors - 2.8% 88,900 Abbott Laboratories $ 3,623,564 50,600 Johnson & Johnson 2,818,420 ------------ $ 6,441,984 ------------ Health Care Equipment - 0.9% 38,200 Becton, Dickinson & Co. $ 1,978,760 ------------ Total Health Care Equipment & Services $ 8,420,744 ------------ Pharmaceuticals & Biotechnology - 3.6% Pharmaceuticals - 3.6% 57,900 Eli Lilly & Co. $ 4,047,789 74,300 Merck & Co., Inc. 3,529,250 20,000 Pfizer, Inc. 685,600 ------------ $ 8,262,639 ------------ Total Pharmaceuticals & Biotechnology $ 8,262,639 ------------ Banks - 12.6% Diversified Banks - 5.4% 154,900 Charter One Financial, Inc. $ 6,845,031 86,100 U.S. Bancorp 2,372,916 53,700 Wells Fargo & Co. 3,073,251 ------------ $ 12,291,198 ------------ Regional Banks - 5.8% 62,200 First Horizon National Corp. $ 2,828,234 96,900 National City Corp. 3,392,469 79,600 SouthTrust Corp. 3,089,276 63,000 SunTrust Banks, Inc. 4,094,370 ------------ $ 13,404,349 ------------ Thrifts & Mortgage Finance - 1.4% 85,400 Washington Mutual, Inc. $ 3,299,856 ------------ Total Banks $ 28,995,403 ------------
Shares Value Diversified Financials - 3.5% Asset Management & Custody Banks - 2.9% 45,100 Eaton Vance Corp. $ 1,723,271 98,600 T. Rowe Price Associates, Inc. 4,969,440 ------------ $ 6,692,711 ------------ Investment Banking & Brokerage - 0.6% 43,100 A.G. Edwards, Inc. $ 1,466,693 ------------ Total Diversified Financials $ 8,159,404 ------------ Insurance - 4.4% Property & Casualty Insurance - 4.4% 51,600 Chubb Corp. $ 3,518,088 86,800 Safeco Corp. 3,819,200 68,900 St. Paul Travelers Companies, Inc. 2,793,206 ------------ $ 10,130,494 ------------ Total Insurance $ 10,130,494 ------------ Real Estate - 1.1% Real Estate Investment Trusts - 1.1% 51,600 Simon DeBartolo Group, Inc. $ 2,653,272 ------------ Total Real Estate $ 2,653,272 ------------ Software & Services - 0.8% Application Software - 0.4% 31,000 Microsoft Corp. $ 885,360 ------------ Data Processing & Outsourced Services - 0.4% 25,000 Automatic Data Processing, Inc. $ 1,047,000 ------------ Total Software & Services $ 1,932,360 ------------ Technology Hardware & Equipment - 1.6% Computer Hardware - 1.6% 44,300 Diebold, Inc. $ 2,342,141 40,000 Hewlett-Packard Co. 844,000 6,200 IBM Corp.* 546,530 ------------ $ 3,732,671 ------------ Total Technology Hardware & Equipment $ 3,732,671 ------------ Telecommunication Services - 6.6% Integrated Telecommunication Services - 6.6% 41,800 Alltel Corp. $ 2,115,916 170,000 AT&T Corp. 2,487,100 98,500 BellSouth Corp. 2,582,670 169,800 SBC Communications, Inc. 4,117,650 110,000 Verizon Communications, Inc. 3,980,900 ------------ $ 15,284,236 ------------ Total Telecommunication Services $ 15,284,236 ------------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Utilities - 15.6% Electric Utilities - 10.1% 60,000 Ameren Corp. $ 2,577,600 55,800 American Electric Power Co., Inc. 1,785,600 56,300 Consolidated Edison, Inc. 2,238,488 153,500 Constellation Energy Group 5,817,650 33,000 FPL Group, Inc. 2,110,350 94,900 Great Plains Energy, Inc. 2,818,530 64,000 NSTAR 3,064,320 98,700 Southern Co. 2,877,105 ------------ $ 23,289,643 ------------ Gas Utilities - 4.3% 111,700 KeySpan Energy Corp. (a) $ 4,099,390 110,300 Questar Corp. 4,261,992 61,100 Vectren Corp. 1,532,999 ------------ $ 9,894,381 ------------ Multi-Utilities & Unregulated Power - 0.6% 24,000 Equitable Resources, Inc. $ 1,241,040 ------------ Water Utilities - 0.6% 71,000 Aqua America, Inc. $ 1,423,550 ------------ Total Utilities $ 35,848,614 ------------ TOTAL COMMON STOCKS (Cost $178,138,936) $219,517,830 ------------
Principal Amount Value TEMPORARY CASH INVESTMENTS - 4.5% Repurchase Agreement - 2.9% $ 6,700,000 UBS Warburg, Inc., 1.25%, dated 6/30/04, repurchase price of $6,700,000 plus accrued interest on 7/1/04 collateralized by $6,540,000 U.S. Treasury Bill, 2.125%, 10/31/04 $ 6,700,000 ------------ Shares Security Lending Collateral - 1.6% 3,514,541 Securities Lending Investment Fund, 1.29% $ 3,514,541 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $10,214,541) $ 10,214,541 ------------ TOTAL INVESTMENT IN SECURITIES - 101.4% (Cost $191,244,800) (a) $233,140,932 ------------ OTHER ASSETS AND LIABILITIES - (1.4)% $ (3,183,134) ------------ TOTAL NET ASSETS - 100.0% $229,957,798 ============
* Non-income producing security. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 40,000 Cedar Fair, L.P. $1,235,200 60,393 KeySpan Energy Corp. 2,190,454 ---------- Total $3,425,654 ==========
6 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 6/30/04 Ended Ended Class I (unaudited) 12/31/03 12/31/02 Net asset value, beginning of period $ 18.09 $ 15.11 $ 18.40 -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.22 $ 0.41 $ 0.42 Net realized and unrealized gain (loss) on investments 0.49 2.96 (3.30) -------- -------- -------- Net increase (decrease) from investment operations $ 0.71 $ 3.37 $ (2.88) Distributions to shareowners: Net investment income (0.18) (0.39) (0.41) Net realized gain -- -- -- -------- -------- -------- Net increase (decrease) in net asset value $ 0.53 $ 2.98 $ (3.29) -------- -------- -------- Net asset value, end of period $ 18.62 $ 18.09 $ 15.11 ======== ======== ======== Total return* 3.94% 22.61% (15.82)% Ratio of net expenses to average net assets+ 0.72%** 0.78% 0.80% Ratio of net investment income (loss) to average net assets+ 2.34%** 2.55% 2.48% Portfolio turnover rate 18%** 12% 12% Net assets, end of period (in thousands) $158,805 $155,634 $133,258 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.72%** 0.78% 0.80% Net investment income (loss) 2.34%** 2.55% 2.48% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.72%** 0.78% 0.80% Net investment income (loss) 2.34%** 2.55% 2.48% Year Year Year Ended Ended Ended Class I 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 21.28 $ 20.72 $ 21.44 -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.40 $ 0.51 $ 0.42 Net realized and unrealized gain (loss) on investments (1.86) 2.28 (0.15) -------- -------- -------- Net increase (decrease) from investment operations $ (1.46) $ 2.79 $ 0.27 Distributions to shareowners: Net investment income (0.36) (0.49) (0.41) Net realized gain (1.06) (1.74) (0.58) -------- -------- -------- Net increase (decrease) in net asset value $ (2.88) $ 0.56 $ (0.72) -------- -------- -------- Net asset value, end of period $ 18.40 $ 21.28 $ 20.72 ======== ======== ======== Total return* (6.97)% 14.85% 1.21% Ratio of net expenses to average net assets+ 0.75% 0.71% 0.70% Ratio of net investment income (loss) to average net assets+ 2.07% 2.40% 1.97% Portfolio turnover rate 13% 13% 23% Net assets, end of period (in thousands) $164,019 $181,920 $226,379 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.75% 0.71% 0.70% Net investment income (loss) 2.07% 2.40% 1.97% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.75% 0.71% 0.70% Net investment income (loss) 2.07% 2.40% 1.97%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
Pioneer Equity Income VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $3,425,654) (Cost $191,244,800) $233,140,932 Cash 165,432 Foreign currencies, at value -- Receivables -- Investment securities sold -- Fund shares sold 107,679 Dividends, interest and foreign taxes withheld 386,897 Other 272 ------------ Total assets $233,801,212 ------------ LIABILITIES: Payables -- Investment securities purchased $ -- Fund shares repurchased 129,721 Dividends -- Upon return for securities loaned 3,514,541 Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 157,442 Accrued expenses 41,710 Other -- ------------ Total liabilities $ 3,843,414 ------------ NET ASSETS: Paid-in capital $202,494,815 Accumulated net investment income (loss) 1,549,361 Accumulated undistributed net realized gain (loss) (15,982,510) Net unrealized gain (loss) on: Investments 41,896,132 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $229,957,798 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $158,805,031 Shares outstanding 8,530,519 ------------ Net asset value per share $ 18.62 Class II: No par value (unlimited number of shares authorized) Net assets $ 71,152,767 Shares outstanding 3,801,847 ------------ Net asset value per share $ 18.72
8 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
Pioneer Equity Income VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends $3,355,605 Interest (net of foreign taxes withheld of $94) 44,410 Income on securities loaned, net 5,416 Other -- ---------- Total investment income $3,405,431 ---------- EXPENSES: Management fees $ 723,317 Transfer agent fees 1,488 Distribution fees (Class II) 81,276 Administrative fees 22,108 Custodian fees 20,776 Professional fees 24,135 Printing 6,146 Fees and expenses of nonaffiliated trustees 1,681 Miscellaneous 5,460 ---------- Total expenses $ 886,387 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ---------- Net expenses $ 886,387 ---------- Net investment income (loss) $2,519,044 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ (626,853) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ (626,853) ---------- Change in net unrealized gain or loss from: Investments $6,585,509 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $6,585,509 ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $5,958,656 ========== Net increase (decrease) in net assets resulting from operations $8,477,700 ==========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
Pioneer Equity Income VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 2,519,044 $ 4,413,641 Net realized gain (loss) on investments (626,853) (634,370) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 6,585,509 34,115,732 ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 8,477,700 $ 37,895,003 ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (1,543,147) $ (3,313,897) Class II (583,520) (860,942) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ------------- ------------- Total distributions to shareowners $ (2,126,667) $ (4,174,839) ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 23,048,590 $ 52,433,019 Reinvestment of distributions 2,126,667 4,174,840 Cost of shares repurchased (17,557,375) (34,680,633) ------------- ------------- Net increase (decrease) in net assets resulting from fund share transactions $ 7,617,882 $ 21,927,226 ------------- ------------- Net increase (decrease) in net assets $ 13,968,915 $ 55,647,390 ------------- ------------- NET ASSETS: Beginning of period $ 215,988,883 $ 160,341,493 ------------- ------------- End of period $ 229,957,798 $ 215,988,883 ============= ============= Accumulated/(distributions in excess of) net investment income (loss) $ 1,549,361 $ 1,156,984 ============= =============
10 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) 1. Organization and Significant Accounting Policies The Pioneer Equity Income VCT Portfolio is a portfolio of the Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objective of Equity Income Portfolio is to seek capital appreciation. Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset value for the portfolio is computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. As of June 30, 2004, there were no fair valued securities. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual 11 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realizes a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, the portfolio had no open futures contracts. C. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Equity Income VCT Portfolio had a capital loss carryforward of $15,355,657, of which will the following amounts expire between 2009 and 2011 if not utilized: $6,328,025 in 2009, $6,407,206 in 2010, and $2,620,426 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003.
- ------------------------------------------------------------ Pioneer Equity Income VCT Portfolio 2003 - ------------------------------------------------------------ Distributions paid from: Ordinary Income $ 4,174,839 Long-Term capital gain -- ------------ $ 4,174,839 Return of Capital -- ------------ Total distributions $ 4,174,839 ============ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 82,058 Undistributed long-term gain/ (capital loss carryforward) (15,355,657) Unrealized appreciation/(depreciation) 36,385,549 ------------ Total $ 21,111,950 ============ - ------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. D. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number 12 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. E. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. F. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $141,022 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $16,162 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Portfolio Tax Cost Appreciation Depreciation (Depreciation) - -------------------------------------------------------------------------------------------------- Equity Income Portfolio $190,169,874 $47,191,020 $ (4,219,962) $42,971,058 - --------------------------------------------------------------------------------------------------
13 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $27,101,040 and $19,453,205, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ------------------------------------------------------------------------------------------------ Equity Income Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------------ CLASS I: Shares sold 537,739 $ 9,891,118 1,544,529 $ 24,668,979 Reinvestment of distributions 84,147 1,543,147 204,954 3,313,898 Shares repurchased (694,977) (12,774,712) (1,964,325) (30,892,038) --------------------------------------------------------------- Net increase (decrease) (73,091) $ (1,340,447) (214,842) $ (2,909,161) =============================================================== CLASS II: Shares sold 712,923 $ 13,157,472 1,723,515 $ 27,764,040 Reinvestment of distributions 31,627 583,520 54,432 860,942 Shares repurchased (261,146) (4,782,663) (242,114) (3,788,595) --------------------------------------------------------------- Net increase 483,404 $ 8,958,329 1,533,833 $ 24,836,387 =============================================================== - ------------------------------------------------------------------------------------------------
14 - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16063-00-0804 [PIONEER INVESTMENTS LOGO] PIONEER VARIABLE CONTRACTS TRUST Pioneer Strategic Income VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - ------------------------------------------------------------- Pioneer Strategic Income VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 14 Notes to Financial Statements 18
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Corporate Bonds 55.6% U.S. Government Securities 21.4% Foreign Government Bonds 12.8% Convertible Corporate Bonds 3.1% Asset Backed Securities 2.7% Temporary Cash Investment 1.9% Municipal Bonds 1.2% Sovereign Issue 0.8% Supranational Bonds 0.5%
Maturity Distribution (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] 0-1 years 4.7% 1-3 years 23.2% 3-4 years 20.9% 4-6 years 31.0% 6-8 years 14.6% 8+ years 5.6%
Five Largest Holdings (As a percentage of long-term holdings) 1. Norwegian Government, 6.75%, 1/15/07 1.78% 2. Government of France, 3.0%, 7/25/09 1.62 3. Government National Mortgage Association II, 6.0%, 11/20/33 1.53 4. Federal Home Loan Mortgage Corp., 6.0%, 6/1/17 1.45 5. Swedish Government, 5.5%, 10/8/12 1.40
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $10.56 $11.01
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.3106 $ - $0.1616
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Strategic Income VCT Portfolio at net asset value, compared to that of the Lehman Brothers U.S. Universal Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer Strategic Lehman Income U.S. Universal VCT Portfolio Index+ ------------- --------------- 7/99 $10,000 $10,000 $10,060 $10,136 6/00 $10,488 $11,234 $11,184 $12,144 6/02 $12,352 $13,338 $15,073 $14,117 6/04 $15,152 $14,140
+ Index comparison begins July 31, 1999. The Lehman Brothers U.S. Universal Index is the union of the U.S. Aggregate Index, the U.S. High Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, the non-ERISA portion of the CMBS Index and the CMBS High Yield Index. Municipal debt, private placements and non-dollar-denominated issues are excluded from the Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ---------------------------------------------------------------------- Net Asset Value - ---------------------------------------------------------------------- Life-of-Class 8.72% (7/29/99) 1 Year 6.32%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- Domestic high-yield corporate bonds and mortgage-backed securities provided the best relative returns during the first six months of 2004, a period marked by rapid rises in interest rates as evidence of a strengthening economy became more pervasive. Higher-rated bonds tended to lose value as market interest rates rose. In international trading, the U.S. dollar strengthened, limiting the returns from foreign investment-grade bonds while the prices of emerging market debt declined after strong gains earlier. The following is an interview with Kenneth J. Taubes, who discusses the factors that influenced the Portfolio's performance during the six-month period. Mr. Taubes, head of Pioneer's Fixed Income Group, oversees the team responsible for daily management of the Portfolio. Q: How did the Portfolio perform during the six months ended June 30, 2004? A: The Portfolio performed reasonably well in a challenging environment. During the six-month period, the Portfolio's Class II shares had a total return of 0.19%, while the Lehman U.S. Universal Bond Index returned 0.17%. The 30-day Standardized SEC Yield for the Portfolio's Class II Shares on June 30, 2004, was 5.82%. Q: What were the factors that affected performance? A: The Portfolio's ability to diversify across several different fixed-income classes worked to its advantage during a period in which rising interest rates tended to undermine the values of higher-quality domestic bonds and a strengthening dollar tended to hurt the values of investments in foreign-denominated securities. The Portfolio's positive performance and slight edge over the U.S. Universal Bond Index came despite exposure to two poorly performing areas that are not significantly represented in the index: foreign investment-grade securities and emerging markets. Throughout the six months, our emphasis on the domestic high-yield corporate bonds helped performance substantially, as this was the best-performing part of the bond market. High-yield bonds, as represented by the Merrill Lynch High Yield Master II Index, returned 1.36% during the period, while most higher quality domestic fixed-income classes had negative returns. In our domestic investment-grade positions, we also focused on the best-performing area, mortgage-backed securities, which benefited from the lessening of fears of prepayments and diminishing interest-rate volatility. We de-emphasized Treasuries, the area most vulnerable to rising interest rates, and the Treasury securities we did own tended to be inflation-protected securities that outperformed standard Treasuries. While emerging markets were down more than 6% during the six months, we focused our holdings on corporate issuers whose longer-term prospects remained good. Although we reduced its position, the Portfolio remained overweighted in non-dollar currencies during the period, and this held back performance as the U.S. dollar strengthened. In particular, our investments in the currencies of growth-oriented economies such as Australia and Canada did poorly, as these currencies weakened even more than the euro and other currencies tied to economies with less growth. At the end of the six months, 37% of assets were invested in high-yield corporates, the largest emphasis of any asset class. Mortgage-backed securities accounted for 21% of assets, while emerging market debt represented about 16% of Portfolio assets and international investment-grade bonds accounted for another 16%. Investment-grade corporate bonds represented just 9% of Portfolio assets, and the Treasury position at the end of the six months was less than 1%. Average credit quality on June 30 was BBB-. Q: What changes did you make in the Portfolio during the six months? A: We continued our emphasis on domestic high-yield corporate bonds. We expect the economy to continue to expand, helping to strengthen the financial health of high-yield issuers, many of which are starting to enjoy greater pricing power over their products. Also, high-yield bonds can remain less sensitive to the negative price impacts of rising interest rates because of their yield advantage over higher quality securities. In spite of the strength of the U.S. dollar during the period, we thought the long-term trend of the dollar continued to be one of weakening versus other currencies. As a result, we maintained investments in growth-oriented countries such as Australia, Canada, Sweden and Norway. Q: What types of individual investments had the greatest influence on performance? A: Several high-yield holdings helped substantially. The bonds of Metro PCS, a wireless telecommunications provider in several metropolitan areas, including in Georgia and California, rose substantially in price on the news that the company intended to proceed with an initial public stock offering. Bonds issued by Corning, which restructured its business to focus on the production of the material used for flat-screen television, did very well, as did securities of several hotel companies, whose earnings increased as the economy improved and business travel improved. Among the better-performers in the Portfolio were bonds issued by the Hilton, Starwood and John Q. Hammond hotel chains. While emerging market debt tended to detract from performance, the bonds of Brazilian brewer AMBEV gained after the announcement of plans for its acquisition by the European firm Interbrew. Disappointments included the bonds of Primus Telecommunications, a multi-national telecommunications service provider based in the United States. While its earnings were positive, the bonds fell because of investor skepticism about the sector. The bonds of Brazilian steel company CSN also detracted from performance in the general decline in emerging markets, despite strong company fundamentals. Q: What is your outlook for the bond market? A: With an outlook for continuing economic expansion, we expect that short-term interest rates are likely to rise further in the coming months. The Federal Reserve began to raise the Fed Funds Rate, the most influential short-term rate, on June 30. The Fed has signaled it plans to raise rates gradually, but to continue to be accommodative and encourage growth, a policy likely to keep interest rates low by historical standards. Market rates on longer-term bonds, which rose in the months leading up to the June 30 announcement, probably are priced appropriately for current conditions, but pressure should continue for the rates of shorter-term and intermediate-term bonds to rise. The financial health of domestic corporations should continue to improve. More companies report they have gained additional pricing power, which should help them strengthen their balance sheets. At the same time, the weaker dollar has improved the competitiveness of many industries in world markets. In our domestic portfolio, we expect to continue to focus on high-yield corporate bonds and mortgage-backed securities and position the Portfolio to mute the impact of rising interest rates of short- and intermediate-term securities with a relatively short duration. While foreign currencies fell during the most recent six months, we believe the U.S. dollar may weaken in the coming months, particularly if the Federal Reserve maintains its commitment to an accommodative monetary policy. We have emphasized the Australian and Canadian currencies and also hold investments in growth-oriented European economies, such as Sweden and Norway. After several years of avoiding the yen, we also have initiated a small position in the Japanese currency to benefit from expanding global growth. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. International investing may involve special risks, including differences in accounting and currency as well as economic and political instability. 3 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
Principal Amount S&P/Moody's USD ($) Ratings Value CONVERTIBLE CORPORATE BONDS - 3.1% Pharmaceuticals & Biotechnology - 0.8% Biotechnology - 0.8% 90,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 84,375 150,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 151,875 ----------- Total Pharmaceuticals & Biotechnology $ 236,250 ----------- Technology Hardware & Equipment - 1.1% Communications Equipment - 0.6% 200,000 B-/B3 Nortel Networks, 4.25%, 9/1/08 $ 191,500 ----------- Electronic Manufacturing Services - 0.4% 150,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 140,250 ----------- Total Technology Hardware & Equipment $ 331,750 ----------- Semiconductors - 1.2% Semiconductor Equipment - 0.8% 170,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 $ 165,750 100,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 99,125 ----------- $ 264,875 ----------- Semiconductors - 0.4% 130,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 124,475 ----------- Total Semiconductors $ 389,350 ----------- TOTAL CONVERTIBLE CORPORATE BONDS (Cost $852,165) $ 957,350 ----------- ASSET BACKED SECURITIES - 2.7% Diversified Financials - 1.3% Consumer Finance - 0.1% DKK 98,058 AA+/Aa1 Realkredit Danmark, 7.0%, 10/1/32 $ 17,475 ----------- Diversified Financial Services - 1.3% 229,036 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 225,855 172,022 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 175,165 ----------- $ 401,020 ----------- Total Diversified Financials $ 418,495 ----------- Real Estate - 0.5% Real Estate Investment Trusts - 0.5% 160,000 BBB-/Baa3 Global Signal Trust, 5.395%, 1/15/34 (144A) $ 153,739 ----------- Total Real Estate $ 153,739 ----------- Utilities - 0.8% Electric Utilities - 0.8% 247,500 BBB-/Baa3 Empresa Electric Guacolda, 8.625%, 4/30/13 $ 256,835 ----------- Total Utilities $ 256,835 ----------- TOTAL ASSET BACKED SECURITIES (Cost $855,330) $ 829,069 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value CORPORATE BONDS - 55.7% Miscellaneous - 0.5% 150,000 B/B3 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 151,500 ----------- Total Miscellaneous $ 151,500 ----------- Energy - 5.1% Oil & Gas Drilling - 0.6% ITL 275,000,000 BBB-/Baa2 Petroleos Mexicanos, 7.375%, 8/13/07 $ 186,963 ----------- Oil & Gas Equipment And Services - 0.3% 76,000 B+/B3 Transmontaigne Inc., 9.125%, 6/1/10 $ 78,280 ----------- Oil & Gas Exploration & Production - 3.3% 80,000 B/B2 Compton Petroleum Corp., 9.9%, 5/15/09 $ 87,400 200,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 209,500 200,000 BB/Ba3 Cie Generale De Geophysique SA, 10.625%, 11/15/07 213,000 55,000 B/B2 Comstock Resources, Inc., 6.875%, 3/1/12 52,250 50,000 B/B2 Paramount Resources, Ltd., 8.875%, 7/15/2014 49,875 300,000 BB-/Ba2 Gaz Capital SA, 8.625%, 4/28/34 (144A) 290,625 100,000 B/B3 Paramount Resources, Ltd., 7.875%, 11/1/10 95,500 ----------- $ 998,150 ----------- Oil & Gas Refining Marketing & Transportation - 0.9% 75,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 82,125 200,000 BBB/Ba1 Magellan Midstream Partners, L.P., 6.45%, 6/1/14 200,898 ----------- $ 283,023 ----------- Total Energy $ 1,546,416 ----------- Materials - 11.2% Commodity Chemicals - 1.0% 100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 98,000 105,000 BBB-/Ba1 Methanex Corp., 7.75%, 8/15/05 109,463 25,000 B+/B1 Lyondell Petrochemical Co., 9.875%, 5/1/07 26,125 75,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 78,375 ----------- $ 311,963 ----------- Construction Materials - 1.9% NOK 2,700,000 NR/NR Kvaerner A.S., 0.0%, 10/30/11 $ 245,373 NOK 60,000 NR/NR Kvaerner A.S., 0.0%, 10/30/11 37,800 300,000 B/B2 Ship Finance International, Ltd., 8.5%, 12/15/13 (144A) 289,500 ----------- $ 572,673 ----------- Diversified Chemical - 0.5% EUR 130,000 CCC+/Caa1 Huntsman ICI Chemicals LLC, 10.125%, 7/1/09 $ 156,937 ----------- Diversified Metals & Mining - 2.0% 140,000 B-/B2 Freeport-McMoran Copper & Gold, 10.125%, 2/1/10 $ 154,700 250,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 228,750 150,000 NR/Ba2 Vale Overseas, Ltd., 8.25%, 1/17/34 130,500 100,000 BBB/Ba1 Kennametal, Inc., 7.2%, 6/15/12 105,762 ----------- $ 619,712 ----------- Forest Products - 0.2% 75,000 B+/B1 Ainsworth Lumber, 6.75%, 3/15/14 (144A) $ 70,312 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Metal & Glass Containers - 1.1% 130,000 B+/B2 Greif Brothers Corp., 8.875%, 8/1/12 $ 139,912 EUR 150,000 B+/NR Crown Holdings, 10.25%, 3/1/11 202,116 ----------- $ 342,028 ----------- Paper Packaging - 0.2% 10,000 B/B2 Stone Container Corp., 9.75%, 2/1/11 $ 11,000 50,000 B/B2 Stone Container Corp., 8.375%, 7/1/12 52,250 ----------- $ 63,250 ----------- Paper Products - 0.3% 100,000 BB/Ba2 Abitibi-Consolidated Inc., 6.0%, 6/20/13 $ 88,507 ----------- Specialty Chemicals - 2.0% 135,000 B-/B3 United Industries Co., 9.875%, 4/1/09 $ 140,400 170,000 B-/Caa2 OM Group, Inc., 9.25%, 12/15/11 174,250 100,000 BBB-/Baa3 Ferro Corp., 7.125%, 4/1/28 100,728 EUR 45,000 CCC+/Caa1 Rhodia SA, 9.25%, 6/1/11 (144A) 45,819 EUR 140,000 CCC+/B3 Rhodia SA, 8.0%, 6/1/10 (144A) 155,352 ----------- $ 616,549 ----------- Steel - 2.0% 150,000 BB/Ba3 International Steel Group, 6.5%, 4/15/14 (144A) $ 140,625 200,000 B-/Caa1 Ispat Inland ULC, 9.75%, 4/1/14 (144A) 206,000 325,000 B+/B1 CSN Islands VIII Corp., 9.75%, 12/16/13 (144A) 290,875 ----------- $ 637,500 ----------- Total Materials $ 3,479,431 ----------- Capital Goods - 6.3% Aerospace & Defense - 1.3% 200,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 7/15/13 $ 193,000 100,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 97,500 100,000 CCC+/Caa2 Hexcel Corp., 9.75%, 1/15/09 104,875 ----------- $ 395,375 ----------- Building Products - 0.5% 50,000 B-/B3 US Concrete, Inc., 8.375%, 4/1/14 (144A) $ 49,875 90,000 B+/B2 NCI Building Systems, Inc., 9.25%, 5/1/09 94,500 ----------- $ 144,375 ----------- Construction & Farm Machinery & Heavy Trucks - 0.7% 75,000 BB+/Ba2 Cummins, Inc., 7.125%, 3/1/28 $ 71,250 140,000 B-/B3 American Rock Salt Co. LLC, 9.5%, 3/15/14 (144A) 143,500 ----------- $ 214,750 ----------- Constuction & Engineering - 0.3% 100,000 B+/B2 North American Energy Partners, 8.75%, 12/1/11 (144A) $ 99,000 ----------- Electrical Component & Equipment - 0.2% 50,000 BB-/Ba2 MSW Energy Holdings, 7.375%, 9/1/10 (144A) $ 49,750 ----------- Heavy Electrical Equipment - 0.6% 199,780 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 $ 188,792 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Industrial Machinery - 2.7% 125,000 B/B2 The Manitowoc Co., Inc., 10.5%, 8/1/12 (144A) $ 143,125 125,000 BB+/Ba3 SPX Corp., 7.5%, 1/1/13 128,125 175,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 (a) 178,062 250,000 B+/Ba2 Sun Sage BV, 8.25%, 3/26/09 (144A) 241,875 125,000 BBB-/Ba1 Timken Co., 5.75%, 2/15/10 125,262 ----------- $ 816,449 ----------- Total Capital Goods $ 1,908,491 ----------- Commercial Services & Supplies - 1.3% Commercial Printing - 0.7% 200,000 B/B1 Sheridan Group, 10.25%, 8/15/11 (144A) $ 210,500 ----------- Diversified Commercial Services - 0.4% 115,000 B-/B3 Cornell Co's, Inc., 10.75%, 7/1/12 (144A) $ 116,150 ----------- Environmental Services - 0.2% 75,000 B-/B3 IESI Corp., 10.25%, 6/15/12 $ 81,750 ----------- Total Commercial Services & Supplies $ 408,400 ----------- Transportation - 2.2% Air Freight & Couriers - 0.5% 130,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 136,500 ----------- Airlines - 0.5% 50,000 CCC/Caa2 AMR Corp., 9.0%, 9/15/16 $ 37,750 85,000 CCC/Caa2 AMR Corp., 9.8%, 10/1/21 61,200 35,000 CCC/Caa2 AMR Corp., 9.0%, 8/1/12 (a) 27,650 50,000 B-/Caa1 Northwest Airlines, Inc., 9.875%, 3/15/07 39,500 ----------- $ 166,100 ----------- Marine - 0.3% 100,000 B-/B3 Horizon Lines LLC, 9.0%, 11/1/12 (144A) $ 100,000 ----------- Railroads - 0.4% 120 B/B3 Atlantic Express Transport, 12.0%, 4/15/08 $ 118,800 ----------- Transportation - 0.5% 150,000 B/B2 TFM SA De CV, 11.75%, 6/15/09 $ 146,250 ----------- Total Transportation $ 667,650 ----------- Automobiles & Components - 0.5% Auto Parts & Equipment - 0.4% 140,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 126,000 ----------- Automobile Manufacturers - 0.1% 35,000 BBB-/A3 Ford Motor Credit Co., 5.8%, 1/12/09 $ 35,329 ----------- Total Automobiles & Components $ 161,329 ----------- Hotels Restaurants & Leisure - 0.8% Hotels, Resorts & Cruise Lines - 0.8% 100,000 BB+/Ba1 Starwood Hotels & Resorts, 7.875%, 5/1/12 $ 107,000 125,000 B/B2 John Q Hamons Hotels, 8.875%, 5/15/12 135,625 ----------- Total Hotels Restaurants & Leisure $ 242,625 -----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Media - 1.6% Broadcasting & Cable TV - 1.3% EUR 100,000 B-/B3 Telenet Communication NV, 9.0%, 12/15/13 (144A) $ 121,330 100,000 B/B3 Kabel Deutschland GMBH, 10.625%, 7/1/14 (144A) 102,750 175,000 BB-/Ba3 Echostar DBS Corp., 6.375%, 10/1/11 (144A) 172,375 ----------- $ 396,455 ----------- Publishing - 0.3% 80,000 BBB-/Baa3 News America Holdings, 8.5%, 2/23/25 $ 96,330 ----------- Total Media $ 492,785 ----------- Retailing - 1.3% Department Stores - 0.5% 150,000 BB+/Ba3 J.C. Penney, 7.125%, 11/15/23 $ 153,750 ----------- Specialty Stores - 0.8% 100,000 BB/Ba2 Toys R Us, 7.375%, 10/15/18 $ 92,375 145,000 B/B3 Asbury Automotive Group, 8.0%, 3/15/14 138,475 ----------- $ 230,850 ----------- Total Retailing $ 384,600 ----------- Food, Beverage & Tobacco - 1.1% Brewers - 0.7% 220,000 BBB-/Baa3 CIA Brasileira De Bebida, 8.75%, 9/15/13 (144A) $ 232,100 ----------- Soft Drinks - 0.3% 80,000 BBB-/Baa3 CIA Brasileira de Bebida, 10.5%, 12/15/11 $ 91,600 ----------- Total Food, Beverage & Tobacco $ 323,700 ----------- Household & Personal Products - 0.4% Household Products - 0.4% 125,000 B-/B3 Solo Cup Co., 8.5%, 2/15/14 (144A) $ 116,250 ----------- Total Household & Personal Products $ 116,250 ----------- Health Care Equipment & Services - 1.8% Health Care Distributors - 0.2% 60,000 BB+/Ba2 Omnicare, Inc., 6.125%, 6/1/13 $ 57,300 ----------- Health Care Facilities - 1.2% 165,000 B-/B3 Curative Health Services, 10.75%, 5/1/11 (144A) $ 158,400 200,000 BBB-/Ba1 HCA, Inc., 6.3%, 10/1/12 200,103 ----------- $ 358,503 ----------- Health Care Supplies - 0.4% 125,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 127,812 ----------- Total Health Care Equipment & Services $ 543,615 ----------- Pharmaceuticals & Biotechnology - 0.3% Pharmaceuticals - 0.3% 80,000 B/B3 Alaris Medical, Inc., 7.25%, 7/1/11 $ 88,000 ----------- Total Pharmaceuticals & Biotechnology $ 88,000 ----------- Banks - 0.1% Diversified Banks - 0.1% 15,000 BBB+/A1 Skandinaviska Enskilda Bank, 8.125%, 9/6/49 (144A) $ 16,394 ----------- Total Banks $ 16,394 -----------
8 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Diversified Financials - 5.6% Investment Banking & Brokerage - 1.6% EUR 200,000 B-/B3 BCP Caylux Holdings Lux SCA, 10.375%, 6/15/14 (144A) $ 257,903 225,000 B+/B1 E*Trade Financial Corp., 8.0%, 6/15/11 (144A) 223,875 ----------- $ 481,778 ----------- Diversified Financial Services - 2.2% 157,000 CCC/Caa1 Alamosa Delaware, Inc., 0.0%, 7/31/09 $ 151,505 210,000 B/B3 Dollar Financial Group, 9.75%, 11/15/11 (144A) 219,450 315,000 BBB/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) 292,175 ----------- $ 663,130 ----------- Specialized Finance - 1.8% 100,000 B-/B3 UGS Corp., 10.0%, 6/1/12 (144A) $ 106,500 200,000 B/B2 Inmarsat Finance Plc, 7.625%, 6/3/12 (144A) 193,500 80,000 BBB-/Baa3 GATX Financial Corp., 8.875%, 6/1/09 89,757 145,000 BB-/B3 Consolidated Commercial Holdings, 9.75%, 4/1/12 (144A) 147,175 ----------- $ 536,932 ----------- Total Diversified Financials $ 1,681,840 ----------- Insurance - 4.5% Life & Health Insurance - 1.8% 265,000 B+/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 265,994 300,000 BB+/Ba1 Provident Companies, Inc., 7.0%, 7/15/18 (a) 285,692 ----------- $ 551,686 ----------- Multi-Line Insurance - 0.6% 210,000 BB/Ba3 Allmerica Financial Corp., 7.625%, 10/15/25 $ 197,400 ----------- Property & Casualty Insurance - 1.4% 285,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 280,098 150,000 BB-/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 150,318 ----------- $ 430,416 ----------- Reinsurance - 0.7% 200,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 214,993 ----------- Total Insurance $ 1,394,495 ----------- Real Estate - 2.3% Real Estate Management & Development - 0.9% 100,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 $ 97,500 185,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 185,925 ----------- $ 283,425 ----------- Real Estate Investment Trusts - 1.4% 120,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 118,800 155,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 161,975 150,000 B-/B1 Meristar Hospitality Operations Finance Corp., 10.5%, 6/15/09 159,750 ----------- $ 440,525 ----------- Total Real Estate $ 723,950 -----------
The accompanying notes are an integral part of these financial statements. 9 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value Technology Hardware & Equipment - 2.0% Communications Equipment - 0.7% 150,000 BB+/Ba2 Corning, Inc., 6.3%, 3/1/09 $ 152,749 50,000 BB+/Ba2 Corning, Inc., 5.9%, 3/15/14 46,750 ----------- $ 199,499 ----------- Electronic Manufacturing Services - 0.2% 50,000 BB-/Ba2 Sanmina-SCI Corp., 10.375%, 1/15/10 $ 57,250 ----------- Office Electronics - 0.4% 120,000 B-/B3 Xerox Corp., 8.0%, 2/1/27 $ 109,500 ----------- Technology Distributors - 0.7% 200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 $ 208,912 ----------- Total Technology Hardware & Equipment $ 575,161 ----------- Telecommunication Services - 5.9% Integrated Telecom Services - 2.4% 125,000 B+/B2 GCI, Inc., 7.25%, 2/15/14 $ 119,375 125,000 CCC/B3 Primus Telecomm Group., 8.0%, 1/15/14 (144A) 110,000 150,000 B-/B3 TSI Telecommunication Services, 12.75%, 2/1/09 161,250 145,000 B+/B2 Innova S De R.L., 9.375%, 9/19/13 151,887 200,000 NR/Baa3 Tele Norte Leste Participacoes SA, 8.0%, 12/18/13 (144A) 179,001 ----------- $ 721,513 ----------- Wireless Telecom Services - 3.5% 150,000 CCC/Caa1 Alamosa Delaware, Inc., 8.5%, 1/31/12 (144A) $ 147,000 170,000 CCC+/B3 MetroPCS, Inc., 10.75%, 10/1/11 (144A) 184,450 275,000 CCC/Caa1 Ubiquitel Operating Co., 9.87%, 3/1/11 (144A) 275,000 CAD 240,000 BB+/Ba3 Rogers Cantel, Inc., 10.5%, 6/1/06 194,866 150,000 CCC+/B3 Mobifon Holdings, 12.5%, 7/31/10 (144A) 171,000 115,000 B+/Ba3 Mobile Telesystems Finance, 8.375%, 10/14/10 (144A) 108,388 ----------- $ 1,080,704 ----------- Total Telecommunication Services $ 1,802,217 ----------- Utilities - 0.9% Electric Utilities - 0.6% 189,200 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) $ 185,416 ----------- Multi-Utilities & Unregulated Power - 0.3% 30,000 B/B1 Reliant Resources, Inc., 9.25%, 7/15/10 $ 32,025 60,000 B/B1 Reliant Resources, Inc., 9.5%, 7/15/13 64,650 ----------- $ 96,675 ----------- Total Utilities $ 282,091 ----------- TOTAL CORPORATE BONDS (Cost $16,575,719) $16,990,940 -----------
10 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.4% 395,358 AAA/Aaa Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 to 11/1/33 $ 404,327 350,035 AAA/Aaa Federal Home Loan Mortgage Corp. (Gold), 5.0%, 6/1/34 338,260 91,229 AAA/Aaa Federal Home Loan Mortgage Corp. (Gold), 6.0%, 11/1/33 93,293 86,744 AAA/Aaa Federal Home Loan Bank, 5.5%, 10/1/16 88,915 415,710 AAA/Aaa Federal Home Loan Bank, 6.0%, 6/1/17 433,784 250,000 AAA/Aaa Federal National Mortgage Association, 6.0%, TBA 255,156 414,338 AAA/Aaa Federal National Mortgage Association, 5.5%, 3/1/18 to 5/1/34 419,071 767,760 AAA/Aaa Federal National Mortgage Association, 6.0%, 7/1/17 to 1/1/34 788,211 AUD 300,000 AAA/Aaa Federal National Mortgage Association, 6.375%, 8/15/07 212,738 28,419 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/31 to 2/1/32 29,638 2,293 AAA/Aaa Federal National Mortgage Association, 7.0%, 9/1/29 2,428 462 AAA/Aaa Federal National Mortgage Association, 7.5%, 6/1/30 496 198,714 AAA/Aaa Government National Mortgage Association, 5.5%, 4/20/34 198,549 1,588,679 AAA/Aaa Government National Mortgage Association, 6.0%, 6/15/17 to 10/15/33 1,638,648 628,729 AAA/Aaa Government National Mortgage Association, 6.5% 3/15/29 to 1/15/34 657,893 10,160 AAA/Aaa Government National Mortgage Association, 7.0%, 3/15/31 10,800 33,092 AAA/Aaa Government National Mortgage Association, 7.5% 5/15/23 35,339 445,636 AAA/Aaa Government National Mortgage Association II, 6.0%, 11/20/33 456,882 196,808 AAA/Aaa Government National Mortgage Association II, 5.5%, 3/20/34 196,644 75,000 AAA/Aaa U.S. Treasury Bond, 5.25%, 2/15/29 73,535 190,000 AAA/Aaa U.S. Treasury Notes 5.375%, 2/15/31 191,625 ----------- TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $6,520,373) $ 6,526,232 ----------- FOREIGN GOVERNMENT BONDS - 12.8% ITL 410,000,000 B+/B2 Banco Nac De Desen Econo , 8.0% 4/28/10 $ 229,962 CAD 27,000 AAA/Aaa Canadian Government, 4.25%, 9/1/08 20,345 CAD 315,000 AAA/Aaa Canadian Government, 5.25%, 6/1/12 243,276 CAD 200,000 AAA/Aaa Candian Government, 5.75%, 9/1/06 157,301 100,000 B+/B2 Federal Republic of Brazil, 11.0%,1/11/12 100,600 AUD 150,000 AAA/Aaa Government of Australia, 4.0%, 8/20/15 145,242 EUR 343,000 AAA/Aaa Government of France, 3.0%, 7/25/09 486,153 SEK 5,000 TSY/Aaa Swedish Government, 5.25%, 3/15/11 698 NOK 3,410,000 TSY/Aaa Norwegian Government, 6.75%, 1/15/07 534,409 AUD 332,000 AA/Aa2 Ontario Province, 5.5%, 4/23/13 219,785 AUD 207,000 NR/Aaa Queensland Treasury, 6.0%, 8/14/13 144,105 253,509 BB+/Ba2 Republic of Columbia, 9.75%, 4/9/11 280,127 185,000 BB-/Ba3 Republic of Peru, 8.375%, 5/3/16 172,050 EUR 125,000 BBB/Baa2 Republic of South Africa, 5.25%, 5/16/13 148,233 145,000 BB+/Baa3 Russia Regs., 5.0%, 3/31/30 132,385 SEK 2,955,000 TSY/Aaa Swedish Government, 5.5%, 10/08/12 418,061 SEK 2,150,000 TSY/Aaa Swedish Government, 8.0%, 8/15/07 322,873 AUD 25,000 AA+/Aa1 Swedish Export Credit, 4.1%, 2/13/06 16,994 DEM 180,000 BBB-/Baa3 United Mexican States, 8.25%, 2/24/09 127,161 ----------- TOTAL FOREIGN GOVERNMENT BONDS (Cost $3,492,603) $ 3,899,760 -----------
The accompanying notes are an integral part of these financial statements. 11 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal Amount S&P/Moody's USD ($) Ratings Value SOVEREIGN ISSUES - 0.7% 75,000 CC/B3 Dominican Republic, 9.04%, 1/23/13 (144A) $ 47,250 75,000 BB-/Ba3 Republic of Peru, 9.125%, 2/21/12 76,875 100,000 BB-/Ba3 Republic of Peru, 9.875%, 2/6/15 104,500 ----------- TOTAL SOVEREIGN ISSUES (Cost $267,376) $ 228,625 ----------- SUPERNATIONAL BONDS - 0.5% Insurance - 0.5% NZD 258,000 AAA/Aaa International Finance Corp., 6.75%, 7/15/09 $ 164,996 ----------- TOTAL SUPERNATIONAL BONDS (Cost $113,817) $ 164,996 ----------- MUNICIPAL BONDS - 1.2% 90,000 BBB/Baa3 Golden State Tobacco Securitization, 6.75%, 6/1/39 $ 80,862 100,000 NR/NR Wayne Charter County SPL, 6.75%, 12/1/15 85,344 175,000 B/Caa2 New Jersey Economic Development Authority Special Facility Revenue, 7.0%, 11/15/30 135,630 60,000 BBB/Baa3 Tobacco Settlement Financing Corp., 7.0%, 6/1/41 55,553 ----------- TOTAL MUNICIPAL BONDS (Cost $346,230) $ 357,389 ----------- Shares TEMPORARY CASH INVESTMENT - 1.9% Securities Lending Collateral - 1.8% 578,396 Securities Lending Investment Fund, 1.29% $ 578,395 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $578,396) $ 578,395 ----------- TOTAL INVESTMENT IN SECURITIES - 97.8% (Cost $29,602,009) (a) $30,532,756 ----------- OTHER ASSETS AND LIABILITIES - 2.2% $ 696,710 ----------- TOTAL NET ASSETS - 100.0% $31,229,467 ===========
12 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- N/R Not rated by either S&P or Moddy's TSY Treasury Security * Non-income producing security. TBA TBA (To Be Assigned) securities are purchased on a forward commitment basis with an approximate (generally plus/minus 2.5%) principal and no definite maturity date period The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. (144A) Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $7,731,379 or 24.7% of total net assets. Note: The Porfolio's investments in mortgage-backed securites of the Government Mortgage Association (GNMA) and the Federal National Mortgage Association (FNMA) are interests in separate pools of mortgages. All separate investments in the issuer which have the same coupon rate have been aggregated for the purpose of presentation in the schedule of investments. Note: Principal amounts are denominated in US dollars unless otherwise denoted. AUD Australian dollar DKK Danish kroner. EURO Euro dollar. NZD New Zealand dollar. DEM Deutsche Marks. CAD Canadian Dollar. ITL Italian Lira. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 33,250 AMR Corp., 9.0%, 8/1/12 $ 27,174 166,250 JLG Industries Inc., 8.375%, 6/15/12 169,740 95,000 Lucent Technologies, Inc., 5.5%, 11/15/08* 90,190 285,000 Provident Companies Inc., 7.0%, 7/15/18 278,708 ---------- Total $ 565,812* ==========
*Security sold as of June 30, 2004, but not returned from loan. The accompanying notes are an integral part of these financial statements. 13 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 5/1/03 6/30/04 to Class II (unaudited) 12/31/03 (a) Net asset value, beginning of period $ 11.01 $10.41 ------- ------ Increase (decrease) from investment operations: Net investment income (loss) $ 0.25 $ 0.41 Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.23) 0.62 ------- ------ Net increase from investment operations $ 0.02 $ 1.03 Distributions to shareowners: Net investment income (0.31) (0.43) Net realized gain (0.16) - ------- ------ Net increase (decrease) in net asset value $ (0.45) $ 0.60 -------- ------ Net asset value, end of period $ 10.56 $11.01 ======= ====== Total return* 0.19% 10.90% Ratio of net expenses to average net assets+ 1.42%** 1.49%** Ratio of net investment income (loss) to average net assets+ 5.60%** 5.08%** Portfolio turnover rate 51%** 68% Net assets, end of period (in thousands) $11,833 $3,663 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.42%** 1.49%** Net investment income (loss) 5.60%** 5.08%**
(a) Class II shares were first publicly offered on May 1, 2003. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period and no sales charges. Total return would be reduced if sales charges were taken into account. ** Annualized. + Ratios with no reduction for fees paid indirectly. 14 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Strategic Income VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $565,812) (Cost $29,602,009) $30,532,756 Cash 1,103,312 Foreign currencies, at value (cost $452,063) 452,882 Receivables -- Investment securities sold 99,189 Fund shares sold 63,956 Dividends, interest and foreign taxes withheld 518,040 Other 395 ----------- Total assets $32,770,530 ----------- LIABILITIES: Payables -- Investment securities purchased $ 732,931 Fund shares repurchased 182,840 Dividends 2,901 Upon return for securities loaned 578,396 Forward foreign currency portfolio hedge contracts, open -- net 5,662 Due to bank -- Due to affiliates 22,297 Accrued expenses 16,036 Other -- ----------- Total liabilities $ 1,541,063 ----------- NET ASSETS: Paid-in capital $29,754,738 Accumulated net investment income (loss) 136,607 Accumulated undistributed net realized gain (loss) 412,206 Net unrealized gain (loss) on: Investments 930,747 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (4,831) ----------- Total net assets $31,229,467 ----------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $19,396,101 Shares outstanding 1,836,427 ----------- $ 10.56 Class II: No par value (unlimited number of shares authorized) Net assets $11,833,366 Shares outstanding 1,120,547 ----------- Net asset value per share $ 10.56
The accompanying notes are an integral part of these financial statements. 15 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Strategic Income VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends $ -- Interest 940,961 Income on securities loaned, net 1,048 Other -- ----------- Total investment income $ 942,009 ----------- EXPENSES: Management fees $ 87,824 Transfer agent fees 1,383 Distribution fees (Class II) 9,221 Administrative fees 9,250 Custodian fees 11,172 Professional fees 34,553 Printing 4,607 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,010 ----------- Total expenses $ 159,020 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ----------- Net expenses $ 159,020 ----------- Net investment income (loss) $ 782,989 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 416,409 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (3,412) ----------- $ 412,997 ----------- Change in net unrealized gain or loss from: Investments $(1,181,610) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 12,963 ----------- $(1,168,647) ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ (755,650) =========== Net increase (decrease) in net assets resulting from operations $ 27,339 ===========
16 The accompanying notes are an integral part of these financial statements. Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Strategic Income VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 782,989 $ 1,068,721 Net realized gain (loss) on investments 412,997 713,901 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (1,168,647) 1,695,515 ----------- ----------- Net increase (decrease) in net assets resulting from operations $ 27,339 $ 3,478,137 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (586,082) $(1,087,224) Class II (212,869) (52,386) Net realized gain Class I (294,735) -- Class II (171,204) -- Tax return of capital Class I -- -- Class II -- -- ----------- ----------- Total distributions to shareowners $(1,264,890) $(1,139,610) ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $11,917,524 $11,160,025 Reinvestment of distributions 1,239,783 1,105,582 Cost of shares repurchased (3,666,138) (6,320,659) ----------- ----------- Net increase (decrease) in net assets resulting from fund share transactions $ 9,491,169 $ 5,944,948 ----------- ----------- Net increase (decrease) in net assets $ 8,253,618 $ 8,283,475 ----------- ----------- NET ASSETS: Beginning of period $22,975,849 $14,692,374 ----------- ----------- End of period $31,229,467 $22,975,849 =========== =========== Accumulated/(distributions in excess of) net investment income (loss) $ 136,607 $ 152,569 =========== ===========
The accompanying notes are an integral part of these financial statements. 17 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Strategic Income VCT Portfolio (The Portfolio) is a portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio)(Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The portfolio commenced operations on May 1, 2003. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Strategic Income Portfolio is to produce a high level of current income. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. As of June 30, 2004, there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Discounts and premiums on fixed income securities are accreted and amortized, respectively, on a yield-to-maturity basis and are included in interest income. Dividend and interest income from foreign securities are reported net of unrecoverable foreign taxes withheld at the applicable country rates. Fixed income securities are valued at prices supplied by independent pricing services, which consider such 18 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. D. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the six months ended June 30, 2004, no such taxes were paid. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 19 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Pioneer Strategic Income VCT Portfolio 2003 -------------- Distributions paid from: Ordinary Income $1,139,610 Long-Term capital gain -- ---------- 1,139,610 Return of Capital -- ---------- Total distributions $1,139,610 ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 380,350 Undistributed long-term gain/ (Capital loss carryforward) 212,557 Unrealized appreciation (depreciation) 2,119,373 ---------- Total $2,712,280 ==========
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. The portion of the Portfolios' expenses attributable to Class II will be reduced only to the extent such expenses are reduced for Class I shares (or Class II shares). Pioneer may subsequently recover reimbursed expenses (within three years of being incurred) from certain Portfolios if the expense ratio of the Class I (or Class II) shares would otherwise be less than the expense limitation of the class. Each class will reimburse PIM no more than the amount by which that class' expenses were reduced. 20 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $19,621 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $2,418 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - -------------------------------------------------------------------------------------------------- Strategic Income Portfolio $29,602,495 $1,359,738 $(427,477) $930,261
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $14,699,615 and 6,400,106, respectively. The cost of purchases and the proceeds from sales of U.S. Government obligations were $192,761 and $398,065, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
Strategic Income Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------- CLASS I: Shares sold 276,859 $ 3,041,159 712,653 $ 7,385,764 Reinvestment of distributions 79,451 855,733 100,561 1,053,192 Shares repurchased (273,985) (2,992,605) (579,108) (6,045,569) -------- ----------- -------- ----------- Net increase 82,325 $ 904,287 234,106 $ 2,393,387 ======== =========== ======== =========== CLASS II: Shares sold 813,612 $ 8,876,365 353,538 $ 3,774,292 Reinvestment of distributions 35,881 384,050 4,862 52,365 Shares repurchased (61,738) (673,533) (25,608) (275,096) -------- ----------- -------- ----------- Net increase 787,755 $ 8,586,882 332,792 $ 3,551,561 ======== =========== ======== ===========
21 Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 8. Forward Foreign Currency Contracts During the six months ended June 30, 2004, certain Portfolios had entered into various contracts that obligate the Portfolios to deliver currencies at specified future dates. At the maturity of a contract, the Portfolios must make delivery of the foreign currency. Alternatively, prior to the settlement date of a portfolio hedge, the Portfolio may close out such contracts by entering into an offsetting hedge contract. As of June 30, 2004, the Portfolio had no outstanding settlement hedges. Outstanding forward portfolio hedge contracts were as follows:
Net Unrealized Contracts to In Exchange Settlement Gain Portfolio Deliver For Date Value (Loss) - ----------------------------------------------------------------------------------------------------------- Strategic Income Portfolio EURO (970,000) $(1,176,610) 7/21/04 $(1,182,307) $ 5,697 Strategic Income Portfolio EURO (118,399) $ (143,014) 7/2/04 $ (144,459) $ 1,445 Strategic Income Portfolio NOK (500,000) $ 72,171 7/6/04 $ 72,192 $ (21) Strategic Income Portfolio NOK (1,000,000) $ 143,014 7/2/04 $ 144,473 $(1,459)
22 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 24 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 25 [PIONEER INVESTMENTS LOGO] Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16075-00-0804 [PIONEER INVESTMENTS LOGO] PIONEER VARIABLE CONTRACTS TRUST Pioneer America Income VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------- Pioneer America Income VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 6 Notes to Financial Statements 10
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Government & Agency Obligations 90.7% Temporary Cash Investment 6.9% Collateralized Mortgage Obligations 1.8% U.S. Corporate Bonds 0.6%
Maturity Distribution (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] 0-1 years 3.8% 1-3 years 42.4% 3-4 years 26.4% 4-6 years 18.3% 6-8 years 0.5% 8+ years 8.6%
Five Largest Holdings (As a percentage of equity holdings) 1. U.S. Treasury Notes, 6.5%, 2/15/10 13.05% 2. U.S. Treasury Notes, 6.25%, 8/15/23 5.05 3. Federal Home Loan Mortgage Corp., 6.0%, 3/1/33 3.47 4. U.S. Treasury Notes, 6.375%, 8/15/27 2.57 5. Federal Home Loan Mortgage Corp., 6.0%, 5/1/34 2.52
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $10.04 $10.37
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.3209 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer America Income VCT Portfolio at net asset value, compared to that of the Lehman Brothers Fixed-Rate Mortgage-Backed Securities Index and of Lehman Brothers Government Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer Lehman Lehman America Income Government Fixed Rate VCT Portfolio Bond Index+ Mortgage Index+ -------------- ----------- --------------- 3/95 $10,000 $10,000 $10,000 $10,555 $11,302 $11,098 6/96 $10,665 $11,615 $11,693 $11,536 $12,727 $12,802 6/98 $12,445 $13,981 $13,694 $12,092 $13,667 $13,947 6/00 $13,480 $15,477 $15,505 $14,317 $16,598 $16,779 6/02 $15,755 $18,506 $18,246 $16,340 $18,943 $18,802 6/04 $16,327 $18,920 $18,948
+ Index comparisons begin 2/28/95. The Lehman Brothers Fixed-Rate Mortgage-Backed Securities Index is an unmanaged index including 15- and 30-year fixed rate securities backed by pools of the Government National Mortgage Association, Federal Home Loan Mortgage Corporation and Federal National Mortgage Association. The Lehman Brothers Government Bond Index is an unmanaged performance measure of U.S. Treasury debt, all publicly issued debt of U.S. government agencies and quasi-federal corporations of corporate debt guaranteed by the U.S. government. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - ------------------------------------------------------------------------- Net Asset Value - ------------------------------------------------------------------------- Life-of-Class 5.38% (3/1/95) 5 Years 6.17% 1 Year -0.26%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In an improving economy, uncertainty about rising interest rates dominated market sentiment. As a result, the yields on fixed-income securities declined and then rose, as investors tried to determine when the Federal Reserve would raise interest rates and by how much. In this volatile environment, Pioneer America Income VCT Portfolio delivered a relatively high level of income to shareholders. In the following interview, Richard Schlanger, a member of the Pioneer fixed-income team, discusses the factors that affected the fixed-income market and the Portfolio over the past six months. Q: How did the Portfolio perform during the six-month period ended June 30, 2004? A: For the six-month period ended June 30, 2004, Class II shares of Pioneer America Income VCT Portfolio produced a total return of -0.08% at net asset value. The Portfolio outperformed the Lehman Brothers Government Bond Index, which returned -0.13% for the same period. It underperformed the Lehman Brothers Fixed-Rate Mortgage-Backed Index, which returned 0.77%. At the end of the period, the 30-day SEC yield for Class A shares was 2.94%. Q: What was the investment environment like during the period? A: For the first three months of 2004, concerns about geopolitical issues and the "jobless" economic recovery kept interest rates at 45-year lows. When we moved into the second calendar quarter of 2004, however, the employment picture changed dramatically. Several hundred thousand jobs were added to the economy in April and May, leading to concerns about the pace of Federal Reserve tightening, accelerating inflation and higher interest rates. In this environment, market rates rose, causing the yield curve to flatten. (The yield curve shows the relationship between bond yields and maturity lengths.) Normally, the yield curve is positively sloped with yields on long-term bonds exceeding those on short-term bonds. The yield curve flattens when yields on short-term bonds rise more than those on long-term bonds. This was the case during the period. As interest rates rose, bond yields went up and prices declined. Q: What investment strategies contributed to performance? A: About 65% of net assets were diversified in mortgage-backed securities issued by Government Sponsored Enterprises, such as the Government National Mortgage Association (Ginnie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae). (Ginnie Mae securities are backed by the full faith and credit of the government. A full faith and credit backing applies to underlying Portfolio securities not to Portfolio shares.) Because mortgages outperformed Treasury securities, the Portfolio's overweight in the sector relative to the benchmark was the biggest aid to total return. In the volatile interest-rate environment, we were concerned about the prepayment risk that is associated with mortgage-backed securities. When interest rates decline, homeowners often "prepay" their existing mortgages and refinance their homes at a lower rate. Significant prepayment activity can result in declining yields and share prices in portfolios with investments in mortgages. To mitigate this risk, we selected mortgages with lower weighted average coupon rates that we believe are less likely to be prepaid. Q: What investment strategies detracted from performance? A: A little more than 31% of the Portfolio was invested in Treasury and agency securities with predominently short- and intermediate-term maturities. As yields on securities in these maturity ranges moved higher, their prices declined. As a result, the Portfolio's exposure to bonds in the middle of the yield curve held back results. Q: What is your outlook over the next several months? A: We believe the economy is on a sustained path for improvement and are concerned that the seeds for higher inflation are being planted. The Federal Reserve raised interest rates by 0.25% on June 30 and is likely to continue doing so at a measured pace over the next two years. As interest rates move higher, we will consider using a barbell strategy in managing the Treasury portion of the Portfolio. This means we may sell some of our intermediate-term holdings and add securities in the one-to-two-year range and in the 20 plus-year range. With this approach, the Portfolio should benefit from the higher yields that long-term bonds provide and from the relative price stability of short-term securities. We will also seek mortgage-backed securities that are selling at a discount and that can provide the Portfolio with relatively high yields as well as the potential for price appreciation. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Principal Amount Value CORPORATE BONDS - 0.6% Miscellaneous - 0.6% $ 250,000 Private Export Funding, 3.375%, 2/15/09 $ 242,131 ---------- TOTAL CORPORATE BONDS (Cost $240,945) $ 242,131 ---------- U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 93.1% 550,000 Federal Farm Credit Bank, 6.5%, 9/29/06 $ 589,480 100,000 Federal Farm Credit Bank, 5.88%, 9/8/08 107,242 400,000 Federal Farm Credit Bank, 4.9%, 3/17/14 375,846 200,000 Federal Farm Credit Bank, Medium Term Note, 6.38%, 11/27/06 214,430 400,000 Federal Home Loan Mortgage Corp., 4.53%, 10/30/06 411,843 850,000 Federal Home Loan Mortgage Corp., 5.875%, 11/15/07 909,101 300,000 Federal Home Loan Mortgage Corp., 5.89%, 6/30/08 322,359 3,921,848 Federal Home Loan Mortgage Corp., 6.0%, 10/1/32 to 5/1/34 4,011,435 901,212 Federal Home Loan Mortgage Corp., 6.5%, 1/1/29 to 7/1/32 940,477 140,000 Federal Home Loan Mortgage Corp., 6.7%, 1/5/07 151,495 185,833 Federal Home Loan Mortgage Corp., 7.0%, 4/1/30 to 4/1/32 196,977 73,070 Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 78,699 2,419,765 Federal National Mortgage Association, 5.5%, 3/1/18 to 3/1/34 2,436,771 2,289,692 Federal National Mortgage Association, 6.0%, 12/1/11 to 6/1/33 2,349,031 500,000 Federal National Mortgage Association, 6.5%, TBA 30 Year 520,469 1,720,919 Federal National Mortgage Association, 6.5%, 7/1/21 to 9/1/32 1,794,641 467,446 Federal National Mortgage Association, 7.0%, 9/1/18 to 1/1/32 495,003 35,476 Federal National Mortgage Association, 7.5%, 2/1/31 38,031 81,061 Federal National Mortgage Association, 9.0%, 4/1/33 90,116 500,000 Government National Mortgage Association, 4.5%, TBA 30 Year 469,375 723,092 Government National Mortgage Association, 4.5%, 8/15/33 to 6/15/34 680,471 374,405 Government National Mortgage Association, 5.0%, 7/15/17 379,866 1,305,089 Government National Mortgage Association, 5.5%, 4/15/31 to 7/1/33 1,306,546 3,966,710 Government National Mortgage Association, 6.0%, 5/15/17 to 9/15/33 4,079,080 3,312,786 Government National Mortgage Association, 6.5%, 4/15/17 to 1/15/34 3,470,454 940,004 Government National Mortgage Association, 7.0%, 1/15/26 to 4/15/33 999,827 172,281 Government National Mortgage Association, 7.5%, 10/15/22 to 1/15/32 185,983 148,618 Government National Mortgage Association I, 6.0%, 11/15/30 152,523 275,243 Government National Mortgage Association I, 6.5%, 5/15/29 to 5/15/31 288,099 125,788 Government National Mortgage Association I, 7.0%, 11/15/30 to 12/15/30 133,783 35,837 Government National Mortgage Association I, 7.5%, 1/15/31 38,624 416,154 Government National Mortgage Association II, 5.0%, 12/20/18 418,994 488,390 Government National Mortgage Association II, 5.5%, 12/20/34 487,983 607,748 Government National Mortgage Association II, 6.0%, 12/20/18 to 6/20/34 624,636 200,086 Government National Mortgage Association II, 6.5%, 8/20/28 to 9/20/31 209,062 255,695 Government National Mortgage Association II, 7.0%, 5/20/26 to 1/20/31 271,797 13,284 Government National Mortgage Association II, 7.5%, 8/20/27 14,326 4,640 Government National Mortgage Association II, 8.0%, 8/20/25 5,091 12,000 Tennessee Valley Authority, 6.75%, 6/1/28 282,000 400,000 U.S. Treasury Bonds, 7.25%, 5/15/16 483,578 925,000 U.S. Treasury Bonds, 6.375%, 8/15/27 1,044,058 4,700,000 U.S. Treasury Notes, 6.5%, 2/15/10 5,295,946
4 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
Principal Amount Value U.S. Government and Agency Obligations - (Con't) $ 200,000 U.S. Treasury Notes, 4.75%, 5/15/14 $ 202,086 1,850,000 U.S. Treasury Notes, 6.25%, 8/15/23 2,048,587 ----------- TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost $39,224,189) $39,606,221 ----------- COLLATERALIZED MORTGAGE OBLIGATIONS - 1.7% Government - 1.7% 250,000 Freddie Mac 3.2%, 5/21/08 $ 244,210 300,000 Freddie Mac 5.25%, 11/15/12 294,354 191,180 Freddie Mac 5.0%, 1/15/16 195,031 ----------- TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS - 1.72% (Cost $749,943) $ 733,595 ----------- TEMPORARY CASH INVESTMENT - 7.0% Repurchase Agreement - 7.0% 3,000,000 UBS Warburg 1.25% dated 6/30/04, repurchase price of $3.000,000 plus accrued interest on 7/1/04, collateralized by $2,911,000 U.S. Treasury Note, 5.75%, 11/15/05 $ 3,000,000 ----------- TOTAL TEMPORARY CASH INVESTMENT - 7.0% (Cost $3,000,000) $ 3,000,000 ----------- TOTAL INVESTMENTS IN SECURITIES - 102.4% (Cost $43,215,077) $43,581,947 ----------- OTHER ASSETS AND LIABILITIES - (2.4%) $(1,028,597) ----------- TOTAL NET ASSETS - 100.0% $42,553,350 ===========
(d) TBA (To Be Assigned) securities are purchased on a forward commitment basis with an approximate (generally plus/minus 2.5%) principal and no definite maturity date period. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. The accompanying notes are an integral part of these financial statements. 5 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 5/1/03(a) 6/30/04 to Class II (a) (unaudited) 12/31/03 Net asset value, beginning of period $10.37 $10.57 ------ ------ Increase (decrease) from investment operations: Net investment income (loss) $ 0.22 $ 0.21 Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.23) (0.15) ------ ------ Net increase (decrease) from investment operations $(0.01) $0.06 Distributions to shareowners: Net investment income (0.32) (0.26) Net realized gain -- -- ------ ------ Net increase (decrease) in net asset value $(0.33) $(0.20) ------ ------ Net asset value, end of period $10.04 $10.37 ------ ------ Total return* (0.08)% 2.60% Ratio of net expenses to average net assets+ 1.08%** 1.01%** Ratio of net investment income (loss) to average net assets+ 4.12%** 2.42%** Portfolio turnover rate 28%** 34% Net assets, end of period (in thousands) $7,118 $2,637 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.08%* * 1.01%** Net investment income (loss) 4.12%* * 2.42%**
(a) Class II shares were first publicly offered on May 1, 2003. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period.) ** Annualized. + Ratios with no reduction for fees paid indirectly. 6 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer America Income VCT Portfolio ASSETS: Investment in securities, at value (Cost $43,215,077) $43,581,947 Cash 31,752 Foreign currencies, at value -- Receivables -- Investment securities sold -- Fund shares sold 58,936 Dividends, interest and foreign taxes withheld 357,466 Other 418 ----------- Total assets $44,030,519 ----------- LIABILITIES: Payables -- Investment securities purchased $ 1,424,051 Fund shares repurchased 45 Dividends -- Upon return for securities loaned -- Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 24,632 Accrued expenses 28,441 Other -- ----------- Total liabilities $ 1,477,169 ----------- NET ASSETS: Paid-in capital $43,324,529 Accumulated net investment income (loss) (239,082) Accumulated undistributed net realized gain (loss) (898,967) Net unrealized gain (loss) on: Investments 366,870 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- Total net assets $42,553,350 ----------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $35,435,314 Shares outstanding 3,533,687 ----------- Net asset value per share $ 10.03 Class II: No par value (unlimited number of shares authorized) Net assets $ 7,118,036 Shares outstanding 708,630 ----------- Net asset value per share $ 10.04
The accompanying notes are an integral part of these financial statements. 7 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer America Income VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends $ -- Interest 1,130,558 Income on securities loaned, net -- Other -- ---------- Total investment income $1,130,558 ---------- EXPENSES: Management fees $ 118,586 Transfer agent fees 1,383 Distribution fees (Class II) 5,992 Administrative fees 9,250 Custodian fees 10,276 Professional fees 26,051 Printing 3,519 Fees and expenses of nonaffiliated trustees -- Miscellaneous 573 ---------- Total expenses $ 175,630 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ---------- Net expenses $ 175,630 ---------- Net investment income (loss) $ 954,928 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ (18,903) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ (18,903) ---------- Change in net unrealized gain or loss from: Investments $ (878,602) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ (878,602) ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ (897,505) ========== Net increase (decrease) in net assets resulting from operations $ 57,423 ==========
8 The accompanying notes are an integral part of these financial statements. Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer America Income VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 954,928 $ 2,011,935 Net realized gain (loss) on investments (18,903) 193,917 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (878,602) (1,192,887) ------------ ------------ Net increase (decrease) in net assets resulting from operations $ 57,423 $ 1,012,965 ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (1,275,683) $ (2,321,232) Class II (149,828) (26,127) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ------------ ------------ Total distributions to shareowners $ (1,425,511) $ (2,347,359) ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 6,288,054 $ 10,875,454 Reinvestment of distributions 1,425,494 2,347,346 Cost of shares repurchased (10,954,747) (34,276,542) ------------ ------------ Net increase (decrease) in net assets resulting from fund share transactions $ (3,241,200) $(21,053,742) ------------ ------------ Net increase (decrease) in net assets $ (4,609,288) $(22,388,136) ------------ ------------ NET ASSETS: Beginning of period $ 47,162,638 $ 69,550,779 ------------ ------------ End of period $ 42,553,350 $ 47,162,643 ============ ============ Accumulated/(distributions in excess of) net investment income (loss) $ (239,082) $ 231,501 ============ ============
The accompanying notes are an integral part of these financial statements. 9 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer America Income VCT Portfolio (The Portfolio) is a portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio)(Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The Portfolio commenced operations on May 1, 2003. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of America Income Portfolio is to produce a high level of current income as consistent with preservation of capital. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. As of June 30, 2004 there were no fair valued securities. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. 10 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. D. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, America Income Trust Portfolio had a net capital loss carryforward of $817,947, of which the following amounts will expire between 2008 and 2011 if not utilized: $382,424 in 2008 and $435,523 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003.
Pioneer America Income VCT Portfolio 2003 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $2,347,359 Long-Term capital gain -- ---------- $2,347,359 Return of Capital -- ---------- Total distributions $2,347,359 ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 422,952 Undistributed long-term gain/ (Capital loss carryforward) (817,957) Unrealized appreciation (depreciation) 1,046,300 ---------- Total $ 651,305 ==========
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number 11 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.55% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $22,840 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $1,534 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------------ America Income Portfolio $43,414,254 $391,118 $(223,425) $167,693 =========== ======== ========= ========
12 Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of U.S. Government obligations for the six months ended June 30, 2004, were $5,943,558 and 10,883,367, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
America Income Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - -------------------------------------------------------------------------------------------------- CLASS I: Shares sold 168,394 $ 1,696,627 711,258 $ 8,118,733 Reinvestment of distributions 124,770 1,275,682 221,712 2,321,232 Shares repurchased (1,059,762) (10,858,369) (3,202,256) (34,132,706) -------------------------------------------------------------- Net increase (766,598) $ (7,886,060) (2,269,286) $(23,692,741) ============================================================== CLASS II: Shares sold 449,092 $ 4,591,427 265,643 $ 2,756,721 Reinvestment of distributions 14,695 149,812 2,521 26,114 Shares repurchased (9,382) (96,378) (13,939) (143,836) -------------------------------------------------------------- Net increase 454,405 $ 4,644,861 254,225 $ 2,638,999 ==============================================================
13 [PIONEER INVESTMENTS LOGO] Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16073-00-0804 [PIONEER INVESTMENTS LOGO] PIONEER VARIABLE CONTRACTS TRUST Pioneer Emerging Markets VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - ---------------------------------------------- Pioneer Emerging Markets VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 10 Notes to Financial Statements 14
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] International Common Stocks 62.1% Depositary Receipts for International Stocks 25.7% U.S. Common Stocks 5.5% Temporary Cash Investment 4.1% International Preferred Stocks 2.6%
Geographical Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF PIE CHART] South Korea 22.6% Taiwan 9.7% Brazil 9.4% South Africa 7.1% Mexico 6.8% India 6.3% Russia 4.6% Thailand 4.1% Malaysia 4.0% Turkey 3.7% Chile 3.2% Indonesia 2.2% Hungary 2.0% Israel 1.9% Singapore 1.9% Poland 1.9% Peru 1.5% People's Republic of China 1.4% Philippines 1.4% United Kingdom 1.0% Egypt 1.0% Other (individually less than 1%) 2.3%
Five Largest Holdings (As a percentage of equity holdings) 1. Samsung Electronics Co. 4.09% 2. Telefonos de Mexico SA 3.11 3. Petrobras Brasileiro SA (A.D.R.) 2.53 4. Anglo American Plc 2.25 5. Alumax, Inc. 2.09
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 16.27 $ 17.26
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.1286 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Emerging Markets VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) Emerging Markets Free Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer MSCI Emerging Markets Emerging Markets VCT Portfolio* Free Index ---------------- ---------------- 10/98 $10,000 $10,000 $10,486 $10,675 $18,695 $17,766 6/00 $12,317 $12,330 $11,410 $12,037 6/02 $11,247 $11,315 $17,756 $17,682 6/04 $16,862 $17,540
The MSCI Emerging Markets Free Index is an unmanaged, capitalization-weighted measure of 679 securities trading in 26 emerging markets; it reflects only those securities available to foreign investors. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004) - --------------------------------------------------------------------- Net Asset Value - --------------------------------------------------------------------- Life-of-Class 9.65% (10/30/98) 5 Years 3.65% 1 Year 30.06%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- For the six months ended June 30, 2004, Pioneer Emerging Markets VCT Portfolio's Class II shares delivered a total return at net asset value of - -5.03%. Over the same time period, the MSCI Emerging Markets Free Index had a total return of -0.78%. In the following discussion, Mark Madden, portfolio manager of Pioneer Emerging Markets VCT Portfolio, addresses the factors affecting the Portfolio's performance and the outlook for the emerging markets. Q: What factors influenced the performance of emerging markets in the six months ended June 30, 2004? A: A combination of accelerating economic growth, attractive stock valuations, positive economic reforms, strong commodity prices and low interest rates led to strong returns in emerging markets from March 2003 to early April 2004. However, beginning in mid-April 2004, emerging markets experienced declines due to a number of factors. First, interest rates started to climb higher as investors anticipated a U.S. Federal Reserve change in monetary policy. Investors sought safe-haven investments while withdrawing funds from emerging markets and other higher-risk asset classes. Second, the Chinese government's efforts to slow its overheating economy led to declines in Chinese stocks and stocks throughout Asia. Third, rising oil and energy prices were perceived to pose a threat to global growth while increasing the risk of inflation. Over the last six months, the total return for the Portfolio was below that of the benchmark MSCI Emerging Markets Free Index. One area that contributed to the Portfolio's underperformance was a sell-off of Brazil's stock market due to the country's reliance on external debt and concerns for higher rates. We remain positive on Brazil's outlook, however, and we believe investors do not adequately recognize the improvements that have been made in the economy in recent years. Brazil now has both a large fiscal surplus and a current account surplus; domestic real interest rates are the lowest in more than a decade; and there is substantial pent-up domestic demand that should drive an acceleration of economic growth. Q: What is your investment strategy? A: Our investment process is driven by rigorous research that focuses on companies with strong long-term growth prospects and proven management ability that sell at a discount to our estimation of fair value. We look for companies that are well positioned in countries and industries with favorable long-term trends and growth potential. We manage risk through diversification among various countries, sectors and companies while emphasizing stocks that are attractively valued. Q: Where are you finding attractive opportunities in emerging markets? A: As for countries, we currently favor Brazil, Thailand and Turkey. In all three markets we see very attractive stock valuations and improved economic prospects. Recent volatility has provided an opportunity, in our opinion, to add to positions at attractive prices. The Portfolio long maintained an overweight in India, but we recently reduced that position to slightly above the index weight following the recent elections. In a surprising outcome, Sonia Gandhi and the Congress party coalition soundly defeated the incumbent National Democratic Alliance (NDA) party, which had been credited with the progress seen in the Indian economy over the last few years. Investors became concerned that the new administration may not have the same emphasis on economic reforms necessary for future growth. We are more cautious on our outlook for India until we see the policies of the new administration. As for sectors, we like the energy and consumer staples sectors. Energy stocks are enjoying increasing profitability due to tight supply and strong demand, and we expect this to continue in the medium term. Consumer spending is picking up in many countries, and we expect the attractively valued stocks in the consumer staples sector to benefit from this trend. We are less optimistic on the technology sector, where we do not believe stronger demand can be sustained. Technology profit margins continue to be under pressure, and a weaker dollar may further erode profit margins of emerging markets firms that export most of their production to the United States. Q: What is your outlook? A: In our last annual report, we wrote that we were optimistic on the prospects for emerging markets over the next several years although we did expect some correction in the coming year. Emerging markets have been correcting over the last two months, and we expect this volatility may continue in the near term. However, the basis for our longer term optimism remains in place. Stock valuations in emerging markets are less expensive than in developed markets, while economic growth rates of developing countries are higher than those of developed markets. In addition, many companies in emerging markets are gaining global market share by delivering quality products and services at very competitive prices. The main risk to these investments relates to the potential for global growth to falter. On the other hand, if growth is too strong, inflation may accelerate, leading to higher interest rates and lower stock valuations. We believe that the markets are already beginning to price in these risks, and an opportunity is developing to acquire stocks with strong long-term prospects at attractive prices. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Investing in emerging markets carries its own set of risks, including but not limited to, currency fluctuations, and social and economic instability. However, we feel confident that the long-term prospects invite serious consideration. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCKS - 2.6% Materials - 0.3% Diversified Metals & Mining - 0.3% 259,000 Caemi Mineracao E Metalurgia SA* $ 99,034 ----------- Total Materials $ 99,034 ----------- Capital Goods - 0.1% Industrial Conglomerates - 0.1% 1,855 GS Holdings Corp.* $ 16,639 3,445 LG Corp. 30,901 ----------- $ 47,540 ----------- Total Capital Goods $ 47,540 ----------- Banks - 0.7% Diversified Banks - 0.7% 2,541,700 Banco Itau Holding Financeira $ 235,144 ----------- Total Banks $ 235,144 ----------- Telecommunication Services - 1.5% Integrated Telecommunication Services - 0.7% 14,401 Tele Norte Leste Participacoes (A.D.R.) $ 183,325 ----------- Wireless Telecommunication Services - 0.8% 10,900 Telesp Celular Participacoes (A.D.R.)* $ 85,894 5,800 Telemig Celular Participacoes (A.D.R.) 171,100 ----------- $ 256,994 ----------- Total Telecommunication Services $ 440,319 ----------- TOTAL PREFERRED STOCKS (Cost $663,334) $ 822,037 ----------- COMMON STOCKS - 92.5% Energy - 10.3% Integrated Oil & Gas - 6.2% 225,000 CNOOC, Ltd. $ 95,517 5,480 Lukoil Holding (A.D.R.) 574,030 30,900 Petrobras Brasileiro SA (A.D.R.) 778,680 13,500 Surgutneftegaz (A.D.R.) (b)* 442,125 15,644,450 Tupras-Turkiye Petrol Rafinerileri AS 102,718 ----------- $ 1,993,070 ----------- Oil & Gas Equipment And Services - 0.4% 3,000 Samchully Co., Ltd. $ 143,240 ----------- Oil & Gas Exploration & Production - 2.0% 183,600 China Petroleum & Chemical $ 67,671 6,100 Mol Magyar Olaj 243,471 179,000 Panva Gas Holdings, Ltd.* 77,535 67,000 PTT Public Co., Ltd. 252,428 ----------- $ 641,105 ----------- Shares Value Oil & Gas Refining Marketing & Transportation - 1.7% 983,500 Petron Corp. $ 53,590 7,400 Polski Koncern Nafto (G.D.R.) 116,980 7,500 S-OIL Corp.* 313,146 2,120 TelecomAsia Corp. Public Co., Ltd. 69,430 ----------- $ 553,146 ----------- Total Energy $ 3,330,561 ----------- Materials - 14.7% Aluminum - 0.1% 12,000 Catcher Technology Co., Ltd. $ 38,556 ----------- Commodity Chemicals - 1.5% 3,869 Daelim Industrial Co. $ 121,643 11,300 Reliance Industries, Ltd. (144A)* 226,848 12,010,000 Ultrapar Participacoes SA 128,312 ----------- $ 476,803 ----------- Construction Materials - 1.1% 5,150 Asia Cement Co., Ltd. $ 115,063 29,013,250 Akcansa Cimento AS 58,636 40,422 Lafarge Malayan Cement* 8,679 14,400 Siam City Cement Co., Ltd. 74,686 12,000 Siam Cement Co., Ltd. 71,872 2,932 Suez Cement Co. (G.D.R.)* 24,042 ----------- $ 352,978 ----------- Diversified Chemicals - 0.7% 200 Israel Chemicals, Ltd. $ 386 2,600 LG Chemicals, Ltd. 88,515 258,360 Sinopac Holdings Co. 135,772 ----------- $ 224,673 ----------- Diversified Metals & Mining - 3.0% 11,400 Anglo American Plc $ 238,032 4,900 Antofagasta Plc 83,845 3,800 Companhia Vale do Rio Doce (A.D.R.) 148,580 3,900 Industrias Penoles SA 13,936 17,200 KGHM Polska Miedz SA* 131,684 4,100 Norilsk Nickel 226,013 127,000 Yanzhou Coal Mining (Class H) 139,864 ----------- $ 981,954 ----------- Gold - 0.4% 25,500 IAMGOLD Corp. (b) $ 142,290 ----------- Paper Products - 0.2% 2,370 Aracruz Cellulose SA (A.D.R.)* $ 77,404 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Precious Metals & Minerals - 4.5% 33,200 Anglo American Plc $ 694,786 1,750 Anglogold, Ltd. 55,955 8,600 Anglogold, Ltd. (A.D.R.)(b) 276,576 20,400 Compania de Minas Buenaventura SA 450,840 ----------- $ 1,478,157 ----------- Specialty Chemicals - 0.9% 85,501 Formosa Plastic Corp.* $ 121,327 135,055 Nan Ya Plastics Corp. 178,645 ----------- $ 299,972 ----------- Steel - 2.1% 231,106 China Steel Corp., Ltd. $ 219,413 7,700 Pohang Iron & Steel Co., Ltd. (A.D.R.)* 258,027 16,800 Remgro, Ltd. 205,595 ----------- $ 683,035 ----------- Total Materials $ 4,755,822 ----------- Capital Goods - 4.1% Building Products - 0.8% 12,500 Daewoo Heavy Industries & Machinery, Ltd. $ 151,670 2,530 Hanil Cement Co., Ltd. 97,062 ----------- $ 248,732 ----------- Construction, Farm Machinery & Heavy Trucks - 0.2% 17,700 Punjab Tractors, Ltd.* $ 78,632 ----------- Construction & Engineering - 1.2% 240,000 CTCI Corp. $ 119,451 2,386,626 Enka Insaat VE Sanayi AS 49,004 7,900 Kyeryong Construction Industrial Co., Ltd. 72,767 9,600 LG Construction, Ltd. 158,825 ----------- $ 400,047 ----------- Electrical Components & Equipment - 0.6% 14,900 Bharat Heavy Electricals (Demat Shares) $ 162,829 7,512 Crompton Greaves, Ltd.* 21,267 ----------- $ 184,096 ----------- Industrial Conglomerates - 0.4% 3,675 GS Holdings Corp.* $ 54,673 6,825 LG Corp. 101,535 ----------- $ 156,208 ----------- Metal Fabricators - 0.3% 5,470 Korea Zinc Co. $ 90,913 ----------- Industrial Machinery - 0.6% 187,000 Yungtay Engineering Co., Ltd. $ 99,949 12,200 Daewoo Heavy Industries & Machinery, Ltd.* 82,391 ----------- $ 182,340 ----------- Total Capital Goods $ 1,340,968 ----------- Shares Value Commercial Services & Supplies - 0.5% Diversified Commercial Services - 0.5% 17,656 Bidvest Group, Ltd. $ 150,339 ----------- Total Commercial Services & Supplies $ 150,339 ----------- Transportation - 1.3% Air Freight & Couriers - 0.2% 153,400 Singapore Post, Ltd. $ 78,675 ----------- Airlines - 0.3% 6,600 Korean Air* $ 86,183 ----------- Marine - 0.6% 11,880 Hyundai Merchant Marine Co.* $ 89,610 19,800 Samsung Heavy Industries Co., Ltd. 89,244 ----------- $ 178,854 ----------- Railroads - 0.2% 23,000 Malaysia International Shipping $ 72,759 ----------- Total Transportation $ 416,471 ----------- Automobiles & Components - 4.0% Auto Parts & Equipment - 1.0% 27,900 Dongyang Mechatronics Corp. $ 75,207 3,000 Hyundai Mobis 133,766 28,600 Jardine Cycle & Carriage, Ltd. 106,742 ----------- $ 315,715 ----------- Automobile Manufacturers - 3.0% 12,800 Edaran Otomobile Nasional $ 31,865 5,230 Hyundai Heavy Industries 125,045 5,900 Hyundai Motor Co., Ltd. 228,102 7,100 Kia Motors 60,968 42,818,482 Koc Holdings AS* 193,285 143,653 PT Astra International 84,365 106,100 Sime Darby 155,008 13,999 Tata Motors 115,901 ----------- $ 994,539 ----------- Total Automobiles & Components $ 1,310,254 ----------- Consumer Durables & Apparel - 1.0% Footwear - 0.2% 346,700 Symphony Holdings, Ltd. $ 59,888 ----------- Homebuilding - 0.5% 563,500 Ayala Land, Inc. $ 58,368 67,000 Corporacion GEO, SA de CV* 88,361 ----------- $ 146,729 ----------- Leisure Products - 0.3% 104,200 Berjaya Sports Toto $ 104,254 ----------- Total Consumer Durables & Apparel $ 310,871 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Hotels, Restaurants & Leisure - 0.3% Hotels, Resorts & Cruise Lines - 0.2% 9,200 Indian Hotels Co., Ltd. $ 70,251 ----------- Restaurants - 0.1% 63,700 Jollibee Foods Corp. $ 27,425 ----------- Total Hotels, Restaurants & Leisure $ 97,676 ----------- Media - 2.3% Broadcasting & Cable TV - 1.1% 33,500 ABS-CBN Broadcasting Corp.* $ 13,499 107,000 BEC World Public Co., Ltd. 47,119 370,903 Media Prima* 152,240 289,300 United Broadcasting Corp., Plc* 140,138 ----------- $ 352,996 ----------- Movies & Entertainment - 0.9% 322,800 Grammy Entertainment Plc $ 120,828 57,700 Zee Telefilms, Ltd. 158,449 ----------- $ 279,277 ----------- Publishing - 0.3% 41,650 Singapore Press Holdings $ 100,952 ----------- Total Media $ 733,225 ----------- Retailing - 0.3% Department Stores - 0.0% 7,300 Robinson Department Store Plc.* $ 704 ----------- General Merchandise Stores - 0.3% 20,400 Jaya Jusco Stores $ 59,148 1,300 LG Home Shopping 53,083 ----------- $ 112,231 ----------- Total Retailing $ 112,935 ----------- Food & Drug Retailing - 2.9% Food Distributors - 0.7% 10,500 Compania Cervecerias Unidas SA $ 224,490 ----------- Food Retail - 2.2% 12,000 Brasil Distributor Pao Acu (A.D.R.) $ 207,600 3,780 CJ Corp. 205,247 5,700 Distribucion y Servicio D&A SA 86,640 256,700 Metro Cash & Carry, Ltd.* 100,037 8,827,000 Migros Turk T.A.S. 42,837 199,800 PT Indofood Sukses Makmur Tbk 14,936 5,000 Tiger Brands, Ltd. 73,882 ----------- $ 731,179 ----------- Total Food & Drug Retailing $ 955,669 ----------- Food, Beverage & Tobacco - 5.1% Agricultural Products - 0.4% 25,000 Makhteshim-Agan Industries, Ltd. $ 116,485 ----------- Shares Value Distillers & Vintners - 1.4% 3,575,700 Andalou efes Biracilik VE $ 41,675 12,500 Companhia de Bebidas PR (A.D.R.) 250,875 62,600 Grupo Modelo SA de CV 157,488 ----------- $ 450,038 ----------- Packaged Foods & Meats - 0.2% 71,017 Rainbow Chicken, Ltd. $ 61,981 ----------- Soft Drinks - 1.4% 2,100 Coca-Cola, S.A. de C.V. (A.D.R.)* $ 46,599 14,200 Embotelladora Andina SA (A.D.R.) 171,962 3,700 Fomento Economico Mexicano SA de CV 169,608 140,600 Sermsuk Public Co., Ltd. 83,313 ----------- $ 471,482 ----------- Tobacco - 1.7% 13,700 British American Tobacco (Malaysia) Bhd $ 182,161 6,200 Korea Tobacco* 143,187 100 Philip Morris CR AS* 61,114 52,100 PT Gudang Garam Public Co., Ltd. 76,116 186,500 PT Hanjaya Mandala Sampoerna Tbk 101,487 ----------- $ 564,065 ----------- Total Food, Beverage & Tobacco $ 1,664,051 ----------- Household & Personal Products - 0.8% Household Products - 0.7% 23,183,610 Arcelik A.S.* $ 114,832 3,600 LG Household & Health Care, Ltd. 102,977 ----------- $ 217,809 ----------- Personal Products - 0.1% 2,350 Natura Cosmeticos SA* $ 37,915 ----------- Total Household & Personal Products $ 255,724 ----------- Health Care Equipment & Services - 1.5% Health Care Distributors - 1.5% 7,130 Teva Pharmaceutical Industries, Ltd. $ 479,778 ----------- Total Health Care Equipment & Services $ 479,778 ----------- Pharmaceuticals & Biotechnology - 1.4% Pharmaceuticals - 1.4% 17,200 Aurobindo Pharma, Ltd. $ 122,108 3,300 Biocon, Ltd.* 36,004 1,275 Gideon Richter (G.D.R.) 129,576 6,000 Lupin, Ltd.* 82,931 110,200 PT Tempo Scan Pacific 82,073 ----------- $ 452,692 ----------- Total Pharmaceuticals & Biotechnology $ 452,692 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Banks - 8.2% Diversified Banks - 8.2% 24,612,250 Akbank T.A.S. $ 90,447 2,222 Banco Bradesco SA 102,101 3,303 Banco Santiago 88,190 29,835 Canara Bank, Ltd. 78,518 217,960 Chinatrust Financial Holding Co., Ltd. 243,915 107,600 Commerce Asset Holdings 137,786 25,400 Commercial International Bank 95,566 7,100 Hana Bank 150,917 23,775 Hong Leong Bank* 30,273 54,700 Kasikornbank* 69,767 1,900 Kookmin Bank* 59,383 900 Kookmin Bank (A.D.R.) (b)* 28,242 58,700 Malayan Banking Bhd 156,218 162,700 Metropolitan Bank & Trust Co. 78,354 9,500 MISR International 30,400 342,300 National Finance Public Co., Ltd. 123,354 4,300 OTP Bank Rt* 88,099 407,500 PT Bank Central Asia Tbk 81,393 2,136,076 PT Lippo Bank* 113,095 37,656 Public Bank Bhd (Foreign) 65,541 59,100 Siam Commercial Bank Plc (Foreign) 67,026 24,400 Standard Bank Group, Ltd. 171,042 13,600 State Bank of India 127,540 40,130,800 Turkiye Garanti Bankasi AS* 119,578 39,834,952 Turkiye Is Bankasi (Isbank) 144,998 5,700 Uniao de Bancos Brasileiros SA (G.D.R.) (144A) 112,689 ----------- $ 2,654,432 ----------- Total Banks $ 2,654,432 ----------- Diversified Financials - 4.3% Investment Banking & Brokerage - 0.2% 203,600 O.S.K. Holdings $ 83,715 ----------- Diversified Financial Services - 4.1% 3,955,000 Alarko Holding AS* $ 77,279 457,700 Bank Mandiri 57,371 408,344 China Development Financial 209,894 42,000 Citic Pacific, Ltd. 103,317 78,300 FirstRand, Ltd. 130,264 137,000 Fubon Group 119,826 37,217,239 Haci Omer Sabanci Holding AS* 110,331 118,200 Kiatnakin Finance Plc 104,826 109,000 MCL Ladn, Ltd. 87,633 32,066 RMB Holdings, Ltd. 85,768 76,900 Sanlam, Ltd. 110,688 632,700 SM Prime Holdings 68,868 78,300 TISCO Finance Public Co., Ltd. 52,200 ----------- $ 1,318,265 ----------- Total Diversified Financials $ 1,401,980 ----------- Shares Value Insurance - 1.0% Multi-Line Insurance - 0.6% 2,800 Samsung Fire & Marine Insurance $ 179,648 ----------- Property & Casualty Insurance - 0.4% 7,900 Cathay Financial Holding Co., Ltd. (G.D.R.) (144A)* $ 141,489 ----------- Total Insurance $ 321,137 ----------- Real Estate - 0.4% Real Estate Management & Development - 0.4% 98,200 Marco Polo Developments, Ltd. $ 116,009 ----------- Total Real Estate $ 116,009 ----------- Software & Services - 0.9% Application Software - 0.9% 1,583 Infosys Technologies, Ltd. $ 190,400 14,200 Satyam Computer Services* 94,455 ----------- $ 284,855 ----------- Total Software & Services $ 284,855 ----------- Technology Hardware & Equipment - 6.9% Semiconductors - 1.7% 43,800 Hon Hai Precision Industry $ 163,461 268,605 Taiwan Semiconductor Manufacturing Co. 388,889 ----------- $ 552,350 ----------- Communications Equipment - 1.0% 1,500 China Unicom (A.D.R.)* $ 11,850 12,140 Empresa Nacional De Telecom 68,663 8,000 Matav Rt (A.D.R.)* 162,480 3,100 Samsung Electro Mechanics Co., Ltd.* 88,337 ----------- $ 331,330 ----------- Computer Hardware - 0.4% 109,160 Compal Electronics $ 118,972 ----------- Computer Storage & Peripherals - 0.5% 107,000 Asia Vital Components $ 123,329 16,400 Quanta Computer, Inc. 34,960 ----------- $ 158,289 ----------- Electronic Equipment & Instruments - 3.2% 28,000 Anpec Electronics Corp. $ 34,886 53,375 Asustek Computer, Inc. 121,959 32,150 Elec & Eltek International Co., Ltd. 90,105 4,050 LG Electronics, Inc. 193,745 6,400 Mtekvision Co., Ltd.* 201,726 12,000 Novatek Microelectronics, Ltd. 39,802 10,000 Richtek Technology Corp.* 29,120 8,000 Samsung Corp.* 98,270 770 Samsung Display Devices* 81,495 154,900 Varitronix International, Ltd. 153,116 ----------- $ 1,044,224 -----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Office Electronics - 0.1% 5,700 Baiksan OPC Co. $ 49,660 ----------- Total Technology Hardware & Equipment $ 2,254,825 ----------- Semiconductors - 4.4% 3,030 Samsung Electronics $ 1,261,174 240,621 United Microelectronics Corp., Ltd.* 180,003 ----------- $ 1,441,177 ----------- Total Semiconductors $ 1,441,177 ----------- Telecommunication Services - 12.7% Integrated Telecommunication Services - 7.3% 6,400 Brasil Telecom Participacoes SA $ 196,480 4,900 Compania de Telephonos de Chile SA ADR 59,731 16,800 KT Corp.(b)* 303,072 29,587 Mahanagar Telephone Nigam, Ltd. 214,506 29,900 Mahanagar Telephone 85,917 11,900 SPT Telecom AS* 145,977 3,440 Telekomunik Indonesia SP (A.D.R.)* 53,492 28,800 Telefonos de Mexico SA 958,176 79,500 Telekomunikacja Polska SA 330,002 ----------- $ 2,347,353 ----------- Wireless Telecommunication Services - 5.4% 27,200 Advanced Service Co., Ltd. (Foreign) $ 59,224 17,700 Alumax, Inc. 643,749 18,800 Bharti Televentures* 55,843 6,600 Korea Telecom Freetel Co. 114,992 13,300 Mobinil-Egyptian Mobile Services 160,177 24,337 SK Telecom Co., Ltd. (b)* 510,834 146,000 Taiwan Cellular Corp. 139,305 22,400 Venfin, Ltd. 72,617 ----------- $ 1,756,741 ----------- Total Telecommunication Services $ 4,104,094 ----------- Utilities - 3.2% Electric Utilities - 2.3% 156,700 Empresa Nacional de Electricid SA $ 64,502 1,992,335 Enersis SA* 235,543 14,600 Korea Electric Power Corp.* 235,684 216,400 Manila Electric Co.* 116,189 4,360 Unified Energy System (G.D.R.) 115,494 ----------- $ 767,412 ----------- Shares Value Gas Utilities - 0.6% 2,300 Gazprom (A.D.R.) (b) $ 67,017 4,200 Korea Gas Corp.* 121,811 ----------- $ 188,828 ----------- Water Utilities - 0.3% 8,500 Cia Saneamento Basic de Estado de Sao Paulo (b)* $ 92,905 ----------- Total Utilities $ 1,049,145 ----------- TOTAL COMMON STOCKS (Cost $24,410,123) $29,994,690 ----------- RIGHTS/WARRANTS - 0.0% Commercial Services & Supplies - 0.0% Diversified Commercial Services - 0.0% 1,580 Bidbee Group, Ltd., 12/8/06* $ 1,494 ----------- Total Commercial Services & Supplies $ 1,494 ----------- Telecommunication Services - 0.0% Integrated Telecommunication Services - 0.0% 32,210 True Corp., Plc* $ -- ----------- Total Telecommunication Services $ -- ----------- TOTAL RIGHTS/WARRANTS (Cost $9,539) $ 1,494 ----------- TEMPORARY CASH INVESTMENT - 4.1% Security Lending Collateral - 4.1% 1,335,560 Securities Lending Investment Fund, 1.29% $ 1,335,560 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,335,560) $ 1,335,560 ----------- TOTAL INVESTMENT IN SECURITIES - 99.2% (Cost $26,418,556) (a)(b) $32,153,781 ----------- OTHER ASSETS AND LIABILITIES - 0.8% $ 271,080 ----------- TOTAL NET ASSETS - 100.0% $32,424,861 ===========
8 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (A.D.R.) American Depositary Receipt (G.D.R.) Global Depositary Receipt * Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $481,026 or 1.5% of net assets. (a) Distributions of investments by country of issue, as a percentage of total equity holdings (excluding temporary cash investments) is as follows: South Korea 22.6% Taiwan 9.7% Brazil 9.4% South Africa 7.1% Mexico 6.8% India 6.3% Russia 4.6% Thailand 4.1% Malaysia 4.0% Turkey 3.7% Chile 3.2% Indonesia 2.2% Hungary 2.0% Israel 1.9% Singapore 1.9% Poland 1.9% Peru 1.5% People's Republic of China 1.4% Philippines 1.4% United Kingdom 1.0% Egypt 1.0% Other (individually less than 1%) 2.3% ----- 100.0% =====
(b) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 7,125 Anglogold, Ltd. (A.D.R.) $ 226,718 8,060 Cia Saneamento Basic de Estado de Sao Paulo* 84,952 155 Gazprom (A.D.R.) 4,301 24,225 IAMGOLD Corp. 129,846 500 Kookmin Bank (A.D.R.)* 15,690 15,905 KT Corp.* 285,495 5,635 SK Telecom Co., Ltd.* 118,504 12,705 Surgutneftegaz (A.D.R.)* 398,937 ---------- Total $1,264,443 ==========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year 5/1/00 6/30/04 Ended Ended Ended to Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 Net asset value, beginning of period $ 17.26 $ 10.98 $11.19 $12.08 $18.02 ------- ------- ------ ------ ------ Increase (decrease) from investment operations: Net investment income (loss) $ 0.09 $ 0.12 $ 0.02 $ 0.09 $(0.02) Net realized and unrealized gain (loss) on investments and foreign currency transactions (0.95) 6.21 (0.17) (0.98) (5.59) ------- ------- ------ ------ ------ Net increase (decrease) from investment operations $ (0.86) $ 6.33 $(0.15) $(0.89) $(5.61) Distributions to shareowners: Net investment income (0.13) (0.05) (0.06) -- -- Net realized gain -- -- -- -- (0.33) ------- ------- ------ ------ ------ Net increase (decrease) in net asset value $ (0.99) $ 6.28 $(0.21) $(0.89) $(5.94) ------- ------- ------ ------ ------ Net asset value, end of period $ 16.27 $ 17.26 $10.98 $11.19 $12.08 ======= ======= ====== ====== ====== Total return* (5.03)% 57.87% (1.42)% (7.37)% (31.65)% Ratio of net expenses to average net assets+ 1.99%** 1.99% 1.99% 1.90% 2.11%** Ratio of net investment income to average net assets+ 1.00%** 1.04% 0.28% 1.05% (0.73)%** Portfolio turnover rate 64%** 79% 124% 175% 156%** Net assets, end of period (in thousands) $25,125 $26,537 $8,852 $7,861 $5,819 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 2.11%** 2.65% 3.11% 4.12% 4.47%** Net investment income (loss) 0.88%** 0.38% (0.84)% (1.17)% (3.09)%** Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.99%** 1.99% 1.99% 1.90% 2.09%** Net investment income (loss) 1.00%** 1.04% 0.28% 1.05% (0.71)%**
(a) Class 2 shares were first publicly offered on May 1, 2000. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period.) ** Annualized. + Ratios with no reduction for fees paid indirectly. 10 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Emerging Markets VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $1,264,443) (Cost $26,418,556) $32,153,781 Cash 2,806,900 Foreign currencies, at value (Cost $97,982) 97,118 Receivables -- Investment securities sold 97,441 Fund shares sold 26,435 Variation margin -- Dividends, interest and foreign taxes withheld 105,985 Forward foreign currency settlement contracts, net 32 Due from Pioneer Investment Management, Inc. -- Other 3,186 ----------- Total assets $35,290,878 ----------- LIABILITIES: Payables -- Investment securities purchased $ 1,303,499 Fund shares repurchased 37,473 Dividends -- Upon return of securities loaned 1,335,560 Forward foreign currency settlement contracts, net -- Reserve for repatriation taxes 86,981 Due to bank -- Due to affiliates 28,056 Accrued expenses 74,448 ----------- Total liabilities $ 2,866,017 ----------- NET ASSETS: Paid-in capital $31,725,483 Accumulated net investment income (loss) 122,425 Accumulated undistributed net realized gain (loss) (5,068,348) Net unrealized gain (loss) on: Investments 5,648,244 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (2,943) ----------- Total net assets $32,424,861 ----------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 7,300,338 Shares outstanding 445,997 ----------- Net asset value per share $ 16.37 Class II: No par value (unlimited number of shares authorized) Net assets $25,124,523 Shares outstanding 1,544,610 ----------- Net asset value per share $ 16.27
The accompanying notes are an integral part of these financial statements. 11 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Emerging Markets VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $65,563) $ 514,353 Interest 4,135 Income on securities loaned, net 4,740 Other -- ----------- Total investment income $ 523,228 ----------- EXPENSES: Management fees $ 201,264 Transfer agent fees 1,508 Distribution fees (Class II) 33,390 Administrative fees 9,250 Custodian fees 72,734 Professional fees 33,721 Printing 5,746 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,870 ----------- Total expenses $ 359,483 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (21,299) ----------- Net expenses $ 338,184 ----------- Net investment income (loss) $ 185,044 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 3,090,302 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (38,564) ----------- $ 3,051,738 ----------- Change in net unrealized gain or loss from: Investments (includes the change in reserve for repatriation taxes of $86,981) $(4,991,310) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (5,835) ----------- $(4,997,145) ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $(1,945,407) =========== Net increase (decrease) in net assets resulting from operations $(1,760,363) ===========
12 The accompanying notes are an integral part of these financial statements. Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Emerging Markets VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 185,044 $ 262,378 Net realized gain (loss) on investments 3,051,738 1,187,664 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (4,997,145) 10,449,480 ----------- ------------ Net increase (decrease) in net assets resulting from operations $(1,760,363) $ 11,899,522 ----------- ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (65,091) $ (25,889) Class II (196,317) (60,429) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ----------- ------------ Total distributions to shareowners $ (196,317) $ (86,319) ----------- ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 5,260,358 $ 16,360,576 Reinvestment of distributions 259,912 85,767 Cost of shares repurchased (6,009,356) (8,062,148) ----------- ------------ Net increase (decrease) in net assets resulting from fund share transactions $ (489,086) $ 8,384,195 ----------- ------------ Net increase (decrease) in net assets $(2,510,857) $220,197,398 ----------- ------------ NET ASSETS: Beginning of period $34,935,718 $ 14,738,320 ----------- ------------ End of period $32,424,861 $ 34,935,718 =========== ============ Accumulated/(distributions in excess of) net investment income (loss) $ 122,425 $ 198,789 =========== ============
The accompanying notes are an integral part of these financial statements. 13 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Emerging Markets Portfolio (the Portfolio) is a Portfolio of the Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objective of Emerging Markets VCT Portfolio is to seek long-term capital growth. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. At June 30, 2004, there were no fair valued securities except as follows. All securities that trade in foreign markets whose closing prices are as of times prior to the close of the New York Stock Exchange ("NYSE") and that are held by Emerging Markets Portfolio are fair valued using vendor-supplied pricing updates for each security to the time of the close of the NYSE. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable 14 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. The Portfolio's investments in emerging markets or countries with limited or developing markets may subject the Portfolio to a greater degree of risk than in a developed market. Risks associated with these developing markets include political, social or economic factors and may affect the price of the Portfolio's investments and income generated by these investments, as well as the Portfolio's ability to repatriate such amounts. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. D. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the six months ended June 30, 2004, no such taxes were paid. In determining the daily net asset value, the Portfolio estimates the reserve for such taxes, if any, associated with investments in certain countries. The estimated reserve for taxes on capital gains is based on the net unrealized appreciation on certain portfolio securities, the holding year of such securities and the related tax rates, tax loss carryforward (if applicable) and other such factors. The estimated reserve for taxes on repatriation of foreign currencies is based on principal balances and/or unrealized appreciation of applicable securities, the holding year of such investments and the related tax rates and other such factors. As of June 30, 2004, the Portfolio had $86,981 in reserves related to taxes on the repatriation of foreign currencies. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Emerging Markets VCT Portfolio had a capital loss carryforward of $7,611,017 of which the following amounts will expire between 2008 and 2010 if not utilized: $1,376,025 in 2008, $5,058,209 in 2009 and $1,176,783 in 2010. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 15 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Pioneer Emerging Markets VCT Portfolio 2003 --------------- Distributions paid from: Ordinary Income $ 86,319 Long-Term capital gain -- ---------- $ 86,319 Return of Capital -- ---------- Total distributions $ 86,319 ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 261,372 Undistributed long-term gain/ (Capital loss carryforward) (7,611,017) Unrealized appreciation (depreciation) 10,070,794 ---------- Total $2,721,149 ==========
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. E. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. F. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. G. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 1.15% of the Portfolio's average daily net assets. The portion of the Portfolio's expenses attributable to Class II will be reduced only to the extent such expenses are reduced for Class I shares (or Class II shares). Pioneer may subsequently recover reimbursed expenses (within three years of being incurred) from certain Portfolios if the expense ratio of the Class I (or Class II) shares would otherwise be less than the expense limitation of the class. Each class will reimburse PIM no more than the amount by which that class' expenses were reduced. 16 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Expense limit agreement for Emerging Markets Portfolio does not provide for the expense reimbursement described above. There can be no assurance that Pioneer will extend any expense limitation beyond June 30, 2004. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $22,079 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $5,719 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------- Emerging Markets Portfolio $26,991,159 $5,927,419 $(764,796) $5,162,622 =========== ========== ========= ==========
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $10,761,173 and $12,315,024, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
Emerging Markets Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------ CLASS I: Shares sold 46,186 $ 815,949 143,611 $ 1,837,255 Reinvestment of distributions 3,952 63,595 2,017 25,338 Shares repurchased (87,603) (1,501,936) (195,769) (2,390,316) -------- ----------- -------- ----------- Net increase (decrease) (37,465) $ (622,392) (50,141) $ (528,316) ======== =========== ======== =========== CLASS II: Shares sold 255,499 $ 4,444,409 1,162,017 $14,523,321 Reinvestment of distributions 12,278 196,317 4,838 60,429 Shares repurchased (260,491) (4,507,420) (435,883) (5,671,239) -------- ----------- --------- ----------- Net increase (decrease) 7,286 $ 133,306 730,972 $ 8,912,511 ======== =========== ======== ===========
17 Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 8. Forward Foreign Currency Contracts During the six months ended June 30, 2004, certain Portfolios had entered into various contracts that obligate the Portfolios to deliver currencies at specified future dates. At the maturity of a contract, the Portfolios must make delivery of the foreign currency. Alternatively, prior to the settlement date of a portfolio hedge, the Portfolio may close out such contracts by entering into an offsetting hedge contract. As of June 30, 2004, the Portfolio had no outstanding portfolio hedges. Outstanding forward currency settlement contracts were as follows:
Net Gross Settlement Gross Receivable/ Portfolio Receivable Date Payable (Payable) - ---------------------------------------------------------------------------------- Emerging Markets Portfolio $(22,235) 7/1/04 $(22,235) $ -- Emerging Markets Portfolio $ 21,527 7/1/04 $ 21,485 $ 42 Emerging Markets Portfolio $ (3,613) 7/1/04 $ (3,623) $(10)
18 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 19 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 21 [PIONEER INVESTMENTS LOGO] Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16071-00-0804 [PIONEER INVESTMENTS LOGO] PIONEER VARIABLE CONTRACTS TRUST Pioneer Mid Cap Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents Pioneer Mid Cap Value VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 7 Notes to Financial Statements 11
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [TABULAR REPRESENTATION OF PIE CHART] U.S. Common Stocks 93.0% Temporary Cash Investment 6.0% Depositary Receipts for International Stocks 1.0%
Sector Distribution (As a percentage of equity holdings) [TABULAR REPRESENTATION OF PIE CHART] Financials 21.7% Consumer Discretionary 15.6% Industrials 12.6% Information Technology 12.6% Health Care 9.6% Materials 8.5% Energy 6.6% Utilities 6.5% Consumer Staples 6.3%
Five Largest Holdings (As a percentage of equity holdings) 1. Foot Locker, Inc. 2.58% 2. Mattel, Inc. 2.29 3. W.W. Grainger, Inc. 2.26 4. Safeway, Inc. 2.14 5. CIGNA Corp. 2.13
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 21.82 $ 20.32
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.0598 $ - $ 0.2095
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Mid Cap Value VCT Portfolio at net asset value, compared to that of the Russell Midcap Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [TABULAR REPRESENTATION OF LINE CHART]
Pioneer Russell Mid Cap Value Midcap VCT Portfolio Value Index ------------- ----------- 6/95 $10,000 $10,000 6/96 $13,193 $14,748 $16,294 $19,812 6/98 $14,734 $20,820 $16,615 $20,799 6/00 $19,800 $24,789 $21,032 $25,369 6/02 $18,639 $22,920 $25,551 $31,643 6/04 $27,778 $33,910
Index comparison begins 2/28/95. The Russell Midcap Value Index measures the performance of the value-oriented stocks in the Russell Midcap Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------- Net Asset Value - -------------------------------------------------- Life-of-Class 11.45% (3/1/95) 5 Years 10.12% 1 Year 31.89%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- Despite interim volatility, stocks tended to gain over the first six months of 2004, riding on the tide of a strengthening economy and generally rising corporate profitability. In the following interview, Rod Wright discusses the market environment and portfolio strategies during the six months ended June 30, 2004. Mr. Wright is responsible for day-to-day portfolio supervision of Pioneer Mid Cap Value VCT Portfolio. Q: How did the Portfolio perform? A: The Portfolio performed well. For six months ended June 30, 2004, the Portfolio's Class II shares had a total return of 8.72% at net asset value, while the Russell Midcap Value Index returned 7.17%. Q: What were the principal factors that affected performance? A: Despite a succession of fears that caused short-term market reversals, stocks generally rose during the six months as evidence accumulated that the economy was strengthening and that corporate earnings were increasing. The rally that had driven the market for most of 2003 continued in early 2004 until March, when market interest rates spiked up on fears about the effects of rising oil prices, the possibility of increasing inflationary pressure and the likelihood that the Federal Reserve would tighten monetary policy. Adding to the uncertainty was the anxiety over the continuing violence in Iraq. In the final weeks of the period, however, the market rebounded again in anticipation of good news about corporate earnings and the widening expectation that the Federal Reserve would act gradually in raising short-term rates, helping to sustain the economic recovery. Q: What types of investments helped Portfolio performance? A: Security selection was the primary factor, as stocks across the industry spectrum contributed to Portfolio performance. Stocks in the health care, financial services, telecommunications and industrial sectors did well, while stocks in basic materials, consumer staples and consumer discretionary sectors did less well. The top individual contributor was Charter One Financial, which was taken over by Royal Bank of Scotland, at a substantial premium to its valuation. Several other performance leaders were formerly out-of-favor companies whose stock prices began appreciating as their earnings and business prospects began to improve. They included: NCR, the technology conglomerate that began turning around its business in time to benefit from an increase in corporate capital spending; and Reliant Energy, an independent power producer and energy merchant whose stock gained as a result of a corporate restructuring and the sale of undervalued assets. The Portfolio also had success with stocks such as Becton Dickinson, the medical supplies company, which benefited from rising earnings and the introduction of new products, and Providian, a credit-card issuer whose prospects began to improve under a restructuring plan implemented by new management. Q: Were there any disappointments? A: We had a few. Investment Technology Group, a company specializing in electronic trading operations, declined as it faced increased competition in the financial markets. However, we continue to hold the stock because of the value of its assets. We have sold our stake in another disappointment, Seagate Technology, a manufacturer of disc drives, which became the victim of industry overcapacity. Similarly, we also eliminated positions in two disappointing mining stocks, Freeport-McMoRan and Newmont Mining, both of which declined as the price of gold weakened. Q: What is your investment outlook? A: We think that the market trends will continue to be choppy, as a variety of factors will weigh on investors' minds. However, the outlook for corporate earnings is generally positive and companies are generating a great deal of free cash flow. We intend to remain focused on our core discipline, concentrating on investments in quality companies with reasonable stock valuations. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Mid-capitalization stocks may be subject to greater short-term price fluctuations than securities of larger companies. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 97.9% Energy - 6.4% Integrated Oil & Gas - 0.9% 115,840 Occidental Petroleum Corp. $ 5,607,814 ------------ Oil & Gas Drilling - 2.9% 138,315 ENSCO International, Inc. $ 4,024,967 98,730 Nabors Industries, Inc.* 4,464,571 155,930 Transocean Offshore, Inc.* 4,512,612 98,235 Weatherford International, Inc.* 4,418,610 ------------ $ 17,420,760 ------------ Oil & Gas Exploration & Production - 2.0% 82,861 Devon Energy Corp. $ 5,468,826 180,485 Pioneer Natural Resources Co. 6,331,414 ------------ $ 11,800,240 ------------ Oil & Gas Refining Marketing & Transportation - 0.6% 57,785 Sun Company, Inc. $ 3,676,282 ------------ Total Energy $ 38,505,096 ------------ Materials - 8.3% Commodity Chemicals - 1.0% 115,445 Air Products & Chemicals, Inc. $ 6,055,090 ------------ Diversified Chemical - 1.6% 155,120 PPG Industries, Inc. $ 9,693,449 ------------ Diversified Metals & Mining - 2.0% 155,285 Phelps Dodge Corp.* $ 12,036,140 ------------ Metal & Glass Containers - 1.6% 130,210 Ball Corp. $ 9,381,631 ------------ Paper Products - 2.1% 311,267 Flowserve Corp.* $ 7,762,999 164,600 Meadwestvaco Corp. 4,837,594 ------------ $ 12,600,593 ------------ Total Materials $ 49,766,903 ------------ Capital Goods - 6.0% Aerospace & Defense - 0.9% 148,300 United Defense Industries, Inc.* $ 5,190,500 ------------ Electrical Components & Equipment - 1.8% 178,465 American Power Conversion Corp. $ 3,506,837 486,390 Symbol Technologies, Inc. 7,169,389 ------------ $ 10,676,226 ------------ Industrial Conglomerates - 3.3% 222,080 American Standard Companies, Inc.* $ 8,952,045 131,520 ITT Industries, Inc. 10,916,160 ------------ $ 19,868,205 ------------ Total Capital Goods $ 35,734,931 ------------ Shares Value Commercial Services & Supplies - 4.6% Commercial Printing - 2.0% 90,200 John H. Harland Co. $ 2,647,370 294,540 R.R. Donnelly & Sons Co. (a) 9,725,711 ------------ $ 12,373,081 ------------ Diversified Commercial Services - 1.0% 131,010 H & R Block, Inc. $ 6,246,557 ------------ Environmental Services - 1.6% 319,335 Republic Services, Inc. $ 9,241,555 ------------ Total Commercial Services & Supplies $ 27,861,193 ------------ Transportation - 1.7% Airlines - 0.6% 228,310 Southwest Airlines Co. $ 3,828,759 ------------ Railroads - 1.1% 149,120 Canadian National Railway Co. $ 6,500,141 ------------ Total Transportation $ 10,328,900 ------------ Consumer Durables & Apparel - 4.2% Apparel, Accessories & Luxury Goods - 0.9% 297,010 The Limited Brands, Inc. $ 5,554,087 ------------ Housewares & Specialties - 0.5% 105,600 Yankee Candle Co.* $ 3,088,800 ------------ Leisure Products - 2.3% 736,530 Mattel, Inc. $ 13,441,673 ------------ Photographic Products - 0.5% 115,500 Eastman Kodak Co. $ 3,116,190 ------------ Total Consumer Durables & Apparel $ 25,200,750 ------------ Hotels, Restaurants & Leisure - 2.3% Restaurants - 2.3% 148,700 Brinker International, Inc.* $ 5,073,644 230,605 Tricon Global Restaurants, Inc.* 8,583,116 ------------ $ 13,656,760 ------------ Total Hotels, Restaurants & Leisure $ 13,656,760 ------------ Media - 0.8% Movies & Entertainment - 0.8% 271,660 Regal Entertainment Group (a) $ 4,917,046 ------------ Total Media $ 4,917,046 ------------ Retailing - 7.9% Apparel Retail - 2.1% 132,230 Jones Apparel Group, Inc. $ 5,220,440 196,400 Liz Claiborne, Inc. 7,066,472 ------------ $ 12,286,912 ------------ Department Stores - 0.8% 130,200 J.C. Penney Co., Inc. $ 4,916,352 ------------
4 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value General Merchandise Stores - 2.0% 238,200 American Greetings Corp.* $ 5,521,476 172,680 Sears, Roebuck and Co. 6,520,397 ------------ $ 12,041,873 ------------ Specialty Stores - 3.0% 620,430 Foot Locker, Inc. $ 15,101,266 195,300 Toys "R" Us, Inc.* 3,111,129 ------------ $ 18,212,395 ------------ Total Retailing $ 47,457,532 ------------ Food & Drug Retailing - 6.2% Drug Retail - 1.5% 211,270 CVS Corp. $ 8,877,565 ------------ Food Retail - 3.4% 280,590 ConAgra, Inc. $ 7,598,377 494,200 Safeway, Inc.* 12,523,028 ------------ $ 20,121,405 ------------ Hypermarkets & Supercenters - 1.3% 313,670 BJ'S Wholesale Club, Inc.* $ 7,841,750 ------------ Total Food & Drug Retailing $ 36,840,720 ------------ Health Care Equipment & Services - 9.4% Health Care Distributors - 0.5% 82,400 Par Pharmaceutical Co., Inc.* $ 2,901,304 ------------ Health Care Equipment - 2.4% 239,400 Apogent Technologies, Inc.* $ 7,660,800 132,205 Becton, Dickinson & Co. 6,848,219 ------------ $ 14,509,019 ------------ Health Care Facilities - 3.3% 557,200 Tenet Healthcare Corp.* $ 7,472,052 330,060 Triad Hospitals, Inc.* 12,288,134 ------------ $ 19,760,186 ------------ Health Care Services - 1.1% 164,630 Laboratory Corp. of America Holdings* $ 6,535,811 ------------ Managed Health Care - 2.1% 181,500 CIGNA Corp. $ 12,489,015 ------------ Total Health Care Equipment & Services $ 56,195,335 ------------ Banks - 9.1% Regional Banks - 5.4% 99,000 City National Corp. $ 6,504,300 140,330 KeyCorp 4,194,464 116,165 Marshall & Ilsley Corp. 4,540,890 99,005 North Fork Bancorporation, Inc. 3,767,140 66,240 SouthTrust Corp. 2,570,774 90,775 TCF Financial Corp. 5,269,489 89,400 Zions Bancorporation 5,493,630 ------------ $ 32,340,687 ------------ Shares Value Thrifts & Mortgage Finance - 3.7% 115,699 Countrywide Financial Corp. $ 8,127,855 115,375 GreenPoint Financial Corp. 4,580,388 222,760 The PMI Group, Inc. 9,694,515 ------------ $ 22,402,758 ------------ Total Banks $ 54,743,445 ------------ Diversified Financials - 6.0% Consumer Finance - 3.1% 671,200 Providian Financial Corp.* $ 9,846,504 16,514 White Mountains Insurance Group, Ltd. 8,422,140 ------------ $ 18,268,644 ------------ Asset Management & Custody Banks - 1.1% 214,590 Federated Investors, Inc. $ 6,510,661 ------------ Investment Banking & Brokerage - 1.8% 190,500 A.G. Edwards, Inc. $ 6,482,715 341,950 Investment Technology Group, Inc.* 4,373,541 ------------ $ 10,856,256 ------------ Total Diversified Financials $ 35,635,561 ------------ Insurance - 6.3% Insurance Brokers - 2.1% 180,710 Platinum Underwriter Holdings, Ltd. (a) $ 5,499,005 187,840 Willis Group Holdings, Ltd. 7,034,608 ------------ $ 12,533,613 ------------ Life & Health Insurance - 0.9% 99,130 Jefferson - Pilot Corp. $ 5,035,804 ------------ Property & Casualty Insurance - 3.3% 104,105 Ambac Financial Group, Inc. $ 7,645,471 278,500 Safeco Corp. 12,254,000 ------------ $ 19,899,471 ------------ Total Insurance $ 37,468,888 ------------ Software & Services - 2.3% Data Processing & Outsourced Services - 2.3% 555,530 The BISYS Group, Inc.* $ 7,810,752 239,929 SunGard Data Systems, Inc.* 6,238,154 ------------ $ 14,048,906 ------------ Total Software & Services $ 14,048,906 ------------ Technology Hardware & Equipment - 9.4% Communications Equipment - 3.2% 296,600 Century Telephone Enterprises, Inc. $ 8,909,864 356,121 Tellabs, Inc.* 3,112,498 230,200 Utstarcom, Inc (a)* 6,963,550 ------------ $ 18,985,912 ------------ Computer Hardware - 1.9% 231,360 NCR Corp.* $ 11,473,142 ------------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Computer Storage & Peripherals - 2.1% 284,600 SanDisk Corp. (a)* $ 6,172,974 214,600 Storage Technology Corp.* 6,223,400 ------------ $ 12,396,374 ------------ Electronic Equipment & Instruments - 2.2% 230,080 W.W. Grainger, Inc. $ 13,229,600 ------------ Total Technology Hardware & Equipment $ 56,085,028 ------------ Semiconductors - 0.6% 260,900 Cypress Semiconductor Corp. (a)* $ 3,702,171 ------------ Total Semiconductors $ 3,702,171 ------------ Utilities - 6.4% Electric Utilities - 4.6% 148,675 Constellation Energy Group $ 5,634,783 140,350 DTE Energy Co. 5,689,789 115,315 Entergy Corp. 6,458,793 347,300 PG&E Corp.* 9,703,562 ------------ $ 27,486,927 ------------ Gas Utilities - 0.1% 16,315 KeySpan Energy Corp. $ 598,761 ------------ Multi-Utilities & Unregulated Power - 1.7% 920,000 Reliant Energy* $ 9,963,600 ------------ Total Utilities $ 38,049,288 ------------ TOTAL COMMON STOCKS (Cost $509,973,009) $586,198,453 ------------
Principal Amount Value TEMPORARY CASH INVESTMENTS - 6.2% Repurchase Agreement - 2.0% $12,100,000 UBS Warburg, Inc. 1.25%, dated 6/30/04, repurchase price of $12,100,000 plus accrued interest on 7/1/04 collateralized by $11,094,000 U.S. Treasury Bill, 7.0%, 7/15/06 $ 12,100,000 ------------ Shares Security Lending Collateral - 4.2% 25,038,825 Securities Lending Investment Fund, 1.29% $ 25,038,825 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $37,138,825) $ 37,138,825 ------------ TOTAL INVESTMENT IN SECURITIES - 104.1% (Cost $547,111,834) (a) $623,337,278 ------------ OTHER ASSETS AND LIABILITIES - (4.1)% $(24,737,403) ------------ TOTAL NET ASSETS - 100.0% $598,599,875 ============
* Non-income producing security. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 105,980 Cypress Semiconductor Corp.* $ 1,462,524 14,695 Platinum Underwriter Holdings Ltd. 445,552 249,900 Regal Entertainment Group 4,510,695 155,000 R.R. Donnelly & Sons Co. 5,128,950 263,720 SanDisk Corp.* 5,909,965 275,023 Utstarcom, Inc* 8,363,449 ----------- Total $25,821,135 ===========
6 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year 5/1/00 6/30/04 Ended Ended Ended to Class II (unaudited) 12/31/03 12/31/02(a) 12/31/01 12/31/00 Net asset value, beginning of period $ 20.32 $ 14.86 $ 17.28 $ 17.75 $16.89 -------- -------- ------- ------- ------ Increase (decrease) from investment operations: Net investment income (loss) $ (0.01) $ 0.06 $ 0.04 $ 0.14 $ 0.07 Net realized and unrealized gain (loss) on investments and foreign currency transactions 1.78 5.44 (1.96) 0.94 2.01 -------- -------- ------- ------- ------ Net increase (decrease) from investment operations $ 1.77 $ 5.50 $ (1.92) $ 1.08 $ 2.08 Distributions to shareowners: Net investment income (0.06) (0.04) (0.04) (0.08) (0.13) Net realized gain (0.21) -- (0.46) (1.47) (1.09) -------- -------- ------- ------- ------ Net increase (decrease) in net asset value $ 1.50 $ 5.46 $ (2.42) $ (0.47) $ 0.86 -------- -------- ------- ------- ------ Net asset value, end of period $ 21.82 $ 20.32 $ 14.86 $ 17.28 $17.75 ======== ======== ======= ======= ====== Total return* 8.72 % 37.09% (11.38)% 6.22% 13.35 % Ratio of net expenses to average net assets+ 0.96%** 1.00% 1.07% 1.11% 1.01%** Ratio of net investment income to average net assets+ 0.39%** 0.60% 0.24% 0.10% 0.37%** Portfolio turnover rate 71%** 52% 68% 95% 85%** Net assets, end of period (in thousands) $399,833 $211,120 $61,038 $10,195 $1,943 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.96%** 1.00% 1.07% 1.11% 1.01%** Net investment income 0.39%** 0.60% 0.24% 0.10% 0.37%** Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.96%** 1.00% 1.07% 1.11% 1.01** Net investment income 0.39%** 0.60% 0.24% 0.10% 0.37**
(a) The per share data presented above is based upon the average shares outstanding for the period presented. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $25,821,135) (Cost $547,111,834) $623,337,278 Cash 232,088 Foreign currencies, at value -- Receivables -- Investment securities sold 9,079,092 Fund shares sold 824,503 Variation margin -- Dividends, interest and foreign taxes withheld 422,351 Forward foreign currency settlement contracts, net -- Due from Pioneer Investment Management, Inc. -- Other -- ------------ Total assets $633,895,312 ------------ LIABILITIES: Payables -- Investment securities purchased $ 9,767,200 Fund shares repurchased 17,620 Dividends -- Upon return of securities loaned 25,038,825 Forward foreign currency settlement contracts, net -- Reserve for repatriation taxes -- Due to bank -- Due to affiliates 439,928 Accrued expenses 31,864 ------------ Total liabilities $ 35,295,437 ------------ NET ASSETS: Paid-in capital $491,654,895 Accumulated net investment income (loss) 1,141,650 Accumulated undistributed net realized gain (loss) 29,577,886 Net unrealized gain (loss) on: Investments 76,225,444 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $598,599,875 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $198,767,124 Shares outstanding 9,037,285 ------------ Net asset value per share $ 21.99 Class II: No par value (unlimited number of shares authorized) Net assets $399,832,751 Shares outstanding 18,321,840 ------------ Net asset value per share $ 21.82
8 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $5,324) $ 3,149,536 Interest 61,832 Income on securities loaned, net 6,732 Other -- ----------- Total investment income $ 3,218,100 ----------- EXPENSES: Management fees $ 1,558,884 Transfer agent fees 1,432 Distribution fees (Class II) 369,014 Administrative fees 41,873 Custodian fees 39,878 Professional fees 37,060 Printing 23,211 Fees and expenses of nonaffiliated trustees -- Miscellaneous 5,011 ----------- Total expenses $ 2,076,363 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ----------- Net expenses $ 2,076,363 ----------- Net investment income (loss) $ 1,141,737 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $31,570,054 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $31,570,054 ----------- Change in net unrealized gain or loss from: Investments $ 7,930,499 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $ 7,930,499 ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $39,500,553 =========== Net increase (decrease) in net assets resulting from operations $40,642,290 ===========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 1,141,737 $ 1,803,484 Net realized gain (loss) on investments 31,570,054 6,004,760 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 7,930,499 75,230,670 ------------ ------------ Net increase (decrease) in net assets resulting from operations $ 40,642,290 $ 83,038,914 ------------ ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (711,725) $ (438,494) Class II (1,067,643) (236,135) Net realized gain Class I (1,863,831) -- Class II (3,740,321) -- Tax return of capital Class I -- -- Class II -- -- ------------ ------------ Total distributions to shareowners $ (7,383,520) $ (674,629) ------------ ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $196,943,386 $161,143,658 Reinvestment of distributions 7,383,520 674,611 Cost of shares repurchased (20,342,972) (44,550,616) ------------ ------------ Net increase (decrease) in net assets resulting from fund share transactions $183,983,934 $117,267,653 ------------ ------------ Net increase (decrease) in net assets $217,242,704 $199,631,938 ------------ ------------ NET ASSETS: Beginning of period $381,357,171 $181,725,233 ------------ ------------ End of period $598,599,875 $381,357,171 ============ ============ Accumulated/(distributions in excess of) net investment income (loss) $ 1,141,650 $ 1,779,281 ============ ============
10 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Mid Cap Value VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Mid Cap Value Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total 11 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Mid Cap Value Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003.
Pioneer Mid Cap Value VCT Portfolio 2003 -------------- Distributions paid from: Ordinary Income $ 674,629 Long-Term capital gain -- ----------- $ 674,629 Return of Capital -- ----------- Total distributions $ 674,629 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 3,095,345 Undistributed long-term gain/ (Capital loss carryforward) 4,286,038 Unrealized appreciation (depreciation) 66,304,827 ----------- Total $73,686,210 ===========
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. 12 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $352,423 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $87,247 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows: 13 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - --------------------------------------------------------------------------------------------------- Mid Cap Value Portfolio $549,097,482 $120,657,540 $(46,417,744) $74,239,796 ============ ============ ============= ===========
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $343,646,689 and $167,846,365, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
Mid Cap Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------------ CLASS I: Shares sold 1,350,399 $ 28,801,387 2,677,744 $ 46,157,551 Reinvestment of distributions 117,892 2,575,556 26,084 438,476 Shares repurchased (746,981) (15,842,125) (2,465,836) (40,592,863) --------- ------------ ---------- ------------ Net increase 712,400 $ 15,534,818 237,992 $ 6,003,164 ========= ============ ========== ============ CLASS II: Shares sold 7,925,107 $168,141,999 6,515,291 $114,986,107 Reinvestment of distributions 221,974 4,807,964 93,450 236,135 Shares repurchased (214,474) (4,500,847) (1,080,224) (3,957,753) --------- ------------ ---------- ------------ Net increase 7,932,607 $168,449,116 6,280,420 $111,264,489 ========= ============ ========== ============
14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [PIONEER INVESTMENTS LOGO] Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16080-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Small Company VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - ------------------------------------------- Pioneer Small Company VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 8 Notes to Financial Statements 12
Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] U.S. Common Stocks 88.7% Temporary Cash Investment 7.2% Depositary Receipts for International Stocks 3.0% International Common Stocks 1.1% Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] Financials 22.9% Industrials 16.5% Information Technology 13.6% Consumer Discretionary 12.2% Health Care 12.1% Energy 7.4% Materials 6.5% Consumer Staples 5.1% Telecommunication Services 2.8% Utilities 0.9% Five Largest Holdings (As a percentage of equity holdings) 1. Advanta Corp. (Class B) 2.37% 2. Alliance Atlantis Communications, Inc. 1.80 3. Forest Oil Corp. 1.76 4. Corn Products International, Inc. 1.75 5. Nu Skin Enterprises Inc. 1.74
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $12.04 $11.35
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ -- $ -- $ --
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Small Company VCT Portfolio at net asset value, compared to that of the Russell 2000 Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.] Date Pioneer Small Company Russell 2000 VCT Portfolio Index 1/31/2001 $10,000 $10,000 12/31/2001 $10,479 $9,741 12/31/2002 $8,683 $7,747 12/31/2003 $10,865 $11,407 6/30/2004 $11,526 $12,177 Index comparison begins 1/31/01. The Russell 2000 Index is an unmanaged measure of the 2,000 smallest stocks, based on capitalization, in the Russell 3000 Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 5.54% (1/19/01) 1 Year 24.00%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In the following discussion, portfolio manager David Adams and assistant portfolio manager Jack McPherson review their investment strategies and the performance of Pioneer Small Company VCT Portfolio. Q: How did Pioneer Small Company VCT Portfolio perform over this period? A: For the six months ended June 30, 2004, Class II shares of the Portfolio returned 6.08% at net asset value. This result slightly trailed the Portfolio's benchmark, the Russell 2000 Index, which returned 6.76% over the same period. Q: Please describe the background for small-company stocks over this period. A: Stocks, led by small-cap issues, moved higher early in the year on the basis of solid earnings gains and encouraging job creation in many sectors of the economy. But investors began to retrench in the spring as demand for goods and services pushed prices higher. The expectation that the Federal Reserve Board would raise short-term rates in order to forestall inflationary trends became a reality near the end of the period. Troubling developments overseas and high energy prices also kept investors on the sidelines. Q: Which stocks or sectors influenced performance favorably? A: Good stock selection in consumer staples and financial services bolstered returns. NuSkin Enterprises continues to record impressive sales gains in Asia; Chinese consumers especially have embraced NuSkin's line of diet, health and beauty products. Shares of Chattem, which markets Gold Bond and Icy Hot among other brands, moved higher following resolution of pending legal issues. Alliance Atlantis, a Canadian cable operator and producer of the CSI television programs, rose as investors took a favorable view of management's restructuring efforts. Alliance also holds movie distribution rights for the Lord of the Rings series and the political documentary Fahrenheit 911. Wabtac, which fabricates components for rail cars, saw new orders increase in response to rising freight volumes. A pickup in air freight and security services aided the Brinks Company; the company also made progress in dealing with liabilities left over from its coal-mining days, when it was known as Pittston. Anticipating possible interest-rate hikes, we avoided thrifts and other rate-sensitive financial issues. Instead, we favored commercial banks whose business customers seemed likely to increase their borrowings as economic conditions improve. California-based City National and Texas Capital Bankshares both contributed positively to results. The acquisition of Staten Island Bank by Independence Community Bank also added to returns. For Advanta, the improving economy meant stepped up demand from its small business clients for credit cards and other business services, while Selective Insurance Group, a property and casualty insurer, benefited from increased premiums and a favorable claims experience. In technology, the buyout of American Management Systems by CGI made an important contribution. Q: Which holdings had a negative impact over the period? A: Disappointing earnings pressured shares of Power Integrations, which makes semiconductors for electronic devices, including chargers for cell phones and DC/AC converters. We believe the trend to miniaturization will eventually boost demand for the company's products. Elsewhere, First Healthgroup, a managed care company, fell victim to aggressive pricing on the part of competitors. Unifi, which makes synthetic yarns for textiles, fell sharply when it was unable to finalize a proposed manufacturing venture in China. Difficult times for the airlines have hurt AAR, which manufactures parts and components for aircraft, and its shares fell. Princeton Review, a provider of preparatory courses for college entrance and other exams, also declined, following a weak earnings report. Q: What is your current outlook? A: The Federal Reserve Board raised interest rates in June, but if the economy idles for a time an aggressive series of increases seems unlikely. In the meantime, equity valuations may already reflect the impact of higher rates. That circumstance has led to a number of attractive investment opportunities among small company stocks that we are analyzing as candidates for investment. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Small-capitalization stocks may be subject to greater short-term price fluctuations than securities of larger companies. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 94.6% Energy - 7.0% Oil & Gas Drilling - 2.9% 925 Atwood Oceanics, Inc.* $ 38,619 2,300 Grant Prideco, Inc.* 42,458 8,550 Key Energy Services, Inc.* 80,710 3,363 Patterson Energy, Inc. 112,358 5,075 Todco* 78,510 ----------- $ 352,655 ----------- Oil & Gas Equipment And Services - 1.1% 2,325 Gulfmark Offshore, Inc.* $ 36,689 3,575 Maverick Tube Corp.* 93,880 ----------- $ 130,569 ----------- Oil & Gas Exploration & Production - 2.2% 7,550 Forest Oil Corp.* $ 206,266 1,828 Spinnaker Exploration Co.* 71,981 ----------- $ 278,247 ----------- Oil & Gas Refining Marketing & Transportation - 0.8% 6,150 Plains Resources, Inc.* $ 104,243 ----------- Total Energy $ 865,714 ----------- Materials - 6.1% Commodity Chemicals - 1.1% 5,800 Airgas, Inc. $ 138,678 ----------- Gold - 0.5% 10,550 IAMGOLD Corp. (a) $ 58,869 ----------- Materials - 0.5% 600 Mega Blocks, Inc.* $ 9,902 2,950 Mega Blocks, Inc. (144A)* 48,681 ----------- $ 58,583 ----------- Metal & Glass Containers - 0.3% 900 Kennametal, Inc. $ 41,220 ----------- Paper Products - 1.1% 7,575 Wausau-Mosinee Paper Corp. $ 131,048 ----------- Precious Metals & Minerals - 1.2% 11,550 Agnico Eagle Mines, Ltd. (a) $ 152,576 ----------- Specialty Chemicals - 0.6% 8,925 Wellman, Inc. $ 72,560 ----------- Steel - 0.8% 10,000 Graftech International, Ltd.* $ 104,600 ----------- Total Materials $ 758,134 ----------- Shares Value Capital Goods - 5.4% Aerospace & Defense - 1.8% 8,450 AAR Corp.* $ 95,908 4,825 MTC Technologies, Inc.* 124,582 ----------- $ 220,490 ----------- Construction, Farm Machinery & Heavy Trucks - 1.4% 9,950 Wabtec Corp. $ 179,498 ----------- Construction & Engineering - 0.2% 1,500 Insituform Technologies, Inc.* $ 24,405 ----------- Electrical Components & Equipment - 2.0% 2,600 Digital Theater Systems, Inc.* $ 67,912 16,425 Power-One, Inc.* 180,347 ----------- $ 248,259 ----------- Total Capital Goods $ 672,652 ----------- Commercial Services & Supplies - 8.8% Data Processing Services - 1.2% 8,100 Gartner Group, Inc.* $ 107,082 1,775 TALX Corp. 43,363 ----------- $ 150,445 ----------- Commercial Printing - 0.8% 3,400 John H. Harland Co. $ 99,790 ----------- Diversified Commercial Services - 4.8% 4,951 The Brinks Co. $ 169,572 2,175 Central Parking Corp. 40,651 7,544 FTI Consulting, Inc.* 124,476 3,775 Regis Corp. 168,327 6,000 Tetra Tech, Inc.* 97,920 ----------- $ 600,946 ----------- Employment Services - 1.4% 2,050 Corinthian Colleges, Inc.* $ 50,717 15,600 The Princeton Review, Inc.* 118,092 ----------- $ 168,809 ----------- Environmental Services - 0.6% 11,250 Newpark Resources, Inc.* $ 69,750 ----------- Total Commercial Services & Supplies $ 1,089,740 ----------- Transportation - 1.3% Trucking - 1.3% 3,000 Dollar Thrifty Automotive Group* $ 82,320 2,200 Forward Air Corp.* 82,280 ----------- $ 164,600 ----------- Total Transportation $ 164,600 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Consumer Durables & Apparel - 4.2% Apparel, Accessories & Luxury Goods - 1.1% 15,500 Charming Shoppes, Inc.* $ 138,415 ----------- Housewares & Specialties - 2.1% 8,150 Tupperware Corp. $ 158,355 3,450 Yankee Candle Co.* 100,913 ----------- $ 259,268 ----------- Photographic Products - 0.4% 4,800 Creo Products* $ 42,144 ----------- Textiles - 0.6% 25,886 Unifi, Inc.* $ 75,846 ----------- Total Consumer Durables & Apparel $ 515,673 ----------- Hotels, Restaurants & Leisure - 1.3% Restaurants - 1.3% 2,334 Applebee's International, Inc. $ 53,729 6,325 O'Charley's, Inc.* 108,727 ----------- $ 162,456 ----------- Total Hotels, Restaurants & Leisure $ 162,456 ----------- Media - 2.8% Movies & Entertainment - 1.7% 11,425 Alliance Atlantis Communications, Inc.* $ 210,231 ----------- Publishing - 1.1% 6,750 Journal Register Co.* $ 135,000 ----------- Total Media $ 345,231 ----------- Retailing - 3.3% Apparel Retail - 0.4% 2,175 Genesco, Inc.* $ 51,395 ----------- Catalog Retail - 0.5% 3,400 Insight Enterprises, Inc.* $ 60,384 ----------- General Merchandise Stores - 0.9% 3,975 Tuesday Morning Corp.* $ 115,275 ----------- Specialty Stores - 1.5% 900 Guitar Center, Inc.* $ 40,023 3,825 School Specialty, Inc.* 138,886 ----------- $ 178,909 ----------- Total Retailing $ 405,963 ----------- Food & Drug Retailing - 1.6% Food Distributors - 0.8% 2,214 THe J.M. Smucker Co. $ 101,645 ----------- Food Retail - 0.8% 1,800 Fresh Del Monte Produce, Inc. (a) $ 45,486 3,300 Wild Oats Markets, Inc.* 46,431 ----------- $ 91,917 ----------- Total Food & Drug Retailing $ 193,562 ----------- Shares Value Food, Beverage & Tobacco - 1.7% Agricultural Products - 1.7% 4,395 Corn Products International, Inc. $ 204,587 ----------- Total Food, Beverage & Tobacco $ 204,587 ----------- Household & Personal Products - 1.6% Household Products - 1.6% 8,025 Nu Skin Enterprises, Inc. $ 203,193 ----------- Total Household & Personal Products $ 203,193 ----------- Health Care Equipment & Services - 10.2% Health Care Distributors - 2.4% 6,337 AMN Healthcare Services (a)* $ 96,893 2,625 Chattem, Inc.* 75,784 6,600 Cross Country Healthcares, Inc. (a)* 119,790 ----------- $ 292,467 ----------- Health Care Equipment - 1.1% 4,625 Haemonetics Corp.* $ 137,131 ----------- Health Care Facilities - 2.4% 3,300 Lifepoint Hospitals, Inc.* $ 122,826 2,927 Sunrise Senior Living, Inc. (a)* 114,563 1,200 Universal Health Services, Inc. (Class B) 55,068 ----------- $ 292,457 ----------- Health Care Services - 3.7% 20,875 Hooper Holmes, Inc. $ 119,823 4,496 Parexel International Corp.* 89,021 1,500 Pediatrix Medical Group, Inc.* 104,775 7,625 Providence Service Corp.* 143,274 ----------- $ 456,893 ----------- Managed Health Care - 0.6% 5,100 First Health Group Corp.* $ 79,611 ----------- Total Health Care Equipment & Services $ 1,258,559 ----------- Pharmaceuticals & Biotechnology - 1.3% Biotechnology - 0.4% 4,525 Cubist Pharmaceuticals, Inc.* $ 50,228 ----------- Pharmaceuticals - 0.9% 4,500 Adolor Corp.* $ 57,060 7,300 Alnylam Pharmaceuticals, Inc. (a)* 55,188 ----------- $ 112,248 ----------- Total Pharmaceuticals & Biotechnology $ 162,476 ----------- Banks - 6.9% Diversified Banks - 1.6% 4,400 Provident Financial Services, Inc. $ 77,220 7,200 Texas Capital Bancshares, Inc.* 119,520 ----------- $ 196,740 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Regional Banks - 3.2% 400 Alliance Bankshares Corp.* $ 6,020 1,500 City National Corp. 98,550 3,575 Sterling Bancshares, Inc. 50,729 3,000 Virginia Commerce Bancorp, Inc.* 88,530 3,377 Whitney Holding Corp. 150,851 ----------- $ 394,680 ----------- Thrifts & Mortgage Finance - 2.1% 4,500 Commercial Federal Corp. $ 121,950 2,975 Webster Financial Corp. 139,885 ----------- $ 261,835 ----------- Total Banks $ 853,255 ----------- Diversified Financials - 6.9% Consumer Finance - 3.6% 12,103 Advanta Corp. (Class B) $ 277,401 18,597 Rewards Network, Inc. (a)* 167,373 ----------- $ 444,774 ----------- Investment Banking & Brokerage - 0.9% 8,300 Apollo Investment Corp.* $ 114,291 ----------- Multi-Sector Holding - 1.4% 3,600 Leucadia National Corp. $ 178,920 ----------- Diversified Financial Services - 1.0% 2,800 Gabelli Asset Management, Inc. $ 119,000 ----------- Total Diversified Financials $ 856,985 ----------- Insurance - 2.1% Property & Casualty Insurance - 2.1% 1,120 First American Corp. $ 28,997 6,800 Quanta Capital Holdings (144A)* 73,032 3,970 Selective Insurance Group, Inc. 158,324 ----------- $ 260,353 ----------- Total Insurance $ 260,353 ----------- Real Estate - 5.6% Real Estate Investment Trusts - 5.6% 1,800 Camden Property Trust $ 82,440 2,700 Colonial Properties Trust 104,031 3,467 Healthcare Realty Trust, Inc. 129,943 9,107 Innkeepers USA Trust 93,893 4,740 Prentiss Properties Trust 158,885 3,450 Shurgard Storage Centers, Inc. 129,030 ----------- $ 698,222 ----------- Total Real Estate $ 698,222 ----------- Shares Value Software & Services - 5.8% Application Software - 3.7% 1,300 Avid Technology, Inc.* $ 70,941 4,112 Fair Isaac & Co., Inc. 137,259 2,850 Manhattan Associates, Inc.* 88,008 6,650 Mercury Computer Systems, Inc.* 164,920 ----------- $ 461,128 ----------- Home Entertainment Software - 0.9% 11,325 Plato Learning, Inc. (a)* $ 112,231 ----------- Internet Software & Services - 0.5% 5,825 Lionbridge Technologies, Inc.* $ 44,561 1,000 PEC Solutions, Inc.* 11,930 ----------- $ 56,491 ----------- IT Consulting & Other Services - 0.2% 1,500 ManTech International Corp.* $ 28,155 ----------- Systems Software - 0.5% 7,500 Borland Software Corp.* $ 63,675 ----------- Total Software & Services $ 721,680 ----------- Technology Hardware & Equipment - 4.0% Communications Equipment - 0.9% 3,025 Avocent Corp.* $ 111,139 ----------- Computer Storage & Peripherals - 0.6% 2,700 Applied Films Corp.* $ 78,354 ----------- Electronic Equipment & Instruments - 0.6% 5,475 Planar Systems, Inc.* $ 73,310 ----------- Electronic Manufacturing Services - 0.9% 8,450 Plexus Corp.* $ 114,075 ----------- Technology Distributors - 1.0% 3,000 Tech Data Corp.* $ 117,390 ----------- Total Technology Hardware & Equipment $ 494,268 ----------- Semiconductors - 3.1% Semiconductor Equipment - 2.2% 898 Cymer, Inc.* $ 33,621 2,701 DuPont Photomasks, Inc. (a)* 54,911 4,796 Photronics, Inc.* 90,836 2,401 Varian Semiconductor Equipment Associates, Inc.* 92,583 ----------- $ 271,951 ----------- Semiconductors - 0.9% 4,425 Power Integrations, Inc.* $ 110,183 ----------- Total Semiconductors $ 382,134 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Telecommunication Services - 2.7% Integrated Telecommunication Services - 2.0% 8,400 Aeroflex, Inc.* $ 120,372 8,284 CT Communications, Inc. 124,674 ----------- $ 245,046 ----------- Wireless Telecommunication Services - 0.7% 8,600 Boston Communications Group, Inc.* $ 88,150 ----------- Total Telecommunication Services $ 333,196 ----------- Utilities - 0.9% Gas Utilities - 0.9% 2,525 People's Energy Corp. $ 106,429 ----------- Total Utilities $ 106,429 ----------- TOTAL COMMON STOCKS (Cost $10,109,655) $11,709,062 ----------- TEMPORARY CASH INVESTMENTS - 7.3% Security Lending Collateral - 7.3% 906,301 Securities Lending Investment Fund, 1.29% $ 906,301 ----------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $906,301) $ 906,301 ----------- TOTAL INVESTMENT IN SECURITIES - 101.9% (Cost $11,015,956) (a) $12,615,363 ----------- OTHER ASSETS AND LIABILITIES - (1.9)% $ (231,973) ----------- TOTAL NET ASSETS - 100.0% $12,383,390 ===========
* Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $121,713 or 1.0% of net assets. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 10,160 Agnico Eagle Mines Ltd. $134,823 6,935 Alnylam Pharmaceuticals, Inc.* 49,239 5,664 AMN Healthcare Services* 86,433 4,797 Cross Country Healthcares, Inc.* 87,641 2,305 DuPont Photomasks, Inc.* 46,169 1,685 Fresh Del Monte Produce, Inc. 42,176 10,497 IAMGOLD Corp. 56,264 9,001 Plato Learning, Inc.* 90,460 16,622 Rewards Network, Inc.* 153,754 2,781 Sunrise Senior Living, Inc.* 108,292 -------- Total $855,251 ========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 8/1/01 6/30/04 Ended Ended to Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01 Net asset value, beginning of period $11.35 $ 9.07 $ 10.95 $11.18 ------ ------ ------- ----- Increase (decrease) from investment operations: Net investment income (loss) $(0.03) $(0.01) $ (0.01) $ -- Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.72 2.29 (1.87) (0.23) ------ ------ ------- ------ Net increase (decrease) from investment operations $ 0.69 $ 2.28 $ (1.88) $(0.23) Distributions to shareowners Net investment income -- -- -- -- Net realized gain -- -- -- -- ------ ------ ------- ------ Net increase (decrease) in net asset value $ 0.69 $ 2.28 $ (1.88) $(0.23) ------ ------ ------- ------ Net asset value, end of period $12.04 $11.35 $ 9.07 $10.95 ====== ====== ======= ====== Total return* 6.08% 25.14% (17.14)% (2.06)% Ratio of net expenses to average net assets+ 1.48%** 1.52% 1.58% 1.68%** Ratio of net investment income to average net assets+ (0.55)%** (0.23)% (0.18)% 0.01%** Portfolio turnover rate 46%** 38% 53% 72% Net assets, end of period (in thousands) $8,809 $7,095 $ 3,419 $ 938 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.73%** 2.67% 2.98% 6.71%** Net investment income (loss) (0.80)%** (1.38)% (1.58)% 5.02%**
(a) Class 2 shares were first publicly offered on August 1, 2001. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period.) ** Annualized. + Ratios with no reduction for fees paid indirectly. 8 The accompanying notes are an integral part of these financial statements. Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Small Company VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $855,251) (Cost $11,015,956) $12,615,363 Cash 704,756 Foreign currencies, at value -- Receivables -- Investment securities sold 923 Fund shares sold 2,836 Variation margin -- Dividends, interest and foreign taxes withheld 9,766 Forward foreign currency settlement contracts, net -- Due from Pioneer Investment Management, Inc. -- Other 408 ----------- Total assets $13,334,052 ----------- LIABILITIES: Payables -- Investment securities purchased $ -- Fund shares repurchased 4,118 Dividends -- Upon return of securities loaned 906,300 Forward foreign currency settlement contracts, net -- Reserve for repatriation taxes -- Due to bank -- Due to affiliates 11,625 Accrued expenses 28,619 ----------- Total liabilities $ 950,662 ----------- NET ASSETS: Paid-in capital $11,122,927 Accumulated net investment income (loss) (26,069) Accumulated undistributed net realized gain (loss) (312,875) Net unrealized gain (loss) on: Investments 1,599,407 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- Total net assets $12,383,390 ----------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 3,574,012 Shares outstanding 294,266 ----------- Net asset value per share $ 12.15 Class II: No par value (unlimited number of shares authorized) Net assets $ 8,809,378 Shares outstanding 731,606 ----------- Net asset value per share $ 12.04
The accompanying notes are an integral part of these financial statements. 9 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Small Company VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $49) $ 50,058 Interest 1,876 Income on securities loaned, net 1,378 Other -- -------- Total investment income $ 53,312 -------- EXPENSES: Management fees $ 43,522 Transfer agent fees 497 Distribution fees (Class II) 9,708 Administrative fees 9,250 Custodian fees 12,204 Professional fees 10,476 Printing 10,106 Fees and expenses of nonaffiliated trustees -- Miscellaneous 496 -------- Total expenses $ 96,259 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (14,892) -------- Net expenses $ 81,367 -------- Net investment income (loss) $(28,055) -------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $393,255 Futures contracts 13,667 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (3,327) -------- $403,595 -------- Change in net unrealized gain or loss from: Investments $325,045 Futures contracts (11,218) Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- -------- $313,827 -------- Net gain (loss) on investments, futures contracts and foreign currency transactions $717,422 ======== Net increase (decrease) in net assets resulting from operations $689,367 ========
10 The accompanying notes are an integral part of these financial statements. Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Small Company VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ (28,055) $ (9,162) Net realized gain (loss) on investments 403,595 (296,269) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 313,827 2,171,849 ----------- ----------- Net increase (decrease) in net assets resulting from operations $ 689,367 $ 1,866,418 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ -- $ -- Class II -- -- Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ----------- ----------- Total distributions to shareowners $ -- $ -- ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 2,429,035 $ 6,156,243 Reinvestment of distributions -- -- Cost of shares repurchased (1,705,541) (3,911,566) ----------- ----------- Net increase (decrease) in net assets resulting from fund share transactions $ 723,494 $ 2,244,677 ----------- ----------- Net increase (decrease) in net assets $ 1,412,861 $ 4,111,095 ----------- ----------- NET ASSETS: Beginning of period $10,970,529 $ 6,859,434 ----------- ----------- End of period $12,383,390 $10,970,529 =========== =========== Accumulated/(distributions in excess of) net investment income (loss) $ (26,069) $ 1,986 =========== ===========
The accompanying notes are an integral part of these financial statements. 11 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Small Company VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Small Company Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. 12 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Small Company Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Small Company VCT Portfolio had a capital loss carryforward of $613,713, of which the following amounts will expire between 2009 and 2011 if not utilized: $92,858 in 2009, $235,402 in 2010 and $284,913 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 13 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Pioneer Small Company VCT Portfolio 2003 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ -- Long- Term capital gain -- ---------- -- Return of Capital -- ---------- Total distributions $ -- ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/ (Capital loss carryforward) (613,173) Unrealized appreciation (depreciation) 1,184,269 ---------- Total $ 571,096 ========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $9,419 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 14 Pioneer Small Company VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $255 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $1,951 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------------------ Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------------------ Small Company Portfolio $11,106,049 $1,913,795 $(404,481) $1,509,314 ----------- ---------- ---------- ---------- - ------------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $3,888,393 and $2,470,587, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ------------------------------------------------------------------------------------------------------ Small Company Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------------------ CLASS II: Shares sold 26,644 $ 310,139 286,397 $ 2,774,242 Reinvestment of distributions -- -- -- Shares repurchased (71,189) (828,339) (324,514) (3,132,628) -------------------------------------------------------------------- Net increase (decrease) (44,545) $ (518,200) (38,117) $ (358,386) ==================================================================== CLASS II: Shares sold 180,783 $2,118,896 328,726 $ 3,382,001 Reinvestment of distributions -- -- -- Shares repurchased (74,557) (877,202) (80,215) (778,938) -------------------------------------------------------------------- Net increase 106,226 $1,241,694 248,511 $ 2,603,063 ==================================================================== - ------------------------------------------------------------------------------------------------------
15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16079-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Shares VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Growth Shares VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 7 Notes to Financial Statements 11
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] U.S. Common Stocks 91.8% Depositary Receipts for International Stocks 8.2% [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] Sector Distribution (As a percentage of equity holdings) Information Technology 30.2% Health Care 22.9% Consumer Discretionary 14.5% Industrials 10.1% Financials 8.6% Consumer Staples 7.6% Materials 3.5% Telecommunication Services 1.6% Energy 1.0% Five Largest Holdings (As a percentage of equity holdings) 1. Microsoft Corp. 5.50% 2. Intel Corp. 4.41 3. Sandisk Corp. 3.05 4. Bristol-Myers Squibb Co. 3.02 5. Samsung Electronics Co., Ltd. 2.84
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $11.96 $12.10 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Growth Shares VCT Portfolio at net asset value, compared to that of the Russell 1000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.] Date Pioneer Growth Shares Russell 1000 VCT Portfolio* Index 10/31/1997 $10,000 $10,000 $10,222 $10,646 12/31/1998 $13,521 $13,522 $14,539 $16,351 12/31/2000 $13,539 $15,079 $10,934 $13,202 12/31/2002 $7,099 $10,343 $8,855 $13,436 6/30/2004 $8,753 $13,883 The Russell 1000 Growth Index contains those Russell 1000 securities with greater-than-average growth orientation. Companies in this index tend to exhibit higher price-to-book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values than the Value universe. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class -1.98% (10/31/97) 5 Years -10.08% 1 Year 9.42%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- The U.S. economy continued to grow during the first half of 2004, but the general investment environment for equities began turning slightly negative as rising corporate profit trends began to weaken, consumer spending was not as strong as expected, and markets began anticipating a tighter monetary policy from the Federal Reserve. In the following interview, Christopher Galizio discusses the factors that affected the performance of Pioneer Growth Shares VCT Portfolio during the six-month period ended June 30, 2004. Mr. Galizio is a member of the Portfolio's management team. Q: How did the Portfolio perform during the first half of 2004? A: For the six-month period ended June 30, 2004, the Growth Shares Portfolio Class II had a total return of -1.16% at net asset value. For the same period, the Russell 1000 Growth Index returned 2.74%. We believe the Portfolio's underperformance was due to the overweight position in technology, particularly semi-conductor companies, early in the period. Q: What was the general investment environment like during the period? A: The overall market sentiment appeared to be turning negative late in the six-month period. The stock market surge that that had begun in March 2003 appeared to lose some energy. Several major corporations, including the retail and semi-conductor industries, began to report earnings disappointments, and we saw some weakening in profit trends, notably in the consumer and technology sectors. Consumer spending trends, in particular, appeared weak as over-extended consumers finally began to retrench from their high-spending patterns. As stock market investors anticipated the June 30 announcement by the Federal Reserve Board that it would begin to tighten monetary policy by raising short-term interest rates, the share prices of some consumer-oriented financial institutions began to fade. Industrial stocks, however, tended to outperform the overall market. Q: What were your principal strategies during the period? A: We restructured the Portfolio during the period, focusing on large-cap companies that we believed offered long-term value, above-average revenue growth, strong returns on capital and reasonable valuations in relation to their earnings potential. This strategy led to a reduced emphasis on the semi-conductor industry and increased weightings in the software, consumer discretionary and financial services areas. We reduced our semi-conductor holdings, eliminating positions in Applied Materials, Cypress Semiconductor, Texas Instruments and Maxim Technology. We did add Taiwan Semiconductor, a major manufacturer with an attractive stock valuation. Overall, however, semiconductor stocks went from an overweight to an underweight position relative to the benchmark S&P 500. The reduced weightings in technology tended to support performance. Conversely, we increased the Portfolio's emphasis on software companies, adding companies such as Macrovision, which has developed a technology to protect DVDs, CDs and other disc-based products from piracy, as well as Take-Two Interactive, the developer of video games, including Grand Theft Auto - the most successful game in history, with a new version soon to be introduced. We also added Fair Isaac, which has developed software to help credit card companies analyze the credit-worthiness of applicants. Fair Isaac tended to detract from performance late in the six-month period as it reported disappointing earnings, but we continued to hold it because of its attractive valuation. We moved from an underweight to an overweight in the consumer discretionary sector, taking advantage of attractive valuations of Disney, whose media and theme park properties have improved earnings outlooks, and Viacom, the owner of the CBS and MTV television networks among other properties. Among retailers, we sold our Wal-Mart position before the stock fell hard, investing in Target, Kohl's and Ross Stores. In addition, we increased the emphasis on financial services stocks, focusing on insurance companies with excellent valuations that were not as vulnerable to interest-rate increases as banks and other lenders. We continued to de-emphasize consumer staples, although we added Altria (the former Philip Morris), which offered a high dividend yield and an attractive stock price that we believed was the result of overly pessimistic market evaluations of the company's tobacco liability. In addition, we invested in First Data, the leader in processing of credit card transactions and owner of the Western Union system, and Accenture, an information technology services consulting firm. Q: What were some of the investments that influenced performance? A: Among newer holdings, Macrovision rose significantly during the period as its revenue grew faster than had been expected. Sepracor, a pharmaceutical company and a new holding, also advanced on positive news of a drug under development. Zimmer Holdings, a world leader in orthopedic products, including hip and knee replacements, was another health care position that did very well. The timely sale of Wal-Mart also supported performance. The overweight position in the semiconductor industry early during the six-month period held back performance, as valuations in that group fell hard. Corinthian Colleges, operator of adult vocational educational colleges and programs, was another detractor, as the SEC began an investigation of its financial records. However, we took advantage of the price decline to add to the position in Corinthian because of its goods long-term fundamentals. Lexar and Sandisk, two manufacturers of flash memories for cameras and cell phones, also fell on disappointing sales. Freeport-McMoRan, a leader in the copper mining industry and a strong support for performance in 2003, also declined both because of problems at one of its mines and because of fears of an economic slowdown in China, an important importer of copper. We increased our investment in the company because of its attractive price. We also believed it experienced some short-term production problems that would be resolved. Q: What is your investment outlook? A: We are cautions about the near-term opportunities in the domestic stock market, as stock valuations appear relatively expensive and the Federal Reserve Board has moved to a less accommodating monetary policy. The home refinancing boom of the past two years may hurt the future earnings of banks, while the technology industry faces a number of challenges, from pricing pressure on its products to calls to change the way many companies have treated stock options in their accounting. Health care stocks, however, appear to be more reasonably valued. Given this outlook, we are paying very strict attention to our analysis and selection of individual companies. We also have somewhat reduced our exposure to the domestic stock market with investments in Europe and the emerging markets. We have, for example, increased our position in Vodafone, the world's largest wireless communications service company, and we have added small holdings from Korea, Taiwan and Israel. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 99.6% Energy - 1.0% Integrated Oil & Gas - 1.0% 2,500 ConocoPhillips $ 190,725 4,200 Occidental Petroleum Corp. 203,322 ----------- $ 394,047 ----------- Total Energy $ 394,047 ----------- Materials - 3.5% Diversified Metals & Mining - 3.5% 19,700 Freeport-McMoRan Copper & Gold, Inc. (Class B) $ 653,055 8,900 Phelps Dodge Corp.* 689,839 ----------- $ 1,342,894 ----------- Total Materials $ 1,342,894 ----------- Capital Goods - 6.9% Aerospace & Defense - 1.1% 6,200 L-3 Communications Holdings, Inc. $ 414,160 ----------- Electrical Component & Equipment - 1.3% 15,200 General Electric Co. $ 492,480 ----------- Industrial Conglom - 4.5% 16,900 American Standard Companies, Inc.* $ 681,239 21,400 Tyco International Ltd. 709,196 4,000 United Technologies Corp. 365,920 ----------- $ 1,756,355 ----------- Total Capital Goods $ 2,662,995 ----------- Commercial Services & Supplies - 2.0% Employment Services - 2.0% 31,300 Corinthian Colleges, Inc.* $ 774,362 ----------- Total Commercial Services & Supplies $ 774,362 ----------- Transportation - 1.2% Trucking - 1.2% 5,900 United Parcel Service $ 443,503 ----------- Total Transportation $ 443,503 ----------- Hotels, Restaurants & Leisure - 3.0% Casinos & Gaming - 1.3% 13,400 International Game Technology $ 517,240 ----------- Hotels, Resorts & Cruise Lines - 0.8% 6,400 Carnival Corp. $ 300,800 ----------- Restaurants - 0.9% 9,100 Tricon Global Restaurants, Inc.* $ 338,702 ----------- Total Hotels, Restaurants & Leisure $ 1,156,742 ----------- Shares Value Media - 3.3% Broadcasting & Cable TV - 0.9% 9,300 Clear Channel Communications, Inc. $ 343,635 ----------- Movies & Entertainment - 2.4% 21,300 The Walt Disney Co. $ 542,937 10,400 Viacom, Inc. (Class B) 371,488 ----------- $ 914,425 ----------- Total Media $ 1,258,060 ----------- Retailing - 8.2% Apparel Retail - 2.3% 5,400 Liz Claiborne, Inc. $ 194,292 3,900 Nike, Inc. 295,425 15,200 Ross Stores, Inc. 406,752 ----------- $ 896,469 ----------- Department Stores - 2.1% 7,500 J.C. Penney Co., Inc. $ 283,200 12,300 Kohl's Corp.* 520,044 ----------- $ 803,244 ----------- General Merchandise Stores - 2.4% 9,900 Family Dollar Stores, Inc. $ 301,158 14,700 Target Corp. 624,309 ----------- $ 925,467 ----------- Home Improvement Retail - 1.4% 10,000 Lowe's Companies, Inc. $ 525,500 ----------- Total Retailing $ 3,150,680 ----------- Food & Drug Retailing - 2.1% Drug Retail - 0.6% 5,900 Walgreen Co. $ 213,639 ----------- Food Distributors - 1.5% 8,500 Cardinal Health, Inc. $ 595,425 ----------- Total Food & Drug Retailing $ 809,064 ----------- Food, Beverage & Tobacco - 5.5% Soft Drinks - 3.6% 17,000 The Coca-Cola Co. $ 858,160 9,800 PepsiCo, Inc. 528,024 ----------- $ 1,386,184 ----------- Tobacco - 1.9% 14,500 Altria Group, Inc. $ 725,725 ----------- Total Food, Beverage & Tobacco $ 2,111,909 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Health Care Equipment & Services - 10.8% Health Care Distributors - 5.7% 47,400 Bristol-Myers Squibb Co. $ 1,161,300 6,203 Teva Pharmaceutical Industries, Ltd. 417,400 17,100 Wyeth 618,336 ----------- $ 2,197,036 ----------- Health Care Equipment - 4.3% 16,700 Guidant Corp. $ 933,196 5,400 St. Jude Medical, Inc.* 408,510 3,500 Zimmer Holdings, Inc.* 308,700 ----------- $ 1,650,406 ----------- Managed Health Care - 0.8% 2,800 Wellpoint Health Networks, Inc.* $ 313,628 ----------- Total Health Care Equipment & Services $ 4,161,070 ----------- Pharmaceuticals & Biotechnology - 11.9% Biotechnology - 2.8% 12,758 Amgen, Inc.* $ 696,204 35,400 Cubist Pharmaceuticals, Inc.* 392,940 ----------- $ 1,089,144 ----------- Pharmaceuticals - 9.1% 16,000 Merck & Co., Inc. $ 760,000 27,851 Pfizer, Inc. 954,732 17,200 Sepracor, Inc.* 909,880 23,400 Schering-Plough Corp. 432,432 14,400 Sanofi-Synthelabo SA (A.D.R.)* 460,656 ----------- $ 3,517,700 ----------- Total Pharmaceuticals & Biotechnology $ 4,606,844 ----------- Banks - 2.3% Diversified Banks - 1.1% 4,900 Bank of America Corp. $ 414,638 ----------- Thrifts & Mortgage Finance - 1.2% 7,400 Freddie Mac $ 468,420 ----------- Total Banks $ 883,058 ----------- Diversified Financials - 1.3% Consumer Finance - 0.6% 15,900 Providian Financial Corp.* $ 233,253 ----------- Investment Banking & Brokerage - 0.7% 2,800 Goldman Sachs Group, Inc. $ 263,648 ----------- Total Diversified Financials $ 496,901 ----------- Shares Value Insurance - 5.0% Insurance Brokers - 0.8% 8,200 Willis Group Holdings, Ltd. $ 307,090 ----------- Multi-Line Insurance - 2.4% 13,000 American International Group, Inc. $ 926,640 ----------- Property & Casualty Insurance - 1.8% 9,000 ACE, Ltd. $ 380,520 7,400 Safeco Corp. 325,600 ----------- $ 706,120 ----------- Total Insurance $ 1,939,850 ----------- Software & Services - 11.6% Application Software - 8.4% 9,200 Fair Isaac & Co., Inc. $ 307,096 74,000 Microsoft Corp. 2,113,440 21,500 Macrovision Corp.* 538,145 9,500 Veritas Software Corp.* 263,150 ----------- $ 3,221,831 ----------- Data Processing & Outsourced Services - 1.5% 12,600 First Data Corp. $ 560,952 ----------- Home Entertainment Software - 0.7% 9,300 Take-Two Interactive Software, Inc.* $ 284,952 ----------- IT Consulting & Other Services - 1.0% 14,100 Accenture, Ltd.* $ 387,468 ----------- Total Software & Services $ 4,455,203 ----------- Technology Hardware & Equipment - 13.0% Communications Equipment - 1.8% 16,600 Nokia Corp. (A.D.R.) $ 241,364 15,100 Utstarcom, Inc.* 456,775 ----------- $ 698,139 ----------- Computer Hardware - 4.3% 21,800 Dell, Inc.* $ 780,876 41,600 Hewlett-Packard Co. 877,760 ----------- $ 1,658,636 ----------- Computer Storage & Peripherals - 4.1% 61,800 Lexar Media, Inc.* $ 412,824 53,900 Sandisk Corp.* 1,169,091 ----------- $ 1,581,915 ----------- Electronic Equipment & Instruments - 2.8% 5,300 Samsung Electronics Co., Ltd.* $ 1,091,126 ----------- Total Technology Hardware & Equipment $ 5,029,816 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Semiconductors - 5.5% 61,300 Intel Corp. $ 1,691,880 51,100 Taiwan Semiconductor Manufacturing Co. (A.D.R.) 424,641 ----------- $ 2,116,521 ----------- Total Semiconductors $ 2,116,521 ----------- Telecommunication Services - 1.6% Wireless Telecommunication Services - 1.6% 27,100 Vodafone Group Plc (A.D.R.) $ 598,911 ----------- Total Telecommunication Services $ 598,911 ----------- TOTAL COMMON STOCKS (Cost $38,249,059) $38,392,430 ----------- TOTAL INVESTMENT IN SECURITIES - 99.6% (Cost $38,249,059) $38,392,430 ----------- OTHER ASSETS AND LIABILITIES - 0.4% $ 169,200 ----------- TOTAL NET ASSETS - 100.0% $38,561,630 ===========
* Non-income producing security. (A.D.R.) American Depository Receipt 6 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year 5/1/00 6/30/04 Ended Ended Ended to Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 Net asset value, beginning of period $12.10 $ 9.70 $ 14.94 $18.50 $21.68 ------ ------ ------- ------ ------ Increase (decrease) from investment operations: Net investment income (loss) $(0.01) $(0.02) $ (0.13) $(0.05) $(0.03) Net realized and unrealized gain (loss) on investments (0.13) 2.42 (5.11) (3.51) (1.23) ------ ------ ------- ------ ------ Net increase (decrease) from investment operations $(0.14) $ 2.40 $ (5.24) $(3.56) $(1.26) Distributions to shareowners: Net investment income -- -- -- -- -- Net realized gain -- -- -- -- (1.92) ------ ------ ------- ------ ------ Net increase (decrease) in net asset value $(0.14) $ 2.40 $ (5.24) $(3.56) $(3.18) ------ ------ ------- ------ ------ Net asset value, end of period $11.96 $12.10 $ 9.70 $14.94 $18.50 ====== ====== ======= ====== ====== Total return* (1.16)% 24.74% (35.07)% 19.24% (6.36)% Ratio of net expenses to average net assets+ 1.16%** 1.44% 1.63% 1.58% 1.03%** Ratio of net investment income (loss) to average net assets+ (0.17)%** (0.40)% (0.64)% (0.61)% (0.33)%** Portfolio turnover rate 208%** 58% 86% 111% 95%** Net assets, end of period (in thousands) $5,592 $3,049 $ 263 $ 658 $ 203 Ratios with no waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.16%* * 1.44% 1.63% 1.58% 0.73%** Net investment income (loss) (0.17)%** (0.40)% (0.64)% (0.61)% (0.11)%**
(a) Class 2 shares were first publicly offered on May 1, 2000. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio ASSETS: Investment in securities, at value (Cost $38,249,059) $ 38,392,430 Cash 166,266 Foreign currencies, at value -- Receivables -- Investment securities sold 350,395 Fund shares sold -- Variation margin -- Dividends, interest and foreign taxes withheld 44,334 Forward foreign currency settlement contracts, net -- Due from Pioneer Investment Management, Inc. -- Other 470 ------------ Total assets $ 38,953,895 ------------ LIABILITIES: Payables -- Investment securities purchased $ 328,381 Fund shares repurchased 8,488 Dividends -- Upon return of securities loaned -- Forward foreign currency settlement contracts, net -- Reserve for repatriation taxes -- Due to bank -- Due to affiliates 27,887 Accrued expenses 27,509 ------------ Total liabilities $ 392,265 ------------ NET ASSETS: Paid-in capital $ 78,004,905 Accumulated net investment income (loss) 2,672 Accumulated undistributed net realized gain (loss) (39,589,318) Net unrealized gain (loss) on: Investments 143,371 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $ 38,561,630 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 32,969,391 Shares outstanding 2,724,557 ------------ Net asset value per share $ 12.10 Class II: No par value (unlimited number of shares authorized) Net assets $ 5,592,239 Shares outstanding 467,443 ------------ Net asset value per share $ 11.96
8 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $1,046) $ 179,113 Interest 2,776 Income on securities loaned, net -- Other -- ----------- Total investment income $ 181,889 ----------- EXPENSES: Management fees $ 135,655 Transfer agent fees 1,508 Distribution fees (Class II) 5,230 Administrative fees 9,250 Custodian fees 11,802 Professional fees 14,662 Printing 30 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,080 ----------- Total expenses $ 179,217 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ----------- Net expenses $ 179,217 ----------- Net investment income (loss) $ 2,672 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 1,809,705 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $ 1,809,705 ----------- Change in net unrealized gain or loss from: Investments $(2,214,548) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $(2,214,548) ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ (404,843) =========== Net increase (decrease) in net assets resulting from operations $ (402,171) ===========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 2,672 $ (20,270) Net realized gain (loss) on investments 1,809,705 (3,697,565) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (2,214,548) 11,680,101 ----------- ----------- Net increase (decrease) in net assets resulting from operations $ (402,171) $ 7,962,266 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ -- $ (4,477) Class II -- -- Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ----------- ----------- Total distributions to shareowners $ -- $ (4,477) ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 3,453,095 $ 4,104,812 Reinvestment of distributions -- 4,477 Cost of shares repurchased (3,287,636) (8,277,302) ----------- ----------- Net increase (decrease) in net assets resulting from fund share transactions $ 165,459 $(4,168,013) ----------- ----------- Net increase (decrease) in net assets $ (236,712) $ 3,789,776 ----------- ----------- NET ASSETS: Beginning of period $38,798,342 $35,008,566 ----------- ----------- End of period $38,561,630 $38,798,342 =========== =========== Accumulated/(distributions in excess of) net investment income (loss) $ 2,672 $ -- =========== ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Growth Shares VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Growth Shares Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004 there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total 11 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Growth Shares Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Growth Shares VCT Portfolio had a capital loss carryforward of $40,517,554, of which the following amounts will expire between 2008 and 2011 if not utilized: $4,132,928 in 2008, $9,820,202 in 2009, $19,245,183 in 2010 and $7,319,241 in 2011. The portfolio elected to defer $85,372 in capital losses recognized between November 1, 2003 and December 31, 2003 to its fiscal year ending December 31, 2004. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 12 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Pioneer Growth Shares VCT Portfolio 2003 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 4,477 Long-Term capital gain -- ------------ 4,477 Return of Capital -- ------------ Total distributions $ 4,477 ============ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/ (Capital loss carryforward) (40,517,554) Unrealized appreciation (depreciation) 1,561,822 ------------ Total $(38,955,732) ============ - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.70% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $26,397 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 13 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $1,232 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - --------------------------------------------------------------------------------------------------- Growth Shares Portfolio $39,045,156 $1,123,103 $(1,775,829) $(652,726) =========== ========== =========== ========= - ---------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $39,697,597 and $38,914,354, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------------------------- Growth Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - --------------------------------------------------------------------------------------------------- CLASS II: Shares sold 50,359 $ 618,962 91,892 $ 1,012,931 Reinvestment of distributions -- -- 403 4,477 Shares repurchased (251,629) (3,068,841) (731,375) (7,757,809) ---------------------------------------------------------------- Net increase (201,270) $(2,449,879) (639,080) $(6,740,401) ================================================================ CLASS II: Shares sold 233,502 $ 2,834,133 271,796 $ 3,091,881 Reinvestment of distributions -- -- -- -- Shares repurchased (18,080) (218,795) (46,885) (519,493) ---------------------------------------------------------------- Net increase 215,422 $ 2,615,338 224,911 $ 2,572,388 ================================================================ - ---------------------------------------------------------------------------------------------------
14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16076-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer International Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer International Value VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 7 Notes to Financial Statements 11
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] Financials 25.0% Consumer Discretionary 13.8% Industrials 12.0% Telecommunication Services 9.6% Consumer Staples 9.4% Materials 7.9% Energy 6.8% Health Care 6.6% Information Technology 6.4% Utilities 2.5% Geographical Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] Japan 26.4% United Kingdom 21.4% France 14.6% Switzerland 8.5% Germany 5.7% Netherlands 4.6% Italy 4.2% Spain 3.0% South Korea 2.1% Brazil 1.1% Turkey 1.1% Finland 1.0% Belgium 1.0% Russia 1.0% Other (individually less than 1%) 4.3% Five Largest Holdings (As a percentage of equity holdings) 1. BP Amoco Plc 3.17% 2. Vodafone Group Plc 2.76 3. Total SA 2.33 4. Mitsubishi Tokyo Financial Group, Inc. 2.26 5. Toyota Motor Co. 2.23
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $10.33 $10.04 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.0431 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer International Value VCT Portfolio at net asset value, compared to that of the Morgan Stanley Capital International (MSCI) All Country World Free (ACWF) ex. U.S. Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.] Date Pioneer International MSCI AC Wld Value VCT Portfolio* Fr USA+ 3/95 $10,000 $10,000 $10,945 $10,960 6/96 $11,819 $11,691 $12,227 $11,929 6/98 $11,012 $13,655 $15,859 $17,877 6/00 $12,260 $15,177 $ 9,325 $12,218 6/02 $ 8,064 $10,425 $10,675 $14,740 6/04 $11,029 $15,346 + Index comparison begins on 2/28/95. The MSCI ACWF ex. U.S. Index is composed of 46 markets - 21 developed countries and 25 emerging countries. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- ------------------------------------ Net Asset Value - ------------------------------------ Life-of-Class 1.04% (3/1/95) 5 Years -1.24% 1 Year 26.35%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- With the global recovery well under way, the six months ended June 30, 2004, proved to be a positive environment for international stocks. As Stefano Pregnolato, a member of the Portfolio's management team, highlights in this report, different industries and companies within those sectors are benefiting to a greater degree than others as the recovery solidifies. Q: How did the Portfolio perform during the first half of fiscal 2004? A: The market environment was generally favorable for international stocks. Low interest rates, improving corporate fundamentals and consumer demand helped drive stock prices higher. For the six months ended June 30, 2004, the Portfolio's Class II shares rose 3.32% at net asset value. In comparison, the Morgan Stanley Capital International (MSCI) All Country World Free Index excluding the United States grew 4.10% for the same period. A handful of stocks contributed to the Portfolio's underperformance relative to the benchmark - most notably Nokia (Finland), which is encountering strong competition in the communications equipment sector. Q: What strategies or investments hurt performance most during the six months under review? A: Information technology was the biggest disappointment for the reporting period. Even though the Portfolio's exposure to this sector was just below that of the benchmark, our decision to maintain a large exposure to Nokia (Finland) hurt performance. Nokia announced that profits later this year might not be as robust as originally thought. While the Portfolio's exposure to telecommunication services was in line with that of the benchmark, it largely consisted of Vodafone Group (United Kingdom) - one of the Portfolio's largest holdings on June 30. Vodafone delivered positive performance for the six months, but underperformed the sector overall. The stock came under pressure in late May, when Vodafone announced that forecasted earnings might be less than previously anticipated. The Portfolio's greater-than-benchmark exposure to health care investments did well but not as well as those constituting the benchmark. Finally, investments in consumer staples did well, but the Portfolio's underweighted position, relative to its benchmark, limited its participation in the rally of those stocks. Q: What strategies or investments helped performance most during the six months under review? A: The momentum for global economic growth shifted to Asia during the first quarter of 2004, particularly to Japan, where its resurging economy and reform efforts are being well received by investors. During the spring, we increased investments there. By June 30, the Portfolio's exposure to Japan was higher than that of the benchmark at 25.98% of total equity assets. The increase was very positive for the Portfolio. In addition, the Japanese market is less correlated to the U.S. economy than that of Europe or the rest of Asia - creating a valuable diversifying effect for the Portfolio. The sector allocation strategy also played a significant part in performance. We'd chosen to keep the Portfolio's exposure to energy stocks just below that of the benchmark, but our selection of companies, most specifically ENI (Italy), significantly outperformed those constituting the benchmark. Similarly, investments in utility holdings were below that of the benchmark, but they outperformed those in the benchmark and represented some of the strongest performers for the six-month period. With the increased global economic activity, consumer-related companies also outperformed during the six months ended June 30. Consumer discretionary companies led this group. Effective stock selection and our decision to overweight investments in this sector helped the Portfolio tremendously. Finally, we deemphasized the materials sector relative to the benchmark on account of our view that near-term fundamentals were weak. This strategy proved to be the right decision. Q: Europe still represents the majority of the Portfolio's holdings. How are these investments faring? A: European stocks generally moved in line with the benchmark. Stock price valuations are fair and supported by strong dividend yields. Growth across Europe is more moderate than outside the region, and that fact is discounted in stock prices. The strength of the euro eased a bit during the six months, but it continues to be a risk for European exporters. Q: What is your outlook for the balance of the fiscal year? A: We are cautious about the equity markets in an environment of rising interest rates. However, we see some opportunity in Japan as the signs of growth begin to build after essentially two decades of recession. We also see opportunities in key emerging markets where stronger balance sheets, domestic growth and political reform should provide the basis for good returns - notably Brazil, Russia and Turkey. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. International investing may involve special risks, including differences in accounting and currency, as well as economic instability. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value PREFERRED STOCKS - 0.5% Telecommunication Services - 0.5% Integrated Telecommunication Services - 0.5% 10,100 Tele Norte Leste Participacoes (A.D.R) $ 128,573 ----------- Total Telecommunication Services $ 128,573 ----------- TOTAL PREFERRED STOCKS (Cost $121,829) $ 128,573 ----------- COMMON STOCKS - 98.1% Energy - 6.8% Integrated Oil & Ga - 4.5% 84,110 BP Amoco Plc $ 746,617 16,000 Eni S.p.A. 318,934 ----------- $ 1,065,551 ----------- Oil & Gas Refining Marketing & Transportation - 2.3% 2,870 Total SA $ 550,021 ----------- Total Energy $ 1,615,572 ----------- Materials - 7.8% Commodity Chemicals - 1.0% 4,200 BASF India, Ltd. $ 226,172 ----------- Construction Materials - 2.2% 3,800 CRH Plc $ 80,693 6,200 Italcementi S.p.A.* 83,330 1,600 Lafarge BR 143,501 2,180 Vinci SA 220,516 ----------- $ 528,040 ----------- Diversified Metals & Mining - 2.2% 3,850 Freeport-McMoRan Copper & Gold, Inc. (Class B) $ 127,628 2,100 Norilsk Nickel 115,763 6,090 Rio Tinto Plc 147,081 4,000 Sandvik AB 137,040 ----------- $ 527,512 ----------- Specialty Chemicals - 1.6% 23,400 Hitachi Chemical Company, Ltd. $ 388,026 ----------- Steel - 0.8% 23,102 Broken Hill Proprietary Co., Ltd. $ 202,242 ----------- Total Materials $ 1,871,992 ----------- Capital Goods - 9.2% Aerospace & Defense - 0.7% 5,700 European Aeronautic Defence $ 159,747 ----------- Construction & Engineering - 3.2% 13,449 Actividades de Construccion y Servicios, SA $ 227,379 4,000 Compagnie de Saint Gobain (a) 200,702 93,000 Kajima Corp. 347,050 ----------- $ 775,131 ----------- Shares Value Electrical Components & Equipment - 4.5% 86,000 Mitsubishi Electric Corp.* $ 427,269 7,900 NEC Electronics Corp (a)* 492,426 2,400 Schneider Electric SA 164,615 ----------- $ 1,084,310 ----------- Industrial Machinery - 0.8% 25,100 Scottish Power Plc $ 182,184 ----------- Total Capital Goods $ 2,201,372 ----------- Commercial Services & Supplies - 0.8% Diversified Commercial Services - 0.8% 8,100 TNT Post Group N.V. $ 185,943 ----------- Total Commercial Services & Supplies $ 185,943 ----------- Transportation - 1.8% Railroads - 1.8% 78 East Japan Railway Co. $ 440,064 ----------- Total Transportation $ 440,064 ----------- Automobiles & Components - 4.1% Auto Parts & Equipment - 0.3% 1,500 Compagnie Generale des Etablissements Michelin $ 83,412 ----------- Automobile Manufacturers - 3.8% 3,000 Bayerische Motoren Werke AG $ 133,429 6,360 Hyundai Motor Co., Ltd. 124,680 27,216,000 Koc Holding AS* 122,855 12,900 Toyota Motor Co. 526,110 ----------- $ 907,074 ----------- Total Automobiles & Components $ 990,486 ----------- Consumer Durables & Apparel - 2.1% Homebuilding - 2.1% 59,000 Sekisui Chemical Co., Ltd. $ 501,648 ----------- Total Consumer Durables & Apparel $ 501,648 ----------- Hotels, Restaurants & Leisure - 2.4% Casinos & Gaming - 1.6% 8,200 Sammy Corp. $ 393,532 ----------- Restaurants - 0.8% 12,000 GUS Plc $ 185,407 ----------- Total Hotels, Restaurants & Leisure $ 578,939 ----------- Media - 2.1% Advertising - 0.4% 3,000 Publics SA $ 89,380 ----------- Publishing - 1.7% 9,600 Vivendi Universal* $ 268,201 13,700 Reed Elsevier Plc 133,638 ----------- $ 401,839 ----------- Total Media $ 491,219 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Retailing - 2.9% Distributors - 1.4% 34,000 Mitsubishi Corp. $ 332,179 ----------- General Merchandise Stores - 1.5% 6,900 Ryohin Keikaku Co., Ltd. $ 359,149 ----------- Total Retailing $ 691,328 ----------- Food & Drug Retailing - 5.0% Drug Retail - 0.6% 12,200 Boots Co., Plc* $ 152,573 ----------- Food Retail - 4.4% 16,700 Koninklijke Ahold NV* $ 131,951 7,266 Koninklijke Ahold NV (144A)* 57,148 1,890 Nestle SA (Registered Shares) 505,706 74,200 Tesco Plc 360,356 ----------- $ 1,055,161 ----------- Total Food & Drug Retailing $ 1,207,734 ----------- Food, Beverage & Tobacco - 3.1% Tobacco - 3.1% 19,820 British American Tobacco Plc $ 308,534 55 Japan Tobacco, Inc.* 429,378 ----------- $ 737,912 ----------- Total Food, Beverage & Tobacco $ 737,912 ----------- Household & Personal Products - 1.2% Household Products - 1.1% 5,200 Uni-Charm Corp.* $ 260,449 ----------- Personal Products - 0.1% 480 Kose Corp. $ 18,533 ----------- Total Household & Personal Products $ 278,982 ----------- Health Care Equipment & Services - 0.8% Health Care Distributors - 0.4% 1,600 Celesio AG $ 95,902 ----------- Health Care Supplies - 0.4% 560 Nobel Biocare Holding AG $ 87,988 ----------- Total Health Care Equipment & Services $ 183,890 ----------- Pharmaceuticals & Biotechnology - 5.8% Pharmaceuticals - 5.8% 10,432 Astrazeneca Plc $ 470,123 9,590 GlaxoSmithKline Plc 195,658 3,788 Roche Holdings AG 376,498 3,800 Sanofi-Synthelabo SA 241,753 1,670 Schering AG 98,907 ----------- $ 1,382,939 ----------- Total Pharmaceuticals & Biotechnology $ 1,382,939 ----------- Shares Value Banks - 13.2% Diversified Banks - 13.2% 7,400 Allied Irish Banks Plc $ 114,682 44,300 Banca Intesa S.p.A. 173,896 18,600 Banco Bilbao Vizcaya Argentaria SA 249,844 18,325 Barclays Plc 156,950 5,520 BNP Paribas SA (a) 341,393 10,345 Credit Agricole SA 253,013 6,830 CS Group* 243,845 18,000 Development Bank of Singapore, Ltd. 151,460 22,900 HSBC Holding Plc 343,363 2,300 Kookmin Bank (A.D.R.) (a)* 72,174 57 Mitsubishi Tokyo Financial Group, Inc.* 533,456 14,020 Royal Bank of Scotland Group Plc 406,589 6,100 Uniao de Bancos Brasileiros SA (G.D.R.) (144A) 120,597 ----------- $ 3,161,262 ----------- Total Banks $ 3,161,262 ----------- Diversified Financials - 7.0% Consumer Finance - 1.4% 3,100 Aiful Corp. $ 327,006 ----------- Diversified Financial Services - 4.8% 12,400 ING Groep NV $ 295,025 2,000 Lagardere SA 125,665 2,519 Societe Generale 215,363 7,150 UBS AG 506,374 ----------- $ 1,142,427 ----------- Specialized Finance - 0.8% 3,800 Deutsche Boerse AG $ 193,950 ----------- Total Diversified Financials $ 1,663,383 ----------- Insurance - 3.1% Life & Health Insurance - 0.7% 6,100 Assicurazioni Generali $ 165,417 ----------- Multi-Line Insurance - 2.4% 12,500 AXA SA $ 277,313 1,860 Zurich Financial Services* 295,149 ----------- $ 572,462 ----------- Total Insurance $ 737,879 ----------- Real Estate - 1.4% Real Estate Management & Development - 1.4% 27,000 Mitsui Fudosan Co. $ 326,878 ----------- Total Real Estate $ 326,878 ----------- Software & Services - 1.2% IT Consulting & Other Services - 0.9% 1,700 Atos Origin* $ 109,984 27,900 LogicaCMG Plc 93,699 ----------- $ 203,683 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Software & Services - 0.3% 6,500 T-Online International AG* $ 74,140 ----------- Total Software & Services $ 277,823 ----------- Technology Hardware & Equipment - 4.0% Semiconductors - 1.1% 9,500 Philips Electronics NV $ 257,838 ----------- Communications Equipment - 1.0% 17,031 Nokia Oyj $ 247,134 ----------- Computer Hardware - 0.5% 42,100 Dixons Group Plc $ 126,465 ----------- Electronic Equipment & Instruments - 1.4% 1,200 Nidec Corp. $ 123,877 2,790 Siemens 202,289 ----------- $ 326,166 ----------- Total Technology Hardware & Equipment $ 957,603 ----------- Semiconductors - 1.2% 450 Samsung Electronics $ 187,303 21,400 United Microelectronics (A.D.R.) (a)* 92,234 ----------- $ 279,537 ----------- Total Semiconductors $ 279,537 ----------- Telecommunication Services - 8.9% Alternate Carriers - 0.7% 6,200 France Telecom $ 162,653 ----------- Integrated Telecommunication Services - 4.0% 7,900 Belgacom SA* $ 241,431 9,500 British Sky Broadcasting Plc 108,058 17,100 Mahanagar Telephone Nigam, Ltd. 123,977 15,630 Telefonica SA 232,388 17,340 Telecom Italia Mobile S.p.A. 98,728 46,486 Telecom Italia S.p.A. 145,203 ----------- $ 949,785 ----------- Wireless Telecommunication Services - 4.2% 1,000 Mobile Telesystems* $ 122,000 5,700 SK Telecom Co., Ltd.* 119,643 4,100 Turkcell Iletism Hizmet (A.D.R.)* 125,870 295,011 Vodafone Group Plc 650,801 ----------- $ 1,018,314 ----------- Total Telecommunication Services $ 2,130,752 ----------- Shares Value Utilities - 2.4% Electric Utilities - 2.4% 4,433 E.On AG $ 321,491 31,100 National Grid Transco Plc 242,321 ----------- $ 563,812 ----------- Total Utilities $ 563,812 ----------- TOTAL COMMON STOCKS (Cost $20,267,040) $23,458,949 ----------- TEMPORARY CASH INVESTMENT - 4.4% Security Lending Collateral - 4.4% 1,038,146 Securities Lending Investment Fund, 1.29% $ 1,038,146 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,038,146) $ 1,038,146 ----------- TOTAL INVESTMENT IN SECURITIES - 103.0% (Cost $21,427,015) (a)(b) $24,625,668 ----------- OTHER ASSETS AND LIABILITIES - (3.0)% $ (709,954) ----------- TOTAL NET ASSETS - 100.0% $23,915,714 ===========
(A.D.R.) American Depositary Receipt (G.D.R.) Global Depositary Receipt * Non-income producing security. 144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $177,745 or 0.7% of net assets. (a) Distributions of investments by country of issue (excluding temporary cash investments), as a percentage of total investment in equity securities, is as follows: Japan 26.4% United Kingdom 21.4 France 14.6 Switzerland 8.5 Germany 5.7 Netherlands 4.6 Italy 4.2 Spain 3.0 South Korea 2.1 Brazil 1.1 Turkey 1.1 Finland 1.0 Belgium 1.0 Russia 1.0 Other (individually less than 1%) 4.3 ----- 100.0% =====
(b) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 4,985 BNP Paribas SA $309,856 3,800 Compagnie de Saint Gobain 190,433 1,825 Kookmin Bank (A.D.R.)* 57,269 5,400 NEC Electronics Corp.* 333,872 20,320 United Microelectronics (A.D.R.)* 86,157 -------- Total $977,587 ========
6 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 5/1/03 6/30/04 to Class II (a) (unaudited) 12/31/03 Net asset value, beginning of period $10.04 $ 7.76 ------ ------ Increase (decrease) from investment operations: Net investment income $ 0.01 $ 0.05 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.32 2.29 ------ ------ Net increase (decrease) from investment operations $ 0.33 $ 2.34 Distributions to shareowners: Net investment income (0.04) (0.06) Net realized gain -- -- ------ ------ Net increase (decrease) in net asset value $ 0.29 $ 2.28 ------ ------ Net asset value, end of period $10.33 $10.04 ------ ------ Total return* 3.32%** 30.31%* * Ratio of net expenses to average net assets+ 2.09%** 2.02%* * Ratio of net investment income (loss) to average net assets+ 1.12%** (0.81)%** Portfolio turnover rate 189%** 99% Net assets, end of period (in thousands) $2,205 $1,081 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 2.09%** 2.02%* * Net investment income (loss) 1.12%** (0.81)%**
(a) Class 2 shares were first publicly offered on May 1, 2003. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer International Value VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $977,587) (Cost $21,427,015) $ 24,625,668 Cash 343,632 Foreign currencies, at value -- Receivables -- Investment securities sold 945,383 Fund shares sold -- Variation margin -- Dividends, interest and foreign taxes withheld 43,287 Forward foreign currency settlement contracts, net -- Due from Pioneer Investment Management, Inc. -- Other 338 ------------ Total assets $ 25,958,308 ------------ LIABILITIES: Payables -- Investment securities purchased $ 896,946 Fund shares repurchased 50,440 Dividends -- Upon return of securities loaned 1,038,146 Forward foreign currency settlement contracts, net 3,112 Reserve for repatriation taxes -- Due to bank 584 Due to affiliates 24,038 Accrued expenses 29,328 ------------ Total liabilities $ 2,042,594 ------------ NET ASSETS: Paid-in capital $ 35,249,709 Accumulated net investment income (loss) 148,255 Accumulated undistributed net realized gain (loss) (14,677,563) Net unrealized gain (loss) on: Investments 3,198,653 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (3,340) ------------ Total net assets $ 23,915,714 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 21,710,796 Shares outstanding 2,096,193 ------------ Net asset value per share $ 10.36 Class II: No par value (unlimited number of shares authorized) Net assets $ 2,204,918 Shares outstanding 213,362 ------------ Net asset value per share $ 10.33
8 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer International Value VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $37,883) $ 341,167 Interest 910 Income on securities loaned, net 5,408 Other -- ----------- Total investment income $ 347,485 ----------- EXPENSES: Management fees $ 116,707 Transfer agent fees 1,458 Distribution fees (Class II) 1,882 Administrative fees 9,250 Custodian fees 27,002 Professional fees 36,283 Printing 5,128 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,425 ----------- Total expenses $ 199,135 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ----------- Net expenses $ 199,135 ----------- Net investment income (loss) $ 148,350 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 2,344,688 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (40,661) ----------- $ 2,304,027 ----------- Change in net unrealized gain or loss from: Investments $(1,630,701) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (13,527) ----------- $(1,644,228) ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ 659,799 =========== Net increase (decrease) in net assets resulting from operations $ 808,149 ===========
The accompanying notes are an integral part of these financial statements. 9 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer International Value VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 148,350 $ 136,624 Net realized gain (loss) on investments 2,304,027 (857,791) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (1,644,228) 6,236,488 ----------- ----------- Net increase (decrease) in net assets resulting from operations $ 808,149 $ 5,515,321 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (113,572) $ (146,246) Class II (8,890) (4) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ----------- ----------- Total distributions to shareowners $ (122,462) $ (146,250) ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 2,046,605 $39,187,523 Reinvestment of distributions 122,459 146,246 Cost of shares repurchased (2,526,547) 42,386,651) ----------- ----------- Net increase (decrease) in net assets resulting from fund share transactions $ (357,483) $(3,052,882) ----------- ----------- Net increase (decrease) in net assets $ 328,204 $ 2,316,189 ----------- ----------- NET ASSETS: Beginning of period $23,587,510 $21,271,321 ----------- ----------- End of period $23,915,714 $23,587,510 =========== =========== Accumulated/(distributions in excess of) net investment income (loss) $ 148,255 $ 122,367 =========== ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer International Value Portfolio (the Portfolio) is a Portfolio of the Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The Portfolio commenced operations on May 1, 2003. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objective of International Value VCT Portfolio is to seek long-term capital growth. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. At June 30, 2004, there were no fair valued securities except as follows. All securities that trade in foreign markets whose closing prices are as of times prior to the close of the New York Stock Exchange ("NYSE") and that are held by International Value Portfolio are fair valued using vendor-supplied pricing updates for each security to the time of the close of the NYSE. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at 11 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. The Portfolio's investments in emerging markets or countries with limited or developing markets may subject the Portfolio to a greater degree of risk than in a developed market. Risks associated with these developing markets include political, social or economic factors and may affect the price of the Portfolio's investments and income generated by these investments, as well as the Portfolio's ability to repatriate such amounts. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. D. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the six months ended June 30, 2004, no such taxes were paid. In determining the daily net asset value, the Portfolio estimates the reserve for such taxes, if any, associated with investments in certain countries. The estimated reserve for taxes on capital gains is based on the net unrealized appreciation on certain portfolio securities, the holding year of such securities and the related tax rates, tax loss carryforward (if applicable) and other such factors. The estimated reserve for taxes on repatriation of foreign currencies is based on principal balances and/or unrealized appreciation of applicable securities, the holding year of such investments and the related tax rates and other such factors. As of June 30, 2004, the Portfolio had no reserves related to taxes on the repatriation of foreign currencies. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, International Value VCT Portfolio had a capital loss carryforward of $16,962,967 of which the following amounts will expire between 2007 and 2010 if not utilized: $2,465,434 in 2007, $7,057,019 in 2009, $5,309,516 in 2010 and $2,130,998 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 12 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Pioneer International Value VCT Portfolio 2003 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 146,250 Long-Term capital gain -- ------------ $ 146,250 Return of Capital -- ------------ Total distributions $ 146,250 ============ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 122,367 Undistributed long-term gain/ (Capital loss carryforward) (16,692,967) Unrealized appreciation (depreciation) 4,820,918 ------------ Total $(12,019,682) ============ - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. E. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. F. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. G. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 1.00% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $23,315 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and 13 Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- shareowner services to the Trust at negotiated rates. Included in due to affiliates is $259 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $464 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ----------------------------------------------------------------------------------------------------- International Value Portfolio $21,445,638 $3,451,463 $(271,433) $3,180,030 =========== ========== ========= ========== - -----------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $21,825,171 and $21,914,026, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ------------------------------------------------------------------------------------------------------ International Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------------------ CLASS I: Shares sold 82,417 $ 841,974 148,266 $ 1,260,116 Reinvestment of distributions 10,994 113,572 17,452 146,246 Shares repurchased (234,008) (2,386,367) (658,580) (5,442,461) ------------------------------------------------------------------- Net increase (decrease) (140,597) $(1,430,821) (492,862) $(4,036,099) =================================================================== CLASS II: Shares sold 118,388 $ 1,204,631 108,723 $ 993,224 Reinvestment of distributions 862 8,887 -- -- Shares repurchased (13,519) (140,180) (1,092) (10,077) ------------------------------------------------------------------- Net increase (decrease) 105,731 $ 1,073,338 107,631 $ 983,217 =================================================================== - ------------------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts During the six months ended June 30, 2004, certain Portfolios had entered into various contracts that obligate the Portfolios to deliver currencies at specified future dates. At the maturity of a contract, the Portfolios must make delivery of the foreign currency. Alternatively, prior to the settlement date of a portfolio hedge, the Portfolio may close out such contracts by entering into an offsetting hedge contract. As of June 30, 2004, the Portfolio had no outstanding portfolio hedges. Outstanding forward currency settlement contracts were as follows:
- --------------------------------------------------------------------------------------------- Net Gross Settlement Gross Receivable/ Portfolio Receivable Date Payable (Payable) - --------------------------------------------------------------------------------------------- International Value Portfolio $(215,870) 7/1/04 $(218,202) $(2,332) International Value Portfolio $ (61,833) 7/1/04 $ (61,783) $ 50 International Value Portfolio $ 150,662 7/1/04 $ 151,021 $ (359) International Value Portfolio $(177,285) 7/1/04 $(178,089) $ (804) International Value Portfolio $ (28,328) 7/1/04 $ (28,528) $ (200) International Value Portfolio $ 104,214 7/1/04 $ 103,313 $ 901 International Value Portfolio $(220,184) 7/1/04 $(220,185) $ (1) International Value Portfolio $ 121,036 7/1/04 $ 121,403 $ (367) - ---------------------------------------------------------------------------------------------
14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16072-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Real Estate Shares VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Real Estate Shares VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 5 Notes to Financial Statements 9
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE PRINTED DOCUMENT.] U.S. Common Stocks 100% Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE PRINTED DOCUMENT.] Office 17.4% Apartment 16.8% Regional Mall 15.0% Industrial 12.7% Shopping Center 10.4% Hotel 8.7% Diversified 8.5% Self Storage 4.1% Cash 3.0% Factory Outlet 2.1% Manufactured Homes 1.0% Health Care 0.3%
Five Largest Holdings (As a percentage of equity holdings) 1. Simon DeBartolo Group, Inc. 6.00% 2. Boston Properties, Inc. 5.02 3. Equity Residential Property Trust 4.36 4. ProLogis Trust 3.97 5. Catellus Development Corp. 3.91
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $19.52 $18.55 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $0.380 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Real Estate Shares VCT Portfolio at net asset value, compared to that of the Wilshire Real Estate Securities Index. Portfolio returns are based on net asset value and do not reflect applicable insurance fees and surrender charges. [THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE PRINTED DOCUMENT.] Date Pioneer Real Estate Wilshire Real Shares VCT Portfolio Estate Securities Index 3/31/1995 $10,000 $10,000 $11,674 $11,322 12/31/1996 $15,680 $15,497 $18,919 $18,565 12/31/1998 $15,259 $15,330 $14,460 $14,841 12/31/2000 $18,905 $19,403 $20,327 $21,431 12/31/2002 $20,789 $21,983 $27,952 $30,133 6/30/2004 $29,978 $32,226 + Index comparison begins on 2/28/95. The Wilshire Real Estate Securities Index is a market-capitalization weighted measure of the performance of real estate investment trusts (equity and hybrid) and real estate operating companies. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 12.47% (3/1/95) 5 Years 13.57% 1 Year 28.59%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- Fear of higher interest rates, rising oil prices and the ongoing turmoil in Iraq contributed to volatile markets for the six months ended June 30, which made up the first half or your Portfolio's fiscal year. In this report, Mathew Troxell, a member of the Portfolio's management team, discusses the sector's positive returns amidst the shifting economic landscape and his expectations for 2004. Q: Was the market and economic environment favorable for the Portfolio's investment strategy? A: Real estate stocks, like most asset classes, experienced great volatility during the reporting period. With evidence suggesting that the U.S. economy was on its way to recovery, the real estate market rose strongly during the first quarter of 2004. However, in early April, the jobs report for March was surprisingly strong and sparked a sell-off in the bond market. Bond investors feared that the economy might be growing too fast and would ignite inflation. Interest rates began to rise, pushing bond prices down. Prices of real estate stocks also fell sharply even though historically they have exhibited a low correlation to bond prices. Rising oil prices and political uncertainty in Iraq further heightened investor concerns. During May and June, real estate investment trusts began to recover and picked up enough positive momentum to regain much of the ground lost in April - ending the six months with relatively strong performance gains. For the six months ended June 30, 2004, the Portfolio's Class II shares rose 7.24% at net asset value. In comparison, the Wilshire Real Estate Securities Index increased 6.96% for the same period. Q: What investments helped performance during the six months? A: Several holdings contributed positively to the Portfolio's returns. AvalonBay Communities, one of the Portfolio's largest holdings, is an apartment/multi-family real estate investment trust (REIT) that has benefited from the expectation of improving fundamentals for apartments. Job growth has been very positive for household formations, especially for young adults who are leaving home for the first time. This demographic group has the highest propensity to rent rather than buy. This stronger renter demand is giving apartment REIT managers, such as AvalonBay, greater pricing flexibility. In addition, rising interest rates should contribute to higher renter demand, because buying a home becomes a more expensive option. In the lodging sector, Starwood Hotels and Resorts performed well, particularly in the final two months of the reporting period. Starwood, as well as the sector in general, are benefiting from a recovery in lodging demand, which is directly correlated to the improving economy. Catellus Development, a real estate management and development company, holds a portfolio of high-quality predominately industrial properties generating strong cash flow. This REIT's positive performance was driven, in part, by management's decision to convert to REIT status early in 2004. The heightened investor interest helped it to outperform the benchmark during the six months. Q: What investments hurt performance during the six months? A: We believe that Simon Property Group is a solid company, but after consistently outperforming the real estate market during the multi-year rally through the first quarter of 2004, it, along with other retail names, lagged in the final months of the reporting period. Following the market correction this spring, it began to recover. However, when management announced in late June that it was acquiring Chelsea Property Group (also held by the Portfolio), investors reacted negatively. We view the proposed merger very positively, because we think Chelsea Property Group, which owns factory outlet shopping centers in Japan as well as in the United States, would add international diversity and a new retail focus to Simon's current portfolio. Following disappointing performance last year, Apartment Investment and Management continued to lag the benchmark. This REIT, which owns a diverse portfolio of multi-family apartment complexes, suffered more than its peers as apartment fundamentals proved challenging last year and experienced lower-than-expected fee income and higher-than-expected apartment-turnover-related expenses last year - resulting in a reduced dividend. Even with the greater promise for improving fundamentals, we reduced the position this spring, because we tempered our view of its total return potential. Q: What is your outlook for the balance of 2004? A: We think that the various property types making up the real estate market are generally experiencing improving fundamentals. While real estate earnings typically lag an improvement in fundamentals, hotel and apartment landlords can respond fairly quickly. Should economic growth continue, however, we believe retail landlords will begin to lose the relative advantage they have previously enjoyed. We believe that it will fall to astute stock selection to separate the wheat from the chafe. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Real estate investments may be subject to special risks, including risks related to general and local economic conditions and risks related to an individual property. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 97.4% Hotels, Restaurants & Leisure - 5.3% Hotels, Resorts & Cruise Lines - 5.3% 75,000 Hilton Hotels Corp.* $ 1,399,500 58,000 Starwood Hotels & Resorts 2,601,300 ----------- $ 4,000,800 ----------- Total Hotels, Restaurants & Leisure $ 4,000,800 ----------- Diversified Financials - 3.0% Diversified Financial Services - 3.0% 77,000 Brookfield Properties Corp. $ 2,213,750 ----------- Total Diversified Financials $ 2,213,750 ----------- Real Estate - 89.1% Real Estate Management & Development - 4.0% 115,500 Catellus Development Corp. $ 2,847,075 8,200 Inland Real Estate Corp.* 106,682 ----------- $ 2,953,757 ----------- Real Estate Investment Trusts - 85.1% 38,500 Apartment Investment & Management Co. $ 1,198,505 46,200 AMB Property Corp. 1,599,906 22,400 Affordable Residential Communities* 371,840 16,500 Alexandria Real Estate Equities, Inc. 936,870 44,000 Arden Realty Group, Inc. 1,294,040 92,500 Archstone Communities Trust 2,713,025 50,000 AvalonBay Communities, Inc.* 2,826,000 73,100 Boston Properties, Inc. 3,660,848 17,500 Chelsea Property Group, Inc. 1,141,350 30,000 Camden Property Trust 1,374,000 10,000 Carramerica Realty Corp. 302,300 61,000 Developers Diversifies Realty Corp. 2,157,570 57,000 Duke Realty Investments, Inc. 1,813,170 79,000 Equity Office Properties Trust 2,148,800 107,000 Equity Residential Property Trust 3,181,110 5,800 First Potomac Realty Trust* 111,186 36,000 Federal Realty Investment Trust 1,497,240 79,500 General Growth Properties, Inc. 2,350,815 25,500 Highwoods Properties, Inc.* 599,250 Shares Value 189,000 Host Marriott Corp.* $ 2,336,040 6,000 Healthcare Realty Trust, Inc. 224,880 2,500 Kilroy Realty Corp. 85,250 53,000 Liberty Property Trust 2,131,130 35,500 The Macerich Co. 1,699,385 11,300 Manufactured Home Communities, Inc. 375,047 9,100 Mills Corp. 424,970 10,500 Corporate Office Properties 260,925 88,000 ProLogis Trust 2,896,960 29,300 Pan Pacific Retail Properties, Inc. 1,480,236 55,000 Prentiss Properties Trust 1,843,600 45,206 Public Storage, Inc. 2,079,928 25,500 PS Business Parks Inc* 1,026,120 48,000 Regency Centers Corp. 2,059,200 35,000 The Rouse Co.* 1,662,500 9,500 iStar Financial, Inc.* 380,000 27,500 Shurgard Storage Centers, Inc. 1,028,500 15,800 Strategic Hotel Capital, Inc.* 232,260 85,000 Simon DeBartolo Group, Inc. 4,370,700 51,000 Taubman Centers, Inc. 1,167,390 37,600 Trizec Properties Inc. 611,376 47,200 United Dominion Realty Trust 933,616 46,000 Vornado Realty Trust 2,627,060 16,500 Western Resources, Inc. 516,120 ----------- $63,731,018 ----------- Total Real Estate $66,684,775 ----------- TOTAL COMMON STOCKS (Cost $55,838,852) $72,899,325 ----------- TOTAL INVESTMENT IN SECURITIES - 97.4% (Cost $55,838,852) $72,899,325 ----------- OTHER ASSETS AND LIABILITIES - 2.6% $ 1,967,974 ----------- TOTAL NET ASSETS - 100.0% $74,867,299 ===========
* Non-income producing security. 4 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Year Year Year 8/1/00 Ended Ended Ended Ended to Class II (a) 6/30/04 12/31/03 12/31/02 12/31/01 12/31/00 Net asset value, beginning of period $ 18.55 $ 14.45 $ 14.75 $ 14.40 $14.55 ------- ------- ------- ------- ------ Increase (decrease) from investment operations: Net investment income $ 0.38 $ 0.68 $ 0.55 $ 0.41 $ 0.32 Net realized and unrealized gain (loss) on investments and foreign currency transactions 0.97 4.18 (0.20) 0.63 (0.28) ------- ------- ------- ------- ------ Net increase (decrease) from investment operations $ 1.35 $ 4.86 $ 0.35 $ 1.04 $ 0.04 Distributions to shareowners: Net investment income (0.38) (0.56) (0.65) (0.52) (0.09) Tax Return of Capital -- (0.20) -- (0.17) (0.10) ------- ------- ------- ------- ------ Net increase (decrease) in net asset value $ 0.97 $ 4.10 $ (0.30) $ 0.35 $(0.15) ------- ------- ------- ------- ------ Net asset value, end of period $ 19.52 $ 18.55 $ 14.45 $ 14.75 $14.40 ======= ======= ======= ======= ====== Total return* 7.24% 34.45% 2.28% 7.52% 1.32 % Ratio of net expenses to average net assets+ 1.19%** 1.28% 1.32% 1.52% 1.63%** Ratio of net investment income (loss) to average net assets+ 4.00%** 4.26% 4.21% 4.36% 7.54%** Portfolio turnover rate 43%** 20% 29% 34% 31%** Net assets, end of period (in thousands) $44,570 $39,892 $31,985 $11,972 $1,770 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.19%** 1.28% 1.32% 1.52% 1.63%** Net investment income (loss) 4.00%** 4.26% 4.21% 4.36% 7.54%**
(a) Class 2 shares were first publicly offered on August 1, 2000. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period.) ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 5 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio ASSETS: Investment in securities, at value (Cost $55,838,852) $72,899,325 Cash 1,906,225 Foreign currencies, at value -- Receivables -- Investment securities sold 2,124,520 Fund shares sold 181,129 Dividends, interest and foreign taxes withheld 428,504 Other 354 ----------- Total assets $77,540,057 ----------- LIABILITIES: Payables -- Investment securities purchased $ 2,208,201 Fund shares repurchased 378,282 Dividends -- Upon return for securities loaned -- Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 66,321 Accrued expenses 19,954 Other -- ----------- Total liabilities $ 2,672,758 ----------- NET ASSETS: Paid-in capital $57,527,714 Accumulated net investment income (loss) 160,542 Accumulated undistributed net realized gain (loss) 118,570 Net unrealized gain (loss) on: Investments 17,060,473 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- Total net assets $74,867,299 ----------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $30,296,916 Shares outstanding 1,549,560 ----------- Net asset value per share $ 19.55 Class II: No par value (unlimited number of shares authorized) Net assets $44,570,383 Shares outstanding 2,283,389 ----------- Net asset value per share $ 19.52
6 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $1,676) $1,885,996 Interest 18,128 Income on securities loaned, net 535 Other -- ---------- Total investment income $1,904,659 ---------- EXPENSES: Management fees $ 294,190 Transfer agent fees 1,494 Distribution fees (Class II) 53,188 Administrative fees 9,250 Custodian fees 13,052 Professional fees 19,250 Printing 8,855 Fees and expenses of nonaffiliated trustees -- Miscellaneous 899 ---------- Total expenses $ 400,178 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ---------- Net expenses $ 400,178 ---------- Net investment income (loss) $1,504,481 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $3,075,780 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $3,075,780 ---------- Change in net unrealized gain or loss from: Investments $ 359,869 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ 359,869 ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $3,435,649 ========== Net increase (decrease) in net assets resulting from operations $4,940,130 ==========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 1,504,481 $ 3,062,870 Net realized gain (loss) on investments 3,075,780 (474,302) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 359,869 15,553,008 ----------- ------------ Net increase (decrease) in net assets resulting from operations $ 4,940,130 $ 18,141,576 ----------- ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (637,400) $ (1,422,912) Class II (859,854) (1,519,594) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ----------- ------------ Total distributions to shareowners $(1,497,254) $ (2,942,506) ----------- ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 7,974,724 $ 9,753,610 Reinvestment of distributions 1,497,254 2,942,506 Cost of shares repurchased (9,831,522) (17,969,003) ----------- ------------ Net increase (decrease) in net assets resulting from fund share transactions $ (359,544) $ (5,272,887) ----------- ------------ Net increase (decrease) in net assets $ 3,083,332 $ 9,926,183 ----------- ------------ NET ASSETS: Beginning of period $71,783,967 $ 61,857,784 ----------- ------------ End of period $78,867,299 $ 71,783,967 =========== ============ Accumulated/(distributions in excess of) net investment income (loss) $ 160,542 $ 153,315 =========== ============
8 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Real Estate Shares VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Real Estate Shares Portfolio pursues long-term capital growth, with current income as a secondary objective. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Because Real Estate Shares Portfolio invests a substantial portion of its assets in real estate 9 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- investment trusts (REITs), the Portfolio may be subject to certain risks associated with direct investments in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital returns may be made at any time. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code or its failure to maintain exemption from registration under the Investment Company Act of 1940. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Real Estate Shares had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. A portion of the dividend income recorded by Real Estate Shares Portfolio is from distributions by publicly traded REITs, and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Trust as a reduction of the cost basis of the securities held. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, 10 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Real Estate Shares VCT Portfolio had a capital loss carryforward of $3,310,843, of which the following amounts will expire between 2007 and 2011 if not utilized: $2,238,450 in 2007, $619,294 in 2008 and $453,069 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003.
- -------------------------------------------------------------------------------- Pioneer Real Estate Shares VCT Portfolio 2003 -------------- Distributions paid from: Ordinary Income* $ 2,171,485 Long-Term capital gain -- ----------- 2,171,485 Return of Capital -- ----------- Total distributions $ 2,171,485 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/ (Capital loss carryforward) (2,665,210) Unrealized appreciation (depreciation) 16,408,604 ----------- Total $13,743,394 =========== - --------------------------------------------------------------------------------
* Included in the Portfolio's distributions from 2003 ordinary income is $192,564 in excess of investment company taxable income, which, in accordance with U.S. tax law, is taxable to shareowners as ordinary income distributions. The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. Prior to June 30, 2004, the Portfolio has reclassified $21,639 to decrease net unrealized gain on investments, $6,268 to decrease accumulated undistributed net realized gain on investments and $27,907 to increase paid-in capital. The reclassification has no impact on the net assets of the Portfolio and presents the Portfolio's capital accounts on a tax basis. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities 11 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.80% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $55,958 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $10,106 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) -------------- -------------- -------------- --------------- Real Estate Shares Portfolio $56,411,455 $16,815,051 $(327,181) $16,487,870 ----------- ----------- ---------- ----------- - ----------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $17,444,652 and $15,240,948, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ---------------------------------------------------------------------------------------------------- Real Estate Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ---------------------------------------------------------------------------------------------------- CLASS II: Shares sold 46,990 $ 914,044 153,884 $ 2,545,266 Reinvestment of distributions 31,935 637,400 87,137 1,422,912 Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017) ----------------------------------------------------------------- Net increase (167,581) $(3,090,354) (347,178) $(5,232,839) ================================================================= CLASS II: Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344 Reinvestment of distributions 43,174 859,854 92,474 1,519,594 Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986) ----------------------------------------------------------------- Net increase 132,798 $ 2,730,810 (62,278) $ (40,048) ----------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------
12 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 13 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16077-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Equity Income VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Equity Income VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 7 Notes to Financial Statements 11
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [The following table was depicted as a pie chart in the printed material.] U.S. Common Stocks 94.2% Temporary Cash Investment 4.4% Convertible Preferred Stocks 1.3% Convertible Corporate Bonds 0.1%
Sector Distribution (As a percentage of equity holdings) [The following table was depicted as a pie chart in the printed material.] Financials 22.4% Utilities 16.1% Energy 12.0% Consumer Discretionary 10.9% Industrials 9.3% Health Care 7.5% Consumer Staples 7.1% Telecommunication Services 6.9% Materials 5.3% Information Technology 2.5%
Five Largest Holdings (As a percentage of equity holdings) 1. ChevronTexaco Corp. 4.15% 2. ConocoPhillips 3.93 3. PACCAR, Inc. 3.78 4. Exxon Mobil Corp. 3.21 5. Charter One Financial, Inc. 3.07
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 18.62 $ 18.09
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.180 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Equity Income VCT Portfolio at net asset value, compared to that of the Russell 1000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [The following table was depicted as a line chart in the printed material.]
Russell 1000 Value Index Pioneer Equity Income VCT Portfolio* ------------------------ ------------------------------------ 3/95 10000 10000 12632 12025 12/96 15366 13852 20773 18732 12/98 24021 22816 25787 23092 12/00 27597 26522 26054 24673 12/02 22010 20770 28620 25466 12/04 29745 26470
Index comparison begins 2/28/95. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 11.31% (3/1/95) 5 Years 1.54% 1 Year 17.83%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 (UNAUDITED) In the following discussion, portfolio manager John Carey reviews the performance of Pioneer Equity Income VCT Portfolio over the six months ended June 30, 2004. Q: How did the portfolio fare over the past six months? A: Stock prices generally showed gains during the period. The Russell 1000 Value Index rose by 3.94%, and Pioneer Equity Income VCT Portfolio rose by exactly the same amount, 3.94% at net asset value. After the market of 2003, when the prices of many highly cyclical stocks moved dramatically, the first six months of 2004 saw investors return to steadier companies. Information technology, which had been the strongest performing sector in 2003 with the sharp recovery of many deeply depressed stocks, was one of the weakest areas of the market through June of this year. On the other hand, consumer staples, energy, and industrials all performed above the benchmark average as investors looked more favorably on companies with substantial earnings and also dividends. While financials actually underperformed the benchmark Russell 1000 Value Index, our Portfolio experienced the largest contribution to total return from our investments there. Two of our holdings, Charter One Financial and South Trust, received take-over bids from other banks at substantial premiums to their current share prices (and also to our average cost on the shares), producing sharp gains in the market value of those positions. We also did not own any shares of the lackluster performer Citigroup, a major component of the Russell index. Offsetting results came from our weightings and stock selection in telecommunications services and utilities. In telecomm, our AT&T stock declined as investors worried about mounting price competition amid slower growth. Further affecting our relative performance in that sector was our lack of ownership of AT&T Wireless, the cellular provider operating independently of its former parent since late 2001. That company received an acquisition offer from Cingular, a joint venture between two companies that we did own, BellSouth and SBC Communications. The stocks of those companies fell on concerns about the acquisition price, while stock in AT&T Wireless rose in recognition of the premium price to be paid. With regard to our holdings in the utilities sector, we have continued to favor the strong utilities with well-supported and consistent dividend-paying records. It so happened that some of the best-performing utility stocks during the period were the so-called turnaround stories, some of which had even sharply reduced or eliminated their dividends. We shall stick with our long-term strategy and emphasis on financial strength and business stability. Q: What changes did you make to the Portfolio in the first half of the period? A: Overall we added seven positions and liquidated nine. With the high oil prices and positive outlook for energy, we thought it reasonable to enlarge our exposure somewhat in that sector and added Occidental Petroleum. A specialist in coatings and other chemical products, Valspar shows good earnings potential as the economy improves. J. C. Penney has re-focused on its department stores after negotiating the sale of its sagging drugstore operation, and the results show it. Clorox, is benefiting from better management. Ameren and Equitable Resources were two additions in utilities, and U. S. Bancorp is a strong regional bank headquartered in Minneapolis. Little bespeaks quality and reliability better than a long dividend-paying record, and here is how our new holdings compare in that regard: Occidental Petroleum, payments every year since 1975; Valspar, each year since 1964; J. C. Penney, continuous payments starting in 1922; Clorox, without interruption since 1968; Ameren and Equitable Resources, since 1906 and 1950, respectively; and U. S. Bancorp, through its predecessor companies, an unbroken record going back all the way to the year of the Battle of Gettysburg, 1863. The list of names leaving the Portfolio in the period included Deere, Illinois Tool Works, Norfolk Southern, Tribune, Biomet, Bank of America, Merrill Lynch, Equity Office Properties, and Electronic Data Systems. Q: What is your outlook on the stock market and the economy for the remainder of 2004? A: At the midpoint of 2004, the market appears in disarray. Truth be told, interest rates have not really moved very much at all, but there appears great anxiety about greater moves to come. Inflation is not a current problem, yet the high oil prices provide the worriers a reason to focus on the risk of inflation. Corporate earnings are generally very strong and also strongly up from last year, but the expressed concern is with respect to slowing of the wonderful comparisons. And so it goes as well when it comes to discussion of international events and corporate-governance issues and much else: the glass is half empty, not half full, as the common expression goes. From our point of view, the market remains quite attractive, and especially the good companies with good records. Betting which way the market might go on a short-term basis has never seemed to us like a particularly fruitful endeavor. So our intention is to stay invested over the coming months, and to stay invested in the solid kinds of companies we always aim to own. Thank you for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED)
Shares Value CONVERTIBLE PREFERRED STOCKS - 1.4% Automobiles & Components - 1.4% Automobile Manufacturers - 1.4% 2,600 General Motors, 5.25%, 3/6/32 $ 64,025 55,600 Ford Capital Trust, 6.5%, 1/15/32 3,033,536 ------------ $ 3,097,561 ------------ Total Automobiles & Components $ 3,097,561 ------------ TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $2,691,323) $ 3,097,561 ------------ Principal Amount CONVERTIBLE CORPORATE BOND - 0.0% Retailing - 0.0% Apparel Retail - 0.0% $200,000 Gap Inc., 5.75%, 3/15/09 $ 311,000 ------------ Total Retailing $ 311,000 ------------ TOTAL CONVERTIBLE CORPORATE BOND (Cost $200,000) $ 311,000 ------------ Shares COMMON STOCKS - 95.5% Energy - 11.7% Integrated Oil & Gas - 11.7% 98,300 ChevronTexaco Corp. $ 9,251,013 114,865 ConocoPhillips 8,763,051 161,066 Exxon Mobil Corp. 7,152,941 35,000 Occidental Petroleum Corp. 1,694,350 ------------ $ 26,861,355 ------------ Total Energy $ 26,861,355 ------------ Materials - 5.2% Commodity Chemicals - 1.7% 50,300 Air Products & Chemicals, Inc. $ 2,638,235 27,341 E.I. du Pont de Nemours and Co. 1,214,487 ------------ $ 3,852,722 ------------ Construction Materials - 0.7% 35,000 Vulcan Materials Co. $ 1,664,250 ------------ Diversified Chemical - 0.7% 25,300 PPG Industries, Inc. $ 1,580,997 ------------ Paper Products - 0.8% 62,400 Meadwestvaco Corp. $ 1,833,936 ------------ Specialty Chemicals - 0.3% 15,000 Valspar Corp. $ 755,850 ------------ Steel - 1.0% 24,700 Nucor Corp. $ 1,895,972 20,050 Roanoke Electric Steel Corp. 272,680 ------------ $ 2,168,652 ------------ Total Materials $ 11,856,407 ------------
Shares Value Capital Goods - 8.6% Aerospace & Defense - 3.0% 51,600 Boeing Co. $ 2,636,244 43,200 General Dynamics Corp. 4,289,760 ------------ $ 6,926,004 ------------ Electrical Components & Equipment - 1.6% 59,000 Emerson Electric Co. $ 3,749,450 ------------ Industrial Conglomerates - 2.7% 58,100 Johnson Controls, Inc. $ 3,101,378 32,700 United Technologies Corp. 2,991,396 ------------ $ 6,092,774 ------------ Industrial Machinery - 1.3% 22,000 Gorman-Rupp Co. $ 597,740 92,200 The Timken Co. 2,442,378 ------------ $ 3,040,118 ------------ Total Capital Goods $ 19,808,346 ------------ Transportation - 0.4% Railroads - 0.4% 26,500 Burlington Northern, Inc. $ 929,355 ------------ Total Transportation $ 929,355 ------------ Automobiles & Components - 3.7% Automobile Manufacturers - 3.7% 145,175 PACCAR, Inc. $ 8,418,698 ------------ Total Automobiles & Components $ 8,418,698 ------------ Media - 3.2% Movies & Entertainment - 1.8% 132,400 Cedar Fair, L.P. (a) $ 4,177,220 ------------ Publishing - 1.4% 40,500 McGraw-Hill Co., Inc. $ 3,101,085 ------------ Total Media $ 7,278,305 ------------ Retailing - 2.3% Department Stores - 1.6% 30,000 J.C. Penney Co., Inc. $ 1,132,800 92,825 May Department Stores Co. 2,551,759 ------------ $ 3,684,559 ------------ General Merchandise Stores - 0.7% 40,300 Sears, Roebuck and Co. $ 1,521,728 ------------ Total Retailing $ 5,206,287 ------------ Food, Beverage & Tobacco - 5.4% Packaged Foods & Meats - 4.4% 147,500 Campbell Soup Co. $ 3,964,800 47,300 General Mills, Inc. 2,248,169 73,700 H.J. Heinz Co., Inc. 2,889,040 46,900 Sara Lee Corp. 1,078,231 ------------ $ 10,180,240 ------------
4 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - --------------------------------------------------------------------------------
Shares Value Soft Drinks - 1.0% 12,900 The Coca-Cola Co. $ 651,192 28,600 PepsiCo, Inc. 1,540,968 ------------ $ 2,192,160 ------------ Total Food, Beverage & Tobacco $ 12,372,400 ------------ Household & Personal Products - 1.5% Household Products - 1.5% 20,000 Clorox Co. $ 1,075,600 39,200 Colgate-Palmolive Co. 2,291,240 ------------ $ 3,366,840 ------------ Total Household & Personal Products $ 3,366,840 ------------ Health Care Equipment & Services - 3.7% Health Care Distributors - 2.8% 88,900 Abbott Laboratories $ 3,623,564 50,600 Johnson & Johnson 2,818,420 ------------ $ 6,441,984 ------------ Health Care Equipment - 0.9% 38,200 Becton, Dickinson & Co. $ 1,978,760 ------------ Total Health Care Equipment & Services $ 8,420,744 ------------ Pharmaceuticals & Biotechnology - 3.6% Pharmaceuticals - 3.6% 57,900 Eli Lilly & Co. $ 4,047,789 74,300 Merck & Co., Inc. 3,529,250 20,000 Pfizer, Inc. 685,600 ------------ $ 8,262,639 ------------ Total Pharmaceuticals & Biotechnology $ 8,262,639 ------------ Banks - 12.6% Diversified Banks - 5.4% 154,900 Charter One Financial, Inc. $ 6,845,031 86,100 U.S. Bancorp 2,372,916 53,700 Wells Fargo & Co. 3,073,251 ------------ $ 12,291,198 ------------ Regional Banks - 5.8% 62,200 First Horizon National Corp. $ 2,828,234 96,900 National City Corp. 3,392,469 79,600 SouthTrust Corp. 3,089,276 63,000 SunTrust Banks, Inc. 4,094,370 ------------ $ 13,404,349 ------------ Thrifts & Mortgage Finance - 1.4% 85,400 Washington Mutual, Inc. $ 3,299,856 ------------ Total Banks $ 28,995,403 ------------
Shares Value Diversified Financials - 3.5% Asset Management & Custody Banks - 2.9% 45,100 Eaton Vance Corp. $ 1,723,271 98,600 T. Rowe Price Associates, Inc. 4,969,440 ------------ $ 6,692,711 ------------ Investment Banking & Brokerage - 0.6% 43,100 A.G. Edwards, Inc. $ 1,466,693 ------------ Total Diversified Financials $ 8,159,404 ------------ Insurance - 4.4% Property & Casualty Insurance - 4.4% 51,600 Chubb Corp. $ 3,518,088 86,800 Safeco Corp. 3,819,200 68,900 St. Paul Travelers Companies, Inc. 2,793,206 ------------ $ 10,130,494 ------------ Total Insurance $ 10,130,494 ------------ Real Estate - 1.1% Real Estate Investment Trusts - 1.1% 51,600 Simon DeBartolo Group, Inc. $ 2,653,272 ------------ Total Real Estate $ 2,653,272 ------------ Software & Services - 0.8% Application Software - 0.4% 31,000 Microsoft Corp. $ 885,360 ------------ Data Processing & Outsourced Services - 0.4% 25,000 Automatic Data Processing, Inc. $ 1,047,000 ------------ Total Software & Services $ 1,932,360 ------------ Technology Hardware & Equipment - 1.6% Computer Hardware - 1.6% 44,300 Diebold, Inc. $ 2,342,141 40,000 Hewlett-Packard Co. 844,000 6,200 IBM Corp.* 546,530 ------------ $ 3,732,671 ------------ Total Technology Hardware & Equipment $ 3,732,671 ------------ Telecommunication Services - 6.6% Integrated Telecommunication Services - 6.6% 41,800 Alltel Corp. $ 2,115,916 170,000 AT&T Corp. 2,487,100 98,500 BellSouth Corp. 2,582,670 169,800 SBC Communications, Inc. 4,117,650 110,000 Verizon Communications, Inc. 3,980,900 ------------ $ 15,284,236 ------------ Total Telecommunication Services $ 15,284,236 ------------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Utilities - 15.6% Electric Utilities - 10.1% 60,000 Ameren Corp. $ 2,577,600 55,800 American Electric Power Co., Inc. 1,785,600 56,300 Consolidated Edison, Inc. 2,238,488 153,500 Constellation Energy Group 5,817,650 33,000 FPL Group, Inc. 2,110,350 94,900 Great Plains Energy, Inc. 2,818,530 64,000 NSTAR 3,064,320 98,700 Southern Co. 2,877,105 ------------ $ 23,289,643 ------------ Gas Utilities - 4.3% 111,700 KeySpan Energy Corp. (a) $ 4,099,390 110,300 Questar Corp. 4,261,992 61,100 Vectren Corp. 1,532,999 ------------ $ 9,894,381 ------------ Multi-Utilities & Unregulated Power - 0.6% 24,000 Equitable Resources, Inc. $ 1,241,040 ------------ Water Utilities - 0.6% 71,000 Aqua America, Inc. $ 1,423,550 ------------ Total Utilities $ 35,848,614 ------------ TOTAL COMMON STOCKS (Cost $178,138,936) $219,517,830 ------------
Principal Amount Value TEMPORARY CASH INVESTMENTS - 4.5% Repurchase Agreement - 2.9% $ 6,700,000 UBS Warburg, Inc., 1.25%, dated 6/30/04, repurchase price of $6,700,000 plus accrued interest on 7/1/04 collateralized by $6,540,000 U.S. Treasury Bill, 2.125%, 10/31/04 $ 6,700,000 ------------ Shares Security Lending Collateral - 1.6% 3,514,541 Securities Lending Investment Fund, 1.29% $ 3,514,541 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $10,214,541) $ 10,214,541 ------------ TOTAL INVESTMENT IN SECURITIES - 101.4% (Cost $191,244,800) (a) $233,140,932 ------------ OTHER ASSETS AND LIABILITIES - (1.4)% $ (3,183,134) ------------ TOTAL NET ASSETS - 100.0% $229,957,798 ============
* Non-income producing security. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 40,000 Cedar Fair, L.P. $1,235,200 60,393 KeySpan Energy Corp. 2,190,454 ---------- Total $3,425,654 ==========
6 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 6/30/04 Ended Ended Class I (unaudited) 12/31/03 12/31/02 Net asset value, beginning of period $ 18.09 $ 15.11 $ 18.40 -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.22 $ 0.41 $ 0.42 Net realized and unrealized gain (loss) on investments 0.49 2.96 (3.30) -------- -------- -------- Net increase (decrease) from investment operations $ 0.71 $ 3.37 $ (2.88) Distributions to shareowners: Net investment income (0.18) (0.39) (0.41) Net realized gain -- -- -- -------- -------- -------- Net increase (decrease) in net asset value $ 0.53 $ 2.98 $ (3.29) -------- -------- -------- Net asset value, end of period $ 18.62 $ 18.09 $ 15.11 ======== ======== ======== Total return* 3.94% 22.61% (15.82)% Ratio of net expenses to average net assets+ 0.72%** 0.78% 0.80% Ratio of net investment income (loss) to average net assets+ 2.34%** 2.55% 2.48% Portfolio turnover rate 18%** 12% 12% Net assets, end of period (in thousands) $158,805 $155,634 $133,258 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.72%** 0.78% 0.80% Net investment income (loss) 2.34%** 2.55% 2.48% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.72%** 0.78% 0.80% Net investment income (loss) 2.34%** 2.55% 2.48% Year Year Year Ended Ended Ended Class I 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 21.28 $ 20.72 $ 21.44 -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.40 $ 0.51 $ 0.42 Net realized and unrealized gain (loss) on investments (1.86) 2.28 (0.15) -------- -------- -------- Net increase (decrease) from investment operations $ (1.46) $ 2.79 $ 0.27 Distributions to shareowners: Net investment income (0.36) (0.49) (0.41) Net realized gain (1.06) (1.74) (0.58) -------- -------- -------- Net increase (decrease) in net asset value $ (2.88) $ 0.56 $ (0.72) -------- -------- -------- Net asset value, end of period $ 18.40 $ 21.28 $ 20.72 ======== ======== ======== Total return* (6.97)% 14.85% 1.21% Ratio of net expenses to average net assets+ 0.75% 0.71% 0.70% Ratio of net investment income (loss) to average net assets+ 2.07% 2.40% 1.97% Portfolio turnover rate 13% 13% 23% Net assets, end of period (in thousands) $164,019 $181,920 $226,379 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.75% 0.71% 0.70% Net investment income (loss) 2.07% 2.40% 1.97% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.75% 0.71% 0.70% Net investment income (loss) 2.07% 2.40% 1.97%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED)
Pioneer Equity Income VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $3,425,654) (Cost $191,244,800) $233,140,932 Cash 165,432 Foreign currencies, at value -- Receivables -- Investment securities sold -- Fund shares sold 107,679 Dividends, interest and foreign taxes withheld 386,897 Other 272 ------------ Total assets $233,801,212 ------------ LIABILITIES: Payables -- Investment securities purchased $ -- Fund shares repurchased 129,721 Dividends -- Upon return for securities loaned 3,514,541 Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 157,442 Accrued expenses 41,710 Other -- ------------ Total liabilities $ 3,843,414 ------------ NET ASSETS: Paid-in capital $202,494,815 Accumulated net investment income (loss) 1,549,361 Accumulated undistributed net realized gain (loss) (15,982,510) Net unrealized gain (loss) on: Investments 41,896,132 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $229,957,798 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $158,805,031 Shares outstanding 8,530,519 ------------ Net asset value per share $ 18.62 Class II: No par value (unlimited number of shares authorized) Net assets $ 71,152,767 Shares outstanding 3,801,847 ------------ Net asset value per share $ 18.72
8 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED)
Pioneer Equity Income VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends $3,355,605 Interest (net of foreign taxes withheld of $94) 44,410 Income on securities loaned, net 5,416 Other -- ---------- Total investment income $3,405,431 ---------- EXPENSES: Management fees $ 723,317 Transfer agent fees 1,488 Distribution fees (Class II) 81,276 Administrative fees 22,108 Custodian fees 20,776 Professional fees 24,135 Printing 6,146 Fees and expenses of nonaffiliated trustees 1,681 Miscellaneous 5,460 ---------- Total expenses $ 886,387 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ---------- Net expenses $ 886,387 ---------- Net investment income (loss) $2,519,044 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ (626,853) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ (626,853) ---------- Change in net unrealized gain or loss from: Investments $6,585,509 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $6,585,509 ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $5,958,656 ========== Net increase (decrease) in net assets resulting from operations $8,477,700 ==========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED)
Pioneer Equity Income VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 2,519,044 $ 4,413,641 Net realized gain (loss) on investments (626,853) (634,370) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 6,585,509 34,115,732 ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 8,477,700 $ 37,895,003 ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (1,543,147) $ (3,313,897) Class II (583,520) (860,942) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ------------- ------------- Total distributions to shareowners $ (2,126,667) $ (4,174,839) ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 23,048,590 $ 52,433,019 Reinvestment of distributions 2,126,667 4,174,840 Cost of shares repurchased (17,557,375) (34,680,633) ------------- ------------- Net increase (decrease) in net assets resulting from fund share transactions $ 7,617,882 $ 21,927,226 ------------- ------------- Net increase (decrease) in net assets $ 13,968,915 $ 55,647,390 ------------- ------------- NET ASSETS: Beginning of period $ 215,988,883 $ 160,341,493 ------------- ------------- End of period $ 229,957,798 $ 215,988,883 ============= ============= Accumulated/(distributions in excess of) net investment income (loss) $ 1,549,361 $ 1,156,984 ============= =============
10 The accompanying notes are an integral part of these financial statements. Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) 1. Organization and Significant Accounting Policies The Pioneer Equity Income VCT Portfolio is a portfolio of the Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The investment objective of Equity Income Portfolio is to seek capital appreciation. Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset value for the portfolio is computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. As of June 30, 2004, there were no fair valued securities. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual 11 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realizes a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, the portfolio had no open futures contracts. C. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Equity Income VCT Portfolio had a capital loss carryforward of $15,355,657, of which will the following amounts expire between 2009 and 2011 if not utilized: $6,328,025 in 2009, $6,407,206 in 2010, and $2,620,426 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003.
- ------------------------------------------------------------ Pioneer Equity Income VCT Portfolio 2003 - ------------------------------------------------------------ Distributions paid from: Ordinary Income $ 4,174,839 Long-Term capital gain -- ------------ $ 4,174,839 Return of Capital -- ------------ Total distributions $ 4,174,839 ============ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 82,058 Undistributed long-term gain/ (capital loss carryforward) (15,355,657) Unrealized appreciation/(depreciation) 36,385,549 ------------ Total $ 21,111,950 ============ - ------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. D. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number 12 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. E. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. F. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $141,022 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $16,162 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolio's aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Portfolio Tax Cost Appreciation Depreciation (Depreciation) - -------------------------------------------------------------------------------------------------- Equity Income Portfolio $190,169,874 $47,191,020 $ (4,219,962) $42,971,058 - --------------------------------------------------------------------------------------------------
13 Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $27,101,040 and $19,453,205, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ------------------------------------------------------------------------------------------------ Equity Income Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ------------------------------------------------------------------------------------------------ CLASS I: Shares sold 537,739 $ 9,891,118 1,544,529 $ 24,668,979 Reinvestment of distributions 84,147 1,543,147 204,954 3,313,898 Shares repurchased (694,977) (12,774,712) (1,964,325) (30,892,038) --------------------------------------------------------------- Net increase (decrease) (73,091) $ (1,340,447) (214,842) $ (2,909,161) =============================================================== CLASS II: Shares sold 712,923 $ 13,157,472 1,723,515 $ 27,764,040 Reinvestment of distributions 31,627 583,520 54,432 860,942 Shares repurchased (261,146) (4,782,663) (242,114) (3,788,595) --------------------------------------------------------------- Net increase 483,404 $ 8,958,329 1,533,833 $ 24,836,387 =============================================================== - ------------------------------------------------------------------------------------------------
14 - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16063-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Real Estate Shares VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 5 Notes to Financial Statements 9 Trustees, Officers and Service Providers 14
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stock 100.0%
Sector Distribution (As a percentage of equity holdings) [DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Office 17.4% Apartment 16.8% Regional Mail 15.0% Industrial 12.7% Shopping Center 10.4% Hotel 8.7% Diversified 8.5% Self Storage 4.1% Cash 3.0% Factory Outlet 2.1% Manufactured Homes 1.0% Health Care 0.3%
Five Largest Holdings (As a percentage of equity holdings) - ----------------------------------------------- 1. Simon DeBartolo Group, Inc. 6.00% - ----------------------------------------------- 2. Boston Properties, Inc. 5.02 - ----------------------------------------------- 3. Equity Residential Property Trust 4.36 - ----------------------------------------------- 4. ProLogis Trust 3.97 - ----------------------------------------------- 5. Catellus Development Corp. 3.91 - -----------------------------------------------
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 19.55 $ 18.57 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.400 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Real Estate Shares VCT Portfolio at net asset value, compared to that of the Wilshire Real Estate Securities Index. Portfolio returns are based on net asset value and do not reflect applicable insurance fees and surrender charges. [DATA BELOW IS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Wilshire Pioneer Real Estate Real Estate Securities Index+ Shares VCT Portfolio 3/95 10,000 10,000 11,322 11,696 6/96 15,497 15,875 18,565 19,235 6/98 15,330 15,629 14,841 14,977 6/00 19,403 19,397 21,431 20,911 6/02 21,983 21,440 30,133 28,890 6/04 32,226 31,028
+ Index comparison begins on 2/28/95. The Wilshire Real Estate Securities Index is a market-capitalization weighted measure of the performance of real estate investment trusts (equity and hybrid) and real estate operating companies. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 12.89% (3/1/95) 5 Years 13.58% 1 Year 28.90%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- Fear of higher interest rates, rising oil prices and the ongoing turmoil in Iraq contributed to volatile markets for the six months ended June 30, which made up the first half or your Portfolio's fiscal year. In this report, Mathew Troxell, a member of the Portfolio's investment management team, discusses the sector's positive returns amidst the shifting economic landscape and his expectations for 2004. Q: Was the market and economic environment favorable for the Portfolio's investment strategy? A: Real estate stocks, like most asset classes, experienced great volatility during the reporting period. With evidence suggesting that the U.S. economy was on its way to recovery, the real estate market rose strongly during the first quarter of 2004. However, in early April, the jobs report for March was surprisingly strong and sparked a sell-off in the bond market. Bond investors feared that the economy might be growing too fast and would ignite inflation. Interest rates began to rise, pushing bond prices down. Prices of real estate stocks also fell sharply even though historically they have exhibited a low correlation to bond prices. Rising oil prices and political uncertainty in Iraq further heightened investor concerns. During May and June, real estate investment trusts began to recover and picked up enough positive momentum to regain much of the ground lost in April -- ending the six months with relatively strong performance gains. For the six months ended June 30, 2004, the Portfolio's Class I shares rose 7.4% at net asset value. In comparison, the Wilshire Real Estate Securities Index increased 6.96% for the same period. Q: What investments helped performance during the six months? A: Several holdings contributed positively to the Portfolio's returns. AvalonBay Communities, one of the Portfolio's largest holdings, is an apartment/multi-family real estate investment trust (REIT) that has benefited from the expectation of improving fundamentals for apartments. Job growth has been very positive for household formations, especially for young adults who are leaving home for the first time. This demographic group has the highest propensity to rent rather than buy. This stronger renter demand is giving apartment REIT managers, such as AvalonBay, greater pricing flexibility. In addition, rising interest rates should contribute to higher renter demand, because buying a home becomes a more expensive option. In the lodging sector, Starwood Hotels and Resorts performed well, particularly in the final two months of the reporting period. Starwood, as well as the sector in general, are benefiting from a recovery in lodging demand, which is directly correlated to the improving economy. Catellus Development, a real estate management and development company, holds a portfolio of high-quality predominately industrial properties generating strong cash flow. This REIT's positive performance was driven, in part, by management's decision to convert to REIT status early in 2004. The heightened investor interest helped it to outperform the benchmark during the six months. Q: What investments hurt performance during the six months? A: We believe that Simon Property Group is a solid company, but after consistently outperforming the real estate market during the multi-year rally through the first quarter of 2004, it, along with other retail names, lagged in the final months of the reporting period. Following the market correction this spring, it began to recover. However, when management announced in late June that it was acquiring Chelsea Property Group (also held by the Portfolio), investors reacted negatively. We view the proposed merger very positively, because we think Chelsea Property Group, which owns factory outlet shopping centers in Japan as well as in the United States, would add international diversity and a new retail focus to Simon's current portfolio. Following disappointing performance last year, Apartment Investment and Management continued to lag the benchmark. This REIT, which owns a diverse portfolio of multi-family apartment complexes, suffered more than its peers as apartment fundamentals proved challenging last year and experienced lower-than-expected fee income and higher-than-expected apartment-turnover-related expenses last year -- resulting in a reduced dividend. Even with the greater promise for improving fundamentals, we reduced the position this spring, because we tempered our view of its total return potential. Q: What is your outlook for the balance of 2004? A: We think that the various property types making up the real estate market are generally experiencing improving fundamentals. While real estate earnings typically lag an improvement in fundamentals, hotel and apartment landlords can respond fairly quickly. Should economic growth continue, however, we believe retail landlords will begin to lose the relative advantage they have previously enjoyed. We believe that it will fall to astute stock selection to separate the wheat from the chafe. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. - -------------------------------------------------------------------------------- Real estate investments may be subject to special risks, including risks related to general and local economic conditions and risks related to an individual property. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 97.4% Hotels, Restaurants & Leisure - 5.3% Hotels, Resorts & Cruise Lines - 5.3% 75,000 Hilton Hotels Corp.* $ 1,399,500 58,000 Starwood Hotels & Resorts 2,601,300 ----------- $ 4,000,800 ----------- Total Hotels, Restaurants & Leisure $ 4,000,800 ----------- Diversified Financials - 3.0% Diversified Financial Services - 3.0% 77,000 Brookfield Properties Corp. $ 2,213,750 ----------- Total Diversified Financials $ 2,213,750 ----------- Real Estate - 89.1% Real Estate Management & Development - 4.0% 115,500 Catellus Development Corp. $ 2,847,075 8,200 Inland Real Estate Corp.* 106,682 ----------- $ 2,953,757 ----------- Real Estate Investment Trusts - 85.1% 38,500 Apartment Investment & Management Co. $ 1,198,505 46,200 AMB Property Corp. 1,599,906 22,400 Affordable Residential Communities* 371,840 16,500 Alexandria Real Estate Equities, Inc. 936,870 44,000 Arden Realty Group, Inc. 1,294,040 92,500 Archstone Communities Trust 2,713,025 50,000 AvalonBay Communities, Inc.* 2,826,000 73,100 Boston Properties, Inc. 3,660,848 17,500 Chelsea Property Group, Inc. 1,141,350 30,000 Camden Property Trust 1,374,000 10,000 Carramerica Realty Corp. 302,300 61,000 Developers Diversifies Realty Corp. 2,157,570 57,000 Duke Realty Investments, Inc. 1,813,170 79,000 Equity Office Properties Trust 2,148,800 107,000 Equity Residential Property Trust 3,181,110 5,800 First Potomac Realty Trust* 111,186 36,000 Federal Realty Investment Trust 1,497,240 79,500 General Growth Properties, Inc. 2,350,815 25,500 Highwoods Properties, Inc.* 599,250 Shares Value 189,000 Host Marriott Corp.* $ 2,336,040 6,000 Healthcare Realty Trust, Inc. 224,880 2,500 Kilroy Realty Corp. 85,250 53,000 Liberty Property Trust 2,131,130 35,500 The Macerich Co. 1,699,385 11,300 Manufactured Home Communities, Inc. 375,047 9,100 Mills Corp. 424,970 10,500 Corporate Office Properties 260,925 88,000 ProLogis Trust 2,896,960 29,300 Pan Pacific Retail Properties, Inc. 1,480,236 55,000 Prentiss Properties Trust 1,843,600 45,206 Public Storage, Inc. 2,079,928 25,500 PS Business Parks Inc* 1,026,120 48,000 Regency Centers Corp. 2,059,200 35,000 The Rouse Co.* 1,662,500 9,500 iStar Financial, Inc.* 380,000 27,500 Shurgard Storage Centers, Inc. 1,028,500 15,800 Strategic Hotel Capital, Inc.* 232,260 85,000 Simon DeBartolo Group, Inc. 4,370,700 51,000 Taubman Centers, Inc. 1,167,390 37,600 Trizec Properties Inc. 611,376 47,200 United Dominion Realty Trust 933,616 46,000 Vornado Realty Trust 2,627,060 16,500 Western Resources, Inc. 516,120 ----------- $63,731,018 ----------- Total Real Estate $66,684,775 ----------- TOTAL COMMON STOCKS (Cost $55,838,852) $72,899,325 ----------- TOTAL INVESTMENT IN SECURITIES - 97.4% (Cost $55,838,852) $72,899,325 ----------- OTHER ASSETS AND LIABILITIES - 2.6% $ 1,967,974 ----------- TOTAL NET ASSETS - 100.0% $74,867,299 ===========
* Non-income producing security. 4 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 $ 13.07 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.42 $ 0.74 $ 0.62 $ 0.68 $ 0.71 $ 0.66 Net realized and unrealized gain (loss) on investments 0.96 4.16 (0.23) 0.40 2.67 (1.20) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 1.38 $ 4.90 $ 0.39 $ 1.08 $ 3.38 $ (0.54) Distributions to shareowners: Net investment income (0.40) (0.64) (0.69) (0.56) (0.59) (0.60) Net realized gain -- -- -- -- -- (0.12) Tax return of capital -- (0.16) -- (0.17) (0.10) (0.08) ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 0.98 $ 4.10 $ (0.30) $ 0.35 $ 2.69 $ (1.34) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 19.55 $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 ======= ======= ======= ======= ======= ======= Total return* 7.40% 34.75% (2.53)% 7.80% 29.51% (4.17)% Ratio of net expenses to average net assets+ 0.94%** 1.03% 1.07% 1.16% 1.10% 1.15% Ratio of net investment income (loss) to average net assets+ 4.22%** 4.49% 4.76% 4.71% 5.02% 5.07% Portfolio turnover rate 43%** 20% 29% 34% 31% 54% Net assets, end of period (in thousands) $30,297 $31,891 $29,873 $33,026 $32,982 $28,318 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.30% Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 4.92% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.14% Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 5.08%
(a) Amount rounds to less than one cent per share. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 5 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio ASSETS: Investment in securities, at value (Cost $55,838,852) $ 72,899,325 Cash 1,906,225 Foreign currencies, at value -- Receivables -- Investment securities sold 2,124,520 Fund shares sold 181,129 Dividends, interest and foreign taxes withheld 428,504 Other 354 ------------ Total assets $ 77,540,057 ------------ LIABILITIES: Payables -- Investment securities purchased $ 2,208,201 Fund shares repurchased 378,282 Dividends -- Upon return for securities loaned -- Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 66,321 Accrued expenses 19,954 Other -- ------------ Total liabilities $ 2,672,758 ------------ NET ASSETS: Paid-in capital $ 57,527,714 Accumulated net investment income (loss) 160,542 Accumulated undistributed net realized gain (loss) 118,570 Net unrealized gain (loss) on: Investments 17,060,473 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $ 74,867,299 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 30,296,916 Shares outstanding 1,549,560 ------------ Net asset value per share $ 19.55 Class II: No par value (unlimited number of shares authorized) Net assets $ 44,570,383 Shares outstanding 2,283,389 ------------ Net asset value per share $ 19.52
6 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $1,676) $1,885,996 Interest 18,128 Income on securities loaned, net 535 Other -- ---------- Total investment income $1,904,659 ---------- EXPENSES: Management fees $ 294,190 Transfer agent fees 1,494 Distribution fees (Class II) 53,188 Administrative fees 9,250 Custodian fees 13,052 Professional fees 19,250 Printing 8,855 Fees and expenses of nonaffiliated trustees -- Miscellaneous 899 ---------- Total expenses $ 400,178 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ---------- Net expenses $ 400,178 ---------- Net investment income (loss) $1,504,481 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $3,075,780 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $3,075,780 ---------- Change in net unrealized gain or loss from: Investments $ 359,869 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ 359,869 ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $3,435,649 ---------- Net increase (decrease) in net assets resulting from operations $4,940,130 ----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 1,504,481 $ 3,062,870 Net realized gain (loss) on investments 3,075,780 (474,302) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 359,869 15,553,008 ------------ ------------- Net increase (decrease) in net assets resulting from operations $ 4,940,130 $ 18,141,576 ------------ ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (637,400) $ (1,422,912) Class II (859,854) (1,519,594) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ------------ ------------- Total distributions to shareowners $ (1,497,254) $ (2,942,506) ------------ ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 7,974,724 $ 9,753,610 Reinvestment of distributions 1,497,254 2,942,506 Cost of shares repurchased (9,831,522) (17,969,003) ------------ ------------- Net increase (decrease) in net assets resulting from fund share transactions $ (359,544) $ (5,272,887) ------------ ------------- Net increase (decrease) in net assets $ 3,083,332 $ 9,926,183 ------------ ------------- NET ASSETS: Beginning of period $ 71,783,967 $ 61,857,784 ------------ ------------- End of period $ 78,867,299 $ 71,783,967 ============ ============= Accumulated/(distributions in excess of) net investment income (loss) $ 160,542 $ 153,315 ============ =============
8 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Real Estate Shares VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Real Estate Shares Portfolio pursues long-term capital growth, with current income as a secondary objective. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no fair valued securities. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Because Real Estate Shares Portfolio invests a substantial portion of its assets in real estate 9 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- investment trusts (REITs), the Portfolio may be subject to certain risks associated with direct investments in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital returns may be made at any time. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code or its failure to maintain exemption from registration under the Investment Company Act of 1940. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Real Estate Shares had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. A portion of the dividend income recorded by Real Estate Shares Portfolio is from distributions by publicly traded REITs, and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Trust as a reduction of the cost basis of the securities held. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, 10 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Real Estate Shares VCT Portfolio had a capital loss carryforward of $3,310,843, of which the following amounts will expire between 2007 and 2011 if not utilized: $2,238,450 in 2007, $619,294 in 2008 and $453,069 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio 2003 - --------------------------------------------------------- Distributions paid from: Ordinary Income* $ 2,171,485 Long-Term capital gain -- ----------- 2,171,485 Return of Capital -- ----------- Total distributions $ 2,171,485 ----------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/ (Capital loss carryforward) (2,665,210) Unrealized appreciation (depreciation) 16,408,604 ----------- Total $13,743,394 -----------
- -------------------------------------------------------------------------------- * Included in the Portfolio's distributions from 2003 ordinary income is $192,564 in excess of investment company taxable income, which, in accordance with U.S. tax law, is taxable to shareowners as ordinary income distributions. The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. Prior to June 30, 2004, the Portfolio has reclassified $21,639 to decrease net unrealized gain on investments, $6,268 to decrease accumulated undistributed net realized gain on investments and $27,907 to increase paid-in capital. The reclassification has no impact on the net assets of the Portfolio and presents the Portfolio's capital accounts on a tax basis. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities 11 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.80% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $55,958 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $10,106 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows: - --------------------------------------------------------------------------------
Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------------------- Real Estate Shares Portfolio $56,411,455 $16,815,051 $ (327,181) $16,487,870 ----------- ----------- ---------- -----------
- -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $17,444,652 and $15,240,948, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: - --------------------------------------------------------------------------------
Real Estate Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ----------------------------------------------------------------------------------------- CLASS II: Shares sold 46,990 $ 914,044 153,884 $ 2,545,266 Reinvestment of distributions 31,935 637,400 87,137 1,422,912 Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017) -------- ------------ -------- ------------ Net increase (167,581) $ (3,090,354) (347,178) $ (5,232,839) ======== ============ ======== ============ CLASS II: Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344 Reinvestment of distributions 43,174 859,854 92,474 1,519,594 Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986) -------- ------------ -------- ------------ Net increase 132,798 $ 2,730,810 (62,278) $ (40,048) -------- ------------ -------- ------------
- -------------------------------------------------------------------------------- 12 - -------------------------------------------------------------------------------- This page for your notes. 13 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16066-00-0804 [logo] Pioneer Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer High Yield VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer High Yield VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 10 Notes to Financial Statements 14
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment in securities) [THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Corporate Bonds 57.7% Convertible Corporate Bonds 35.4% Temporary Cash Investment 4.1% Convertible Preferred Stocks 2.8%
Maturity Distribution (As a percentage of total investment in securities) [THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
0-1 years 2.5% 1-3 years 16.6% 3-4 years 18.6% 4-6 years 44.9% 6-8 years 10.4% 8+ years 7.0%
Five Largest Holdings (As a percentage of long-term holdings) 1. Bowater, Inc., 6.5%, 6/15/13 3.71% 2. CMS Energy Corp., 7.75%, 8/1/10 2.97 3. Freeport-Mc Corp., 5.5% (144A) 2.87 4. Forest City Enterprises, 7.625%, 6/1/15 2.83 5. Meristar Hospitality Corp., 9.125%, 1/15/11 2.69
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 11.12 $ 11.45
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.3137 $ - $ 0.047
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch (ML) High Yield Master II Index and of the ML Index of Convertible Bonds (Speculative Quality). Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
ML Convertible Pioneer High Bonds Speculative ML High Yield Yield VCT Quality Master II+ Portfolio ----------------- ------------- ------------ 5/00 $10,000 $10,000 $10,000 6/00 8,424 9,770 10,623 7,882 10,207 12,387 6/02 7,744 10,013 12,211 10,529 12,830 16,215 6/04 11,090 13,006 16,254
+ Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a broad-based measure of the performance of the non-investment grade U.S. domestic bond market. The ML Index of Convertible Bonds (Speculative Quality) is a market-capitalization weighted index including mandatory and non-mandatory domestic corporate convertible securities. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
Net Asset Value Life-of-Class 11.82% (5/1/00) 1 Year 9.80%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- High-yield bonds offered slightly positive returns during the first half of 2004. In the following report, portfolio manager Margaret Patel describes the market backdrop and why the Portfolio slightly underperformed its benchmark index. Q: How did the Portfolio perform? A: During the six months ended June 30, 2004, the Portfolio's Class I shares had a total return based on net asset value of 0.25%. By comparison, the Merrill Lynch High Yield Master II Index returned 1.36%. The 30-day SEC yield on June 30, 2004, was 3.88%. Q: What was the environment like for the high-yield market during the first six months of 2004? A: Rising interest rates significantly dampened returns for all segments of the fixed-income market. Signs of a strengthening economy and the increased possibility of sustained inflationary pressures caused market yields to rise in anticipation of an increase in short-term interest rates by the Federal Reserve Board. That hike came to pass on the last day of the period. Bond prices move in the opposite direction of interest rates and within such an environment Treasury bonds suffered the worst relative price declines. Steady economic growth helped high-yield bonds perform better than Treasuries, but high-yield bonds still suffered price declines due to rising market yields. Lower-quality securities outperformed higher-quality issues during the period, as investors became more comfortable taking on riskier investments within a strengthening economy. Q: Why did the Portfolio's performance slightly lag that of the Merrill Lynch High Yield Master II Index? A. The Portfolio had a higher overall credit quality than the index during a period when lower-rated bonds led the market. We favored higher-quality securities because we felt that they offered better value and risk profiles. We also increased the Portfolio's economic sensitivity during the period, including adding investments in the basic materials sector. Companies in this sector had performed well due to torrid demand from China. However, during the period the Chinese government took steps to slow economic growth to reduce inflationary pressures from building. Investors, in turn, became concerned that the moves would soften demand for basic materials, and so these investments suffered. Finally, the Portfolio's allocation to convertible securities -- about 40% at the end of the period -- also dampened performance somewhat. Convertibles underperformed generic high-yield bonds because of declines in the underlying stock prices, particularly in two of our areas of focus -- basic materials and technology. Q: Which investments proved to be some of the top performers during the fiscal year? Which disappointed? A: Two energy holdings, Tom Brown and Nuevo Energy, offered significant price appreciation when they were each acquired by investment-grade companies. Convertible bonds issued by Kaydon -- which manufactures ball bearings, hydraulic gear and filters for the aerospace, electronics and heavy construction industries -- rose in concert with the underlying stock price due to an improving business outlook. Real estate firm LNR Properties continued to perform well despite the risk that higher interest rates might hurt its business. On the down side, three commodity-based companies -- Freeport Mac MoRan, Coeur d'Alene Mining and Graftech, underperformed because of fears that slower growth in the U.S. and China would reduce demand for basic materials. Q: What is your outlook? A: The Fed's rate hike at the end of the period was widely expected, and the Board indicated its willingness to implement any further rate increases in a slow, measured manner. The U.S. economy remains relatively healthy, so we believe that the overall outlook for corporate earnings should be positive. It is possible that Treasury yields could continue to rise during the rest of 2004, but we feel that the extent of any such increases should be relatively muted. Within such an environment, high-yield bonds could continue to attract investors who are more comfortable taking on more risk within a healthy economy and who are looking for more attractive yields than either those offered in the Treasury or other lower-yielding segments of the fixed-income markets. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio invests in below investment-grade securities, which may be more volatile and subject to greater price fluctuations than investment-grade securities. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
S&P/Moody's Shares Ratings Value CONVERTIBLE PREFERRED STOCKS - 2.8% Materials - 2.8% Construction Materials - 0.0% 1,750 B-/B3 TXI Capital Trust I, 5.5%, 6/30/28 $ 80,325 ----------- Diversified Metals & Mining - 2.8% 3,000 CCC/NR Freeport-McCorp., 5.5% (144A) $ 2,688,750 ----------- Total Materials TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $3,077,338) $ 2,769,075 ----------- Principal Amount CONVERTIBLE CORPORATE BONDS - 35.4% Materials - 5.4% Commodity Chemicals - 0.3% $ 200,000 BB-/B1 Millenium Chemicals, Inc., 4.0%, 11/15/23 (144A) $ 311,000 ----------- Diversified Metals & Mining - 1.6% 500,000 B+/B1 Massey Energy Co., 4.75% 5/15/23 $ 850,625 500,000 B-/NR Freeport McMoran Copper & Gold, Inc., 7.0%, 2/11/11 697,500 ----------- $ 1,548,125 ----------- Gold - 1.1% 1,000,000 NR/NR Coeur D'Alene Mines Corp. 1.25%, 1/15/24 $ 827,500 250,000 BBB+/Baa2 Placer Dome, Inc., 2.75%, 10/15/23 (144A) 282,500 ----------- $ 1,110,000 ----------- Specialty Chemicals - 0.5% 1,000,000 BBB/Baa3 RPM International, Inc., 1.389%, 5/13/33 $ 521,250 ----------- Steel - 1.9% 2,000,000 B-/NR Graftech International, 1.625%, 1/15/24 (144A) (a) $ 1,800,000 ----------- Total Materials $ 5,290,375 ----------- Capital Goods - 5.1% Aerospace & Defense - 2.2% 400,000 NR/NR EDO Corp., 5.25%, 4/15/07 $ 418,500 1,725,000 B/B2 Alliant Technology Systems, 2.75%, 2/15/24 (144A) 1,785,375 ----------- $ 2,203,875 ----------- Constuction & Engineering - 1.3% 875,000 NR/NR Quanta Services, Inc., 4.0%, 7/1/07 $ 796,250 500,000 B/NR Quanta Services, 4.5%, 10/1/23 493,125 ----------- $ 1,289,375 ----------- Electrical Component & Equipment - 1.2% 2,595,000 NR/B1 Roper Industries, Inc., 1.4813%, 1/15/34 (a) $ 1,164,506 ----------- Industrial Machinery - 0.4% 300,000 BB-/Ba3 Kaydon Corp., 4.0%, 5/23/23 (144A) $ 361,125 ----------- Total Capital Goods $ 5,018,881 ----------- Media - 1.4% Advertising - 1.4% 1,000,000 BB+/Baa3 Interpublic Group Companies, 4.5%, 3/15/23 $ 1,360,000 ----------- Total Media $ 1,360,000 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Retailing - 0.5% Specialty Stores - 0.5% $ 500,000 B+/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 (a) $ 484,375 ----------- Total Retailing $ 484,375 ----------- Health Care Equipment & Services - 2.1% Health Care Equipment - 0.6% 300,000 NR/NR Wilson Greatbatch Technology, 2.25%, 6/15/13 $ 284,625 375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) 358,125 ----------- $ 642,750 ----------- Health Care Facilities - 1.5% 1,400,000 B-/B3 Community Health Systems, 4.25%, 10/15/08 $ 1,457,750 ----------- Total Health Care Equipment & Services $ 2,100,500 ----------- Pharmaceuticals & Biotechnology - 6.8% Biotechnology - 1.9% 800,000 CCC/NR Human Genome Sciences, 3.75%, 3/15/07 $ 750,000 850,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 860,625 300,000 NR/NR Cubist Pharmaceuticals, 5.5%, 11/1/08 279,750 ----------- $ 1,890,375 ----------- Pharmaceuticals - 4.9% 400,000 NR/NR Vertex Pharmaceuticals, Inc., 5.75%, 2/15/11 (144A) $ 402,000 2,000,000 NR/NR Ivax Corp., 4.5%, 5/15/08 1,980,000 2,500,000 BB-/B1 Valeant Pharmaceuticals, 3.0%, 8/16/10 (144A) 2,381,250 ----------- $ 4,763,250 ----------- Total Pharmaceuticals & Biotechnology $ 6,653,625 ----------- Real Estate - 0.7% Real Estate Management & Development - 0.7% 500,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 $ 698,750 ----------- Total Real Estate $ 698,750 ----------- Software & Services - 1.1% Application Software - 0.8% 200,000 NR/NR Mentor Graphics, 6.875%, 6/15/07 $ 211,500 500,000 NR/NR Serena Software, 1.5%, 12/15/23 (144A) 537,500 ----------- $ 749,000 ----------- IT Consulting & Other Services - 0.3% 400,000 NR/NR Safeguard Scientifics, 2.625%, 3/15/24 (144A) $ 296,500 ----------- Total Software & Services $ 1,045,500 ----------- Technology Hardware & Equipment - 6.0% Communications Equipment - 3.0% 1,500,000 B-/NR Adaptec, Inc., 0.75%, 12/22/23 $ 1,481,250 1,020,000 BB+/Ba2 Corning, Inc., 3.5%, 11/1/08 1,435,650 ----------- $ 2,916,900 ----------- Computer Storage & Peripherals - 0.8% 700,000 NR/B2 Maxtor Corp., 6.8%, 4/30/10 $ 738,500 ----------- Electronic Equipment & Instruments - 0.4% 300,000 B+/NR Flir Systems, Inc., 3.0%, 6/1/23 (a) $ 427,125 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Electronic Manufacturing Services - 1.4% $ 1,500,000 B+/Ba3 SCI Systems, Inc., 3.0%, 3/15/07 $ 1,402,500 ----------- Technology Distributors - 0.4% 400,000 NR/NR Bell Microproducts, Inc., 3.75%, 3/5/24 (144A) $ 397,500 ----------- Total Technology Hardware & Equipment $ 5,882,525 ----------- Semiconductors - 6.3% Semiconductor Equipment - 3.5% 700,000 B-/NR Advanced Energy Industries, Inc., 5.25%, 11/15/06 $ 693,000 1,700,000 B-/NR FEI Co., 5.5%, 8/15/08 1,731,875 700,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 682,500 200,000 NR/NR Axcelis Technologies, 4.25%, 1/15/07 198,250 ----------- $ 3,305,625 ----------- Semiconductors - 2.8% 1,825,000 CCC+/NR Conexant Systems, Inc., 4.0%, 2/1/07 $ 1,747,438 1,000,000 NR/NR Triquint Semiconductor, 4.0%, 3/1/07 (a) 957,500 ----------- $ 2,704,938 ----------- Total Semiconductors $ 6,010,563 ----------- TOTAL CONVERTIBLE CORPORATE BONDS (Cost $33,516,548) $34,545,094 ----------- CORPORATE BONDS - 57.7% Energy - 3.9% Oil & Gas Equipment And Services - 0.3% 100,000 B+/B3 Transmontaigne, Inc., 9.125%, 6/1/10 $ 103,000 200,000 BB-/Ba3 Grant Prideco Escrow, 9.0%, 12/15/09 217,500 ----------- $ 320,500 ----------- Oil & Gas Refining Marketing & Transportation - 3.6% 1,255,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 1,374,225 1,900,000 B/B3 Tesoro Petroleum Corp., 9.625%, 4/1/12 2,132,750 ----------- $ 3,506,975 ----------- Total Energy $ 3,827,475 ----------- Materials - 13.9% Commodity Chemicals - 4.6% 1,100,000 B+/B1 Arco Chemical Co., 9.8%, 2/1/20 $ 1,078,000 2,500,000 BB+/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,375,000 1,000,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,045,000 ----------- $ 4,498,000 ----------- Diversified Metals & Mining - 1.3% 1,375,000 B-/B2 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 (a) $ 1,258,125 ----------- Metal & Glass Containers - 1.5% 1,000,000 B+/B1 Crown Holdings, 9.5%, 3/1/11 $ 1,090,000 500,000 B/B3 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 415,000 ----------- $ 1,505,000 ----------- Paper Products - 4.3% 685,000 BB/Ba2 Bowater Canada Finance, 7.95%, 11/15/11 $ 707,589 3,700,000 BB/Ba2 Bowater, Inc., 6.5%, 6/15/13 3,480,849 ----------- $ 4,188,438 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Specialty Chemicals - 2.2% $ 1,200,000 BB-/B1 Millenium America, Inc., 7.625%, 11/15/26 $ 1,026,000 1,000,000 BB-/B1 Millennium America, Inc., 9.25%, 6/15/08 1,075,000 ----------- $ 2,101,000 ----------- Total Materials $13,550,563 ----------- Capital Goods - 7.3% Aerospace & Defense - 5.1% 1,000,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 1/15/14 $ 955,000 2,500,000 B/B2 DRS Technologies, Inc., 6.875%, 11/1/13 2,437,500 1,525,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 1,570,750 ----------- $ 4,963,250 ----------- Industrial Machinery - 2.2% 800,000 B+/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 (a) $ 800,000 517,000 BBB+/Ba3 SPX Corp., 7.5%, 1/1/13 529,925 800,000 B/B3 JLG Industries, Inc., 8.375%, 6/15/12 814,000 ----------- $ 2,143,925 ----------- Total Capital Goods $ 7,107,175 ----------- Transportation - 0.5% Air Freight & Couriers - 0.5% 500,000 BB-/B1 Petroleum Helicopters, 9.375%, 5/1/09 $ 525,000 ----------- Total Transportation $ 525,000 ----------- Automobiles & Components - 0.4% Auto Parts & Equipment - 0.4% 400,000 B/B2 Intermet Corp., 9.75%, 6/15/09 $ 360,000 ----------- Total Automobiles & Components $ 360,000 ----------- Consumer Durables & Apparel - 1.4% Homebuilding - 1.4% 400,000 BB/Ba2 Beazer Homes USA, 8.375%, 4/15/12 $ 422,000 1,000,000 BB/Ba2 Beazer Homes USA, 6.5%, 11/15/13 945,000 ----------- $ 1,367,000 ----------- Total Consumer Durables & Apparel $ 1,367,000 ----------- Media - 2.2% Advertising - 2.2% 2,000,000 BB+/Baa3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,139,558 ----------- Total Media $ 2,139,558 ----------- Retailing - 1.0% Department Stores - 1.0% 1,000,000 BB+/Ba3 J.C. Penney Co., Inc., 7.625%, 3/1/97 $ 1,025,000 ----------- Total Retailing $ 1,025,000 ----------- Health Care Equipment & Services - 0.8% Health Care Facilities - 0.5% 500,000 BBB-/Ba1 HCA, Inc., 6.25%, 2/15/13 $ 497,008 ----------- Health Care Supplies - 0.3% 350,000 B-/Caa1 Inverness Medical Innovation, 8.75%, 2/15/12 $ 357,875 ----------- Total Health Care Equipment & Services $ 854,883 -----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value Pharmaceuticals & Biotechnology - 1.4% Pharmaceuticals - 1.3% $ 1,375,000 B/NR Valeant Pharmaceuticals, 7.0%, 12/15/11 (144A) $ 1,340,625 ----------- Total Pharmaceuticals & Biotechnology $ 1,340,625 ----------- Real Estate - 11.9% Real Estate Management & Development - 6.4% 510,000 B+/Ba3 LNR Property Corp., 5.5%, 3/1/23 (144A) $ 712,725 800,000 B+/Ba3 LNR Property Corp., 7.625%, 7/15/13 796,000 2,115,000 B+/Ba3 LNR Property Co., 7.25%, 10/15/13 2,062,125 2,635,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 2,648,175 ----------- $ 6,219,025 ----------- Real Estate Investment Trusts - 5.5% 500,000 B+/B3 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 495,000 2,300,000 B+/B1 Crescent Real Estate, 9.25%, 4/15/09 2,403,500 2,500,000 CCC+/B2 Meristar Hospitality Corp., 9.125%, 1/15/11 2,525,000 ----------- $ 5,423,500 ----------- Total Real Estate $11,642,525 ----------- Technology Hardware & Equipment - 5.5% Communications Equipment - 0.6% 700,000 BB+/Ba2 Corning, Inc., 6.2%, 3/15/16 $ 649,250 ----------- Electronic Equipment & Instruments - 2.0% 1,835,000 B/B2 General Cable Corp, 9.5%, 11/15/10 $ 1,972,625 ----------- Technology Distributors - 2.9% 1,550,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 $ 1,550,547 1,200,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 7/1/13 1,253,473 ----------- $ 2,804,020 ----------- Total Technology Hardware & Equipment $ 5,425,895 ----------- Utilities - 7.4% Electric Utilities - 7.5% 1,000,000 B+/B3 CMS Energy Corp., 7.5%, 1/15/09 $ 995,000 2,800,000 B+/B3 CMS Energy Corp., 7.75%, 8/1/10 2,786,000 2,000,000 CCC+/B3 Allegheny Energy Supply, 7.8%, 3/15/11 1,955,000 1,500,000 CCC+/B3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,483,125 ----------- $ 7,219,125 ----------- Total Utilities $ 7,219,125 ----------- TOTAL CORPORATE BONDS (Cost $56,297,175) $56,384,824 -----------
8 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal S&P/Moody's Amount Ratings Value TEMPORARY CASH INVESTMENT - 4.1% Security Lending Collateral - 4.1% $ 3,990,710 Securities Lending Investment Fund, 1.29% $ 3,990,710 ------------ TOTAL TEMPORARY CASH INVESTMENT (Cost $3,990,710) $ 3,990,710 ------------ TOTAL INVESTMENT IN SECURITIES - 101.7% (Cost $96,881,771)(a) $ 97,689,703 ------------ OTHER ASSETS AND LIABILITIES - (1.7)% $ (1,635,148) ------------ TOTAL NET ASSETS - 100% $ 96,054,555 ============
144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $15,138,100 or 15.8% of net assets. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 285,000 Flir Systems Inc., 3.0%, 6/1/23 $ 403,251 1,306,250 Freeport-McMoran Copper & Gold, 6.875%, 2/1/09 1,225,358 329,000 Graftech International, 1.625%, 1/15/24 (144A) 295,568 760,000 Manitowoc Co. Inc., 7.125%, 11/1/13 768,875 404,000 Roper Industries Inc., 1.4813%, 1/15/34 184,681 100,000 Sonic Automotive Inc., 5.25%, 5/7/09 97,648 950,000 Triquint Semiconductor, 4.0%, 3/1/07 920,998 ---------- Total $3,896,379 ==========
The accompanying notes are an integral part of these financial statements. 9 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year 6/30/04 Ended Class I (unaudited) 12/31/03 Net asset value, beginning of period $ 11.45 $ 9.27 ---------- ---------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.31 $ 0.76 Net realized and unrealized gain (loss) on investments (0.28) 2.18 ---------- ---------- Net increase (decrease) from investment operations $ 0.03 $ 2.94 Distributions to shareowners: Net investment income (0.31) (0.76) Net realized gain (0.05) -- ---------- ---------- Net increase (decrease) in net asset value $ (0.33) $ 2.18 ---------- ---------- Net asset value, end of period $ 11.12 $ 11.45 ========== ========== Total return* 0.25% 32.78% Ratio of net expenses to average net assets+ 0.77%** 0.89% Ratio of net investment income (loss) to average net assets+ 5.53%** 7.22% Portfolio turnover rate 67%** 48% Net assets, end of period (in thousands) $ 63,375 $ 66,587 Ratios with no waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.77%** 0.89% Net investment income (loss) 5.53%** 7.22% Year Year 5/1/00 Ended Ended to Class I 12/31/02 12/31/01 12/31/00(a) Net asset value, beginning of period $ 10.33 $ 9.82 $ 10.00 ---------- ---------- ---------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.92 $ 0.95 $ 0.61 Net realized and unrealized gain (loss) on investments (1.06) 0.62 (0.18) ---------- ---------- ---------- Net increase (decrease) from investment operations $ (0.14) $ 1.57 $ 0.43 Distributions to shareowners: Net investment income (0.92) (0.95) (0.61) Net realized gain -- (0.11) -- ---------- ---------- ---------- Net increase (decrease) in net asset value $ (1.06) $ 0.51 $ (0.18) ---------- ---------- ---------- Net asset value, end of period $ 9.27 $ 10.33 $ 9.82 ========== ========== ========== Total return* (1.42)% 16.60% 4.12 Ratio of net expenses to average net assets+ 1.02% 1.15% 1.25%** Ratio of net investment income (loss) to average net assets+ 9.39% 9.15% 9.18%** Portfolio turnover rate 42% 36% 33%** Net assets, end of period (in thousands) $ 41,111 $ 32,331 $ 6,849 Ratios with no waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.02% 1.28% 2.35%** Net investment income (loss) 9.39% 9.02% 8.08%**
(a) Shares of High Yield VCT Portfolio were first publicly offered on May 1, 2000. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. 10 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer High-Yield VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $3,896,379) (Cost $96,881,771) $ 97,689,703 Cash 4,966,498 Foreign currencies, at value -- Receivables -- Investment securities sold 1,251,309 Fund shares sold 129,186 Dividends, interest and foreign taxes withheld 1,389,274 Other 240 ------------- Total assets $ 105,426,210 ------------- LIABILITIES: Payables -- Investment securities purchased $ 5,290,138 Fund shares repurchased 22 Dividends -- Upon return for securities loaned 3,990,710 Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 62,907 Accrued expenses 27,878 Other -- ------------- Total liabilities $ 9,371,655 ------------- NET ASSETS: Paid-in capital $ 92,183,318 Accumulated net investment income (loss) 42,466 Accumulated undistributed net realized gain (loss) 3,020,839 Net unrealized gain (loss) on: Investments 807,932 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------- Total net assets $ 96,054,555 ------------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 63,375,020 Shares outstanding 5,697,234 ------------- Net asset value per share $ 11.12 Class II: No par value (unlimited number of shares authorized) Net assets $ 32,679,535 Shares outstanding 2,937,735 ------------- Net asset value per share $ 11.12
The accompanying notes are an integral part of these financial statements. 11 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer High Yield VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends $ 25,646 Interest (net of foreign taxes withheld of $2,145) 2,986,213 Income on securities loaned, net 2,414 Other -- ------------ Total investment income $ 3,014,273 EXPENSES: Management fees $ 311,486 Transfer agent fees 293 Distribution fees (Class II) 34,430 Administrative fees 9,604 Custodian fees 9,660 Professional fees 26,244 Printing 8,162 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,996 ------------ Total expenses $ 401,875 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ------------ Net expenses $ 401,875 ------------ Net investment income (loss) $ 2,612,398 ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 3,020,965 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ $ 3,020,965 ------------ Change in net unrealized gain or loss from: Investments $ (6,002,478) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ $ (6,002,478) ------------ Net gain (loss) on investments, futures contracts and foreign currency transactions $ (2,981,513) ------------ Net increase (decrease) in net assets resulting from operations $ (369,115) ------------
12 The accompanying notes are an integral part of these financial statements. Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer High Yield VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 2,612,398 $ 4,106,902 Net realized gain (loss) on investments 3,020,965 1,124,588 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (6,002,478) 10,301,474 ------------- ------------- Net increase (decrease) in net assets resulting from operations $ (369,115) $ 15,532,964 ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (1,887,530) $ (3,817,405) Class II (724,685) (279,944) Net realized gain Class I (265,040) -- Class II (135,300) -- Tax return of capital Class I -- -- Class II -- -- ------------- ------------- Total distributions to shareowners $ (3,012,555) $ (4,097,349) ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 40,007,704 $ 45,609,360 Reinvestment of distributions 2,994,517 4,059,022 Cost of shares repurchased (27,753,753) (18,254,761) ------------- ------------- Net increase (decrease) in net assets resulting from fund share transactions $ 15,248,468 $ 31,413,621 ------------- ------------- Net increase (decrease) in net assets $ 11,866,798 $ 42,849,236 ------------- ------------- NET ASSETS: Beginning of period $ 84,187,757 $ 41,338,521 ------------- ------------- End of period $ 96,054,555 $ 84,187,757 ------------- ------------- Accumulated/(distributions in excess of) net investment income (loss) $ 42,466 $ 42,283 ------------- -------------
The accompanying notes are an integral part of these financial statements. 13 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer High Yield VCT Portfolio (The Portfolio) is a portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of High Yield Portfolio is to maximize total return through a combination of income and capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting years. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolios are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Trading in foreign equity securities is substantially completed each day at various times prior to the close of the New York Stock Exchange. The value of such securities used in computing the net asset value of the Portfolio's shares, based on the last sale price on the principal exchange where they traded, are determined as of such times. As of June 30, 2004, there were no fair valued securities. Fixed income securities are valued at prices supplied by independent pricing services, which consider such factors as Treasury spreads, yields, maturities and ratings. Valuations may be supplemented by dealers and other sources, as required. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income 14 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- bearing cash accounts, is recorded on the accrual basis, net of unrecoverable foreign taxes withheld at the applicable country rates. All discounts/premiums are accreted/amortized for financial reporting purposes. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. The High Yield Portfolio invests in below investment grade (high yield) debt securities and preferred stocks. These high yield securities may be convertible into equity securities of the issuer. Debt securities rated below investment grade are commonly referred to as "junk bonds" and are considered speculative. These securities involve greater risk of loss, are subject to greater price volatility, and are less liquid, especially during years of economic uncertainty or change, than higher rated debt securities. The Portfolio is not diversified, which means that it can invest a higher percentage of its asset in any one issuer than a diversified fund. Being non-diversified may magnify the fund's losses from adverse events affecting a particular issuer. In addition, the non-diversified Portfolios have concentrations in certain asset types, which may subject the Portfolios to additional risks. Further description of these risks is included in the Trust's Prospectus. B. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. C. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. D. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. In addition to the requirements of the Internal Revenue Code, the Portfolio may also be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the six months ended June 30, 2004, the no such taxes were paid. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 15 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Pioneer High-Yield VCT Portfolio 2003 -------------- Distributions paid from: Ordinary Income $4,097,349 Long-Term capital gain -- ---------- $4,097,349 Return of Capital -- ---------- Total distributions $4,097,349 ---------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 42,283 Undistributed long-term gain/ (Capital loss carryforward) 400,214 Unrealized appreciation (depreciation) 6,810,410 ---------- Total $7,252,907 ==========
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Dividends and distributions to shareowners are recorded on the ex-dividend date. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. The portion of the Portfolios' expenses attributable to Class II (or Class I for shares in the case of High Yield Portfolios) will be reduced only to the extent such expenses are reduced for Class I shares (or Class II shares). Pioneer may subsequently recover reimbursed expenses (within three years of being incurred) from certain Portfolios if the expense ratio of the Class I (or Class II) shares would otherwise be less than the expense limitation of the class. $7,270 was reimbursed by High Yield Portfolio under this arrangement and is included in miscellaneous expense. 16 Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Each class will reimburse PIM no more than the amount by which that class' expenses were reduced. In addition, under the management and administration agreement, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $56,197 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $255 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $6,455 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) ---------------------------------------------------------------------------------------------- High Yield Portfolio $96,881,771 $3,691,838 $ (2,883,906) $807,932 -------------- -------------- ---------------- --------------- - ----------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $47,769,685 and $31,032,220, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------------------------- High Yield Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - --------------------------------------------------------------------------------------------------- CLASS I: Shares sold 1,201,971 $ 13,743,588 2,515,726 $ 26,817,319 Reinvestment of distributions 187,908 2,134,532 357,809 3,779,086 Shares repurchased (1,508,494) (17,051,802) (1,491,103) (15,895,254) --------------------------------------------------------------- Net increase (decrease) (118,615) $ (1,173,682) 1,382,432 $ 14,701,151 =============================================================== CLASS II: Shares sold 2,297,852 $ 26,264,116 1,708,526 $ 18,792,041 Reinvestment of distributions 75,932 859,985 25,089 279,836 Shares repurchased (972,496) (10,701,951) (221,726) (2,359,726) --------------------------------------------------------------- Net increase 1,401,288 $ 16,422,150 1,511,889 $ 16,712,470 =============================================================== - ---------------------------------------------------------------------------------------------------
17 [logo] Pioneer Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16060-00-0804 [logo] Pioneer Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Oak Ridge Large Cap Growth VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Oak Ridge Large Cap Growth VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 6 Notes to Financial Statements 10
Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 94.6% Depositary Receipts for International Stocks 5.4%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Information Technology 23.2% Financials 19.1% Health Care 17.9% Consumer Discretionary 16.5% Consumer Staples 9.1% Industrials 7.8% Energy 6.4%
Five Largest Holdings (As a percentage of equity holdings) 1. Procter & Gamble Co. 3.78% 2. Genentech, Inc. 3.58 3. Apache Corp. 3.38 4. eBAY, Inc. 3.34 5. Microsoft Corp. 3.31
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 3/15/04 Net Asset Value per Share $ 10.37 $ 10.00
Distributions per Share Short-Term Long-Term (3/15/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Oak Ridge Large Cap Growth VCT Portfolio at net asset value, compared to that of the Russell 1000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Oak Ridge Russell 1000 Large Cap Growth Growth Index VCT Portfolio ------------ ---------------- 3/04 $10,000 $10,000 6/04 10,194 10,174
The Russell 1000 Growth Index contains those Russell 1000 securities with a greater-than-average growth orientation. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life of Fund 3.70% (3/15/04)
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In the following interview, David Klaskin, Pioneer Oak Ridge Large Cap Growth VCT Portfolio's Lead Manager, discusses the factors that influenced performance for the abbreviated period ended June 30, 2004. Q: How did the U.S. stock market perform over recent months? A: Stocks delivered the strongest returns in the first half of the reporting period, during which the market was supported by the ongoing expansion of the world economy, low interest rates and the continued improvement of corporate earnings results. The backdrop for stocks started to deteriorate in March, however, as investors began to anticipate that the U.S. Federal Reserve would soon have to begin raising interest rates in order to keep inflation at bay. In the latter part of the period: higher-quality companies with strong earnings growth and sound fundamentals came back into favor. In contrast, smaller, lower-quality companies (including many with no earnings) generally had been the best performers in 2003 and the first calendar quarter of this year. Q: How did the Portfolio perform during the period? A: Class II shares of the Portfolio produced a total return of 3.70% at net asset value for the abbreviated period from March 15, 2004 through June 30, 2004, ahead of its benchmark, the Russell 1000 Growth Index which returned 1.94% for the period from March 31, 2004 through June 30, 2004. The gradual return to higher quality issues during April and May could signal an end to a challenging period for the Portfolio. Like most growth-oriented managers, we look for companies that offer accelerating sales and earnings growth. However, we strive to make sure that the companies we own in the Portfolio have what we think are sensible valuations relative to their growth prospects. In other words, we will not overpay for companies whose stock prices are not adequately supported by fundamentals. We believe that this is the best way to find companies poised to perform well over a three-to-five year time horizon. With the markets' preferences returning to a focus on quality, this approach again began to bear fruit during the latter half of the period. Q: Please discuss some of the key factors in the Portfolio's performance. A: We are pleased to report that the vast majority of our investment decisions paid off. While we didn't hit any home runs, we also didn't suffer any "blow-ups" from individual holdings. In fact, most of the stocks in the portfolio produced steady gains. The Portfolio received the strongest performance from its holdings in health care stocks. This sector in general - and the biotechnology and medical equipment industries in particular - is home to a wealth of fast-growing companies selling at what we believe to be reasonable prices. Genentech was a strong individual performer for the Portfolio, and while it is still a large position, we have begun to trim its weighting in the stock as its multiple had expanded to a valuation more reflective of its prospects. The stock is benefiting from the high hopes for the drug Avastin, which has proven effective in treating several forms of cancer. Zimmer Holdings, a leader in making replacement joints, also performed well, as did Alcon, an eye care device maker that has benefited from both higher earnings and an increase in its valuation. A recent addition within the health care sector is Caremark Rx, a pharmacy benefits company that we believe is poised for strong growth resulting from the need for cost-effective drug distribution. We also generated strong performance from our stock selection within the energy sector, which has been helped by the continued rise in oil and gas prices. Both of the Portfolio's holdings in this area - Apache Corp. and XTO Energy - executed particularly well. In the consumer area, we emphasize companies with strong earnings growth and dominant positions within their respective industries, such as Walmart and Procter & Gamble. Q: The Portfolio is underweight in technology. Why do you hold this positioning, which is unusual for a growth portfolio? A: We are having no trouble finding technology companies with good growth prospects. What is challenging is finding tech stocks that are reasonably valued in relation to their growth rates. The Portfolio's underweight in technology proved helpful in recent months, as many of the high-flying stocks in the tech sector lost ground. Our strategy with respect to technology is to select companies that are market leaders and that are gaining market share from their competitors. We believe companies that are gaining share will, over the long-term, perform well versus the sector as a whole. It is our belief that the best performing stocks over the next market cycle will not be the manufacturers of technology, but the companies best utilizing technological advancement to gain market share in their respective sectors. Q: What are some examples of investments that did not work as well? A: As we stated earlier, very few of the Portfolio's holdings performed poorly. Having said that, our investment in the Spanish language television broadcaster Univision produced a loss. Although the company reported strong first quarter earnings, it was conservative in its forward-looking guidance. Citicorp, meanwhile, weakened on concerns over the effects of litigation and the potential impact of rising interest rates. We believe these fears are overstated, and maintain our position in the stock. Meanwhile, our purchase of Texas Instruments proved poorly timed, leading to a short-term loss. However, we believe TI will deliver good performance over time due to its exposure to the fast-growing communications area. Q: What is your outlook for the stock market? A: We are encouraged by the recent improvement in the performance of higher-quality stocks. The market environment remains uncertain, with the positive effects of a stronger economy and growing corporate earnings offset by the fear of rising interest rates and worries about Iraq, terrorism and the upcoming election. But an environment such as this may prove advantageous to stock pickers such as us, because quality, earnings and valuations will likely begin to matter once again. And in such an environment, we believe that our concentrated portfolio of reasonably valued, fundamentally sound stocks will benefit accordingly. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 92.6% Energy - 5.9% Oil & Gas Exploration & Production - 5.9% 631 Apache Corp. $ 27,480 830 Cross Timbers Oil Co. 24,726 -------- $ 52,206 -------- Total Energy $ 52,206 -------- Capital Goods - 4.7% Electrical Components & Equipment - 1.8% 493 General Electric Co. $ 15,973 -------- Industrial Conglomerates - 2.9% 495 Danaher Corp. $ 25,666 -------- Total Capital Goods $ 41,639 -------- Transportation - 2.5% Air Freight & Couriers - 2.5% 269 FedEx Corp. $ 21,975 -------- Total Transportation $ 21,975 -------- Hotels, Restaurants & Leisure - 1.3% Casinos & Gaming - 1.3% 296 International Game Technology $ 11,426 -------- Total Hotels, Restaurants & Leisure $ 11,426 -------- Media - 2.2% Broadcasting & Cable TV - 2.2% 611 Univision Communications, Inc.* $ 19,509 -------- Total Media $ 19,509 -------- Retailing - 11.7% Computer & Electronics Retail - 2.1% 356 Best Buy Co., Inc. $ 18,063 -------- Home Improvement Retail - 1.9% 323 Lowe's Companies, Inc. $ 16,974 -------- Internet Retail - 5.0% 295 eBAY, Inc.* $ 27,125 561 InterActive Corp.* 16,909 -------- $ 44,034 -------- Specialty Stores - 2.7% 817 Staples, Inc. $ 23,946 -------- Total Retailing $103,017 -------- Food & Drug Retailing - 4.9% Food Distributors - 2.4% 599 Sysco Corp. $ 21,486 -------- Hypermarkets & Supercenters - 2.5% 410 Wal-Mart Stores, Inc. $ 21,632 -------- Total Food & Drug Retailing $ 43,118 -------- Shares Value Household & Personal Products - 3.5% Household Products - 3.5% 564 Procter & Gamble Co. $ 30,704 -------- Total Household & Personal Products $ 30,704 -------- Health Care Equipment & Services - 9.6% Health Care Distributors - 1.9% 250 Teva Pharmaceutical Industries, Ltd. (A.D.R.) $ 16,823 -------- Health Care Equipment - 2.5% 249 Zimmer Holdings, Inc.* $ 21,962 -------- Health Care Services - 2.1% 565 Caremark Rx, Inc.* $ 18,611 -------- Health Care Supplies - 3.1% 340 Alcon, Inc. $ 26,741 -------- Total Health Care Equipment & Services $ 84,137 -------- Pharmaceuticals & Biotechnology - 7.0% Biotechnology - 4.3% 162 Amgen, Inc.* $ 8,840 518 Genentech, Inc.* 29,112 -------- $ 37,952 -------- Pharmaceuticals - 2.7% 684 Pfizer, Inc. $ 23,448 -------- Total Pharmaceuticals & Biotechnology $ 61,400 -------- Banks - 4.6% Diversified Banks - 4.6% 493 Popular, Inc. $ 21,086 712 U.S. Bancorp 19,623 -------- $ 40,709 -------- Total Banks $ 40,709 -------- Diversified Financials - 9.1% Consumer Finance - 4.3% 356 American Express Co. $ 18,291 493 SLM Corp. 19,942 -------- $ 38,233 -------- Investment Banking & Brokerage - 2.1% 339 Merrill Lynch & Co., Inc. $ 18,299 -------- Diversified Financial Services - 2.7% 507 Citigroup, Inc. $ 23,576 -------- Total Diversified Financials $ 80,108 -------- Insurance - 3.9% Life & Health Insurance - 1.9% 416 Aflac, Inc. $ 16,977 --------
4 The accompanying notes are an integral part of these financial statements. Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Multi-Line Insurance - 2.0% 247 American International Group, Inc. $ 17,606 -------- Total Insurance $ 34,583 -------- Software & Services - 7.8% Application Software - 3.1% 942 Microsoft Corp. $ 26,904 -------- Data Processing & Outsourced Services - 4.7% 393 Affiliated Computer Services, Inc.* $ 20,805 467 First Data Corp. 20,791 -------- $ 41,596 -------- Total Software & Services $ 68,500 -------- Technology Hardware & Equipment - 11.7% Communications Equipment - 2.9% 351 Qualcomm, Inc. $ 25,616 -------- Computer Hardware - 4.4% 645 Dell, Inc.* $ 23,104 170 IBM Corp.* 14,986 -------- $ 38,090 -------- Shares Value Electronic Manufacturing Services - 1.9% 661 Jabil Circuit, Inc.* $ 16,640 -------- Technology Distributors - 2.5% 384 Fisher Scientific International, Inc.* $ 22,176 -------- Total Technology Hardware & Equipment $102,522 -------- Semiconductors - 2.0% 709 Texas Instruments, Inc. $ 17,144 -------- Total Semiconductors $ 17,144 -------- TOTAL COMMON STOCKS (Cost $803,436) $812,697 -------- TOTAL INVESTMENT IN SECURITIES - 92.6% (Cost $803,436) $812,697 -------- OTHER ASSETS AND LIABILITIES - 7.4% $ 65,077 -------- TOTAL NET ASSETS - 100.0% $877,774 ========
* Non-income producing security. (A.D.R.) American Depository Receipt The accompanying notes are an integral part of these financial statements. 5 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
3/15/04 to 6/30/04 Class II (a) (unaudited) Net asset value, beginning of period $ 10.00 ------- Increase from investment operations: Net investment income $ -- Net realized and unrealized gain on investments and foreign currency transactions 0.37 ------- Net increase from investment operations $ 0.37 ------- Net increase in net asset value $ 0.37 ------- Net asset value, end of period $ 10.37 ======= Total return* 3.70% Ratio of net expenses to average net assets+ 0.95%** Ratio of net investment income to average net assets+ 0.10%** Portfolio turnover rate 15%** Net assets, end of period (in thousands) $ 878 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 25.13%** Net investment loss (24.09)%**
(a) Class II shares were first publicly offered on March 15, 2004 * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period, and no sales charges. Total return would be reduced if sales charges were taken into account. ** Annualized. + Ratios with no reduction for fees paid indirectly. 6 The accompanying notes are an integral part of these financial statements. Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Oak Ridge Large Cap Growth VCT Portfolio ASSETS: Investment in securities, at value (Cost $803,436) 812,697 Cash 149,940 Futures collateral -- Foreign currencies, at value -- Receivables -- Investment securities sold -- Fund shares sold 14,341 Variation margin -- Dividends, interest and foreign taxes withheld 519 Forward foreign currency settlement contracts, net Forward foreign currency portfolio hedge contracts, open-net Due from Pioneer Investment Management, Inc. 7,820 Other 10 ------- Total assets $985,327 -------- LIABILITIES: Payables -- Investment securities purchased $ 90,503 Fund shares repurchased -- Dividends -- Upon return of securities loaned -- Forward foreign currency settlement contracts, net -- Forward foreign currency portfolio hedge contracts, open-net -- Variation margin -- Due to bank Due to affiliates 1,814 Accrued expenses 15,236 -------- Total liabilities $107,553 -------- NET ASSETS: Paid-in capital $869,151 Accumulated net investment income (loss) 102 Accumulated undistributed net realized gain (loss) (740) Net unrealized gain (loss) on: Investments 9,261 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- -------- Total net assets $877,774 -------- NET ASSET VALUE PER SHARE: Class II: No Par Value (Unlimited number of shares authorized) Net assets $877,774 Shares outstanding 84,638 -------- Net asset value per share $ 10.37 --------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Oak Ridge Large Cap Growth VCT Portfolio For the period from 3/15/04 (Commencement of Operations) to 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $23) $ 940 Interest 99 Income on securities loaned, net -- Other -- --------- Total investment income $ 1,039 --------- EXPENSES: Management fees $ 740 Transfer agent fees 504 Distribution fees (Class II) 247 Administrative fees 4,625 Custodian fees 7,072 Professional fees 8,059 Printing 3,743 Fees and expenses of nonaffiliated trustees 36 Miscellaneous -- --------- Total expenses $ 25,026 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (24,089) --------- Less fees paid indirectly Net expenses $ 937 --------- Net investment income (loss) $ 102 --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ (740) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- --------- $ (740) --------- Change in net unrealized gain or loss from: Investments $ 9,261 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- --------- $ 9,261 --------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ 8,521 --------- Net increase (decrease) in net assets resulting from operations $ 8,623 =========
8 The accompanying notes are an integral part of these financial statements. Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Oak Ridge Large Cap Growth VCT Portfolio For the period from 3/15/04 (Commencement of Operations) to 6/30/04 (unaudited) FROM OPERATIONS: Net investment income $ 102 Net realized gain (loss) on investments (740) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 9,261 -------- Net increase (decrease) in net assets resulting from operations $ 8,623 -------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income: Class I $ -- Class II $ -- Net realized gain Class I -- Class II -- Tax return of Capital Class I -- Class II -- -------- Total distributions to shareholders $ -- -------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $869,656 Reinvestment of distributions -- Cost of shares repurchased (505) -------- Net increase in net assets resulting from fund share transactions $869,151 -------- Net increase in net assets $877,774 NET ASSETS: Beginning of period -- -------- End of period $877,774 ======== Accumulated net investment income (loss), end of period $ 102 ========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Oak Ridge Large Cap Growth VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware statutory trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The Oak Ridge Large Cap Growth VCT Portfolio commenced operations on March 15, 2004. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Oak Ridge Large Cap Growth Portfolio is capital appreciation. The financial statements and financial highlights of all other portfolios are presented in separate books. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. 10 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Oak Ridge Large Cap Growth Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. 11 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $1,542 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $129 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $143 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - -------------------------------------------------------------------------------------- Oak Ridge Large Cap Growth Portfolio $803,436 $20,914 $ (11,653) $9,261 ======== ======= ========= ====== - --------------------------------------------------------------------------------------
12 Pioneer Oak Ridge Large Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the period ended June 30, 2004, were $820,969 and $16,793, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- -------------------------------------------------------------------------------- Oak Ridge Large Cap Growth Portfolio '04 Shares '04 Amount - --------------------------------------------------------------- CLASS II: Shares sold 84,687 $869,656 Reinvestment of distributions -- -- Shares repurchased (49) (505) --------------------- Net increase 84,638 $869,151 ===================== - --------------------------------------------------------------------------------
13 [logo] Pioneer Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16070-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Real Estate Shares VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 5 Notes to Financial Statements 9 Trustees, Officers and Service Providers 14
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stock 100.0%
Sector Distribution (As a percentage of equity holdings) [DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Office 17.4% Apartment 16.8% Regional Mail 15.0% Industrial 12.7% Shopping Center 10.4% Hotel 8.7% Diversified 8.5% Self Storage 4.1% Cash 3.0% Factory Outlet 2.1% Manufactured Homes 1.0% Health Care 0.3%
Five Largest Holdings (As a percentage of equity holdings) - ----------------------------------------------- 1. Simon DeBartolo Group, Inc. 6.00% - ----------------------------------------------- 2. Boston Properties, Inc. 5.02 - ----------------------------------------------- 3. Equity Residential Property Trust 4.36 - ----------------------------------------------- 4. ProLogis Trust 3.97 - ----------------------------------------------- 5. Catellus Development Corp. 3.91 - -----------------------------------------------
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 19.55 $ 18.57 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.400 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Real Estate Shares VCT Portfolio at net asset value, compared to that of the Wilshire Real Estate Securities Index. Portfolio returns are based on net asset value and do not reflect applicable insurance fees and surrender charges. [DATA BELOW IS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Wilshire Pioneer Real Estate Real Estate Securities Index+ Shares VCT Portfolio 3/95 10,000 10,000 11,322 11,696 6/96 15,497 15,875 18,565 19,235 6/98 15,330 15,629 14,841 14,977 6/00 19,403 19,397 21,431 20,911 6/02 21,983 21,440 30,133 28,890 6/04 32,226 31,028
+ Index comparison begins on 2/28/95. The Wilshire Real Estate Securities Index is a market-capitalization weighted measure of the performance of real estate investment trusts (equity and hybrid) and real estate operating companies. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 12.89% (3/1/95) 5 Years 13.58% 1 Year 28.90%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- Fear of higher interest rates, rising oil prices and the ongoing turmoil in Iraq contributed to volatile markets for the six months ended June 30, which made up the first half or your Portfolio's fiscal year. In this report, Mathew Troxell, a member of the Portfolio's investment management team, discusses the sector's positive returns amidst the shifting economic landscape and his expectations for 2004. Q: Was the market and economic environment favorable for the Portfolio's investment strategy? A: Real estate stocks, like most asset classes, experienced great volatility during the reporting period. With evidence suggesting that the U.S. economy was on its way to recovery, the real estate market rose strongly during the first quarter of 2004. However, in early April, the jobs report for March was surprisingly strong and sparked a sell-off in the bond market. Bond investors feared that the economy might be growing too fast and would ignite inflation. Interest rates began to rise, pushing bond prices down. Prices of real estate stocks also fell sharply even though historically they have exhibited a low correlation to bond prices. Rising oil prices and political uncertainty in Iraq further heightened investor concerns. During May and June, real estate investment trusts began to recover and picked up enough positive momentum to regain much of the ground lost in April -- ending the six months with relatively strong performance gains. For the six months ended June 30, 2004, the Portfolio's Class I shares rose 7.4% at net asset value. In comparison, the Wilshire Real Estate Securities Index increased 6.96% for the same period. Q: What investments helped performance during the six months? A: Several holdings contributed positively to the Portfolio's returns. AvalonBay Communities, one of the Portfolio's largest holdings, is an apartment/multi-family real estate investment trust (REIT) that has benefited from the expectation of improving fundamentals for apartments. Job growth has been very positive for household formations, especially for young adults who are leaving home for the first time. This demographic group has the highest propensity to rent rather than buy. This stronger renter demand is giving apartment REIT managers, such as AvalonBay, greater pricing flexibility. In addition, rising interest rates should contribute to higher renter demand, because buying a home becomes a more expensive option. In the lodging sector, Starwood Hotels and Resorts performed well, particularly in the final two months of the reporting period. Starwood, as well as the sector in general, are benefiting from a recovery in lodging demand, which is directly correlated to the improving economy. Catellus Development, a real estate management and development company, holds a portfolio of high-quality predominately industrial properties generating strong cash flow. This REIT's positive performance was driven, in part, by management's decision to convert to REIT status early in 2004. The heightened investor interest helped it to outperform the benchmark during the six months. Q: What investments hurt performance during the six months? A: We believe that Simon Property Group is a solid company, but after consistently outperforming the real estate market during the multi-year rally through the first quarter of 2004, it, along with other retail names, lagged in the final months of the reporting period. Following the market correction this spring, it began to recover. However, when management announced in late June that it was acquiring Chelsea Property Group (also held by the Portfolio), investors reacted negatively. We view the proposed merger very positively, because we think Chelsea Property Group, which owns factory outlet shopping centers in Japan as well as in the United States, would add international diversity and a new retail focus to Simon's current portfolio. Following disappointing performance last year, Apartment Investment and Management continued to lag the benchmark. This REIT, which owns a diverse portfolio of multi-family apartment complexes, suffered more than its peers as apartment fundamentals proved challenging last year and experienced lower-than-expected fee income and higher-than-expected apartment-turnover-related expenses last year -- resulting in a reduced dividend. Even with the greater promise for improving fundamentals, we reduced the position this spring, because we tempered our view of its total return potential. Q: What is your outlook for the balance of 2004? A: We think that the various property types making up the real estate market are generally experiencing improving fundamentals. While real estate earnings typically lag an improvement in fundamentals, hotel and apartment landlords can respond fairly quickly. Should economic growth continue, however, we believe retail landlords will begin to lose the relative advantage they have previously enjoyed. We believe that it will fall to astute stock selection to separate the wheat from the chafe. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. - -------------------------------------------------------------------------------- Real estate investments may be subject to special risks, including risks related to general and local economic conditions and risks related to an individual property. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 97.4% Hotels, Restaurants & Leisure - 5.3% Hotels, Resorts & Cruise Lines - 5.3% 75,000 Hilton Hotels Corp.* $ 1,399,500 58,000 Starwood Hotels & Resorts 2,601,300 ----------- $ 4,000,800 ----------- Total Hotels, Restaurants & Leisure $ 4,000,800 ----------- Diversified Financials - 3.0% Diversified Financial Services - 3.0% 77,000 Brookfield Properties Corp. $ 2,213,750 ----------- Total Diversified Financials $ 2,213,750 ----------- Real Estate - 89.1% Real Estate Management & Development - 4.0% 115,500 Catellus Development Corp. $ 2,847,075 8,200 Inland Real Estate Corp.* 106,682 ----------- $ 2,953,757 ----------- Real Estate Investment Trusts - 85.1% 38,500 Apartment Investment & Management Co. $ 1,198,505 46,200 AMB Property Corp. 1,599,906 22,400 Affordable Residential Communities* 371,840 16,500 Alexandria Real Estate Equities, Inc. 936,870 44,000 Arden Realty Group, Inc. 1,294,040 92,500 Archstone Communities Trust 2,713,025 50,000 AvalonBay Communities, Inc.* 2,826,000 73,100 Boston Properties, Inc. 3,660,848 17,500 Chelsea Property Group, Inc. 1,141,350 30,000 Camden Property Trust 1,374,000 10,000 Carramerica Realty Corp. 302,300 61,000 Developers Diversifies Realty Corp. 2,157,570 57,000 Duke Realty Investments, Inc. 1,813,170 79,000 Equity Office Properties Trust 2,148,800 107,000 Equity Residential Property Trust 3,181,110 5,800 First Potomac Realty Trust* 111,186 36,000 Federal Realty Investment Trust 1,497,240 79,500 General Growth Properties, Inc. 2,350,815 25,500 Highwoods Properties, Inc.* 599,250 Shares Value 189,000 Host Marriott Corp.* $ 2,336,040 6,000 Healthcare Realty Trust, Inc. 224,880 2,500 Kilroy Realty Corp. 85,250 53,000 Liberty Property Trust 2,131,130 35,500 The Macerich Co. 1,699,385 11,300 Manufactured Home Communities, Inc. 375,047 9,100 Mills Corp. 424,970 10,500 Corporate Office Properties 260,925 88,000 ProLogis Trust 2,896,960 29,300 Pan Pacific Retail Properties, Inc. 1,480,236 55,000 Prentiss Properties Trust 1,843,600 45,206 Public Storage, Inc. 2,079,928 25,500 PS Business Parks Inc* 1,026,120 48,000 Regency Centers Corp. 2,059,200 35,000 The Rouse Co.* 1,662,500 9,500 iStar Financial, Inc.* 380,000 27,500 Shurgard Storage Centers, Inc. 1,028,500 15,800 Strategic Hotel Capital, Inc.* 232,260 85,000 Simon DeBartolo Group, Inc. 4,370,700 51,000 Taubman Centers, Inc. 1,167,390 37,600 Trizec Properties Inc. 611,376 47,200 United Dominion Realty Trust 933,616 46,000 Vornado Realty Trust 2,627,060 16,500 Western Resources, Inc. 516,120 ----------- $63,731,018 ----------- Total Real Estate $66,684,775 ----------- TOTAL COMMON STOCKS (Cost $55,838,852) $72,899,325 ----------- TOTAL INVESTMENT IN SECURITIES - 97.4% (Cost $55,838,852) $72,899,325 ----------- OTHER ASSETS AND LIABILITIES - 2.6% $ 1,967,974 ----------- TOTAL NET ASSETS - 100.0% $74,867,299 ===========
* Non-income producing security. 4 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 $ 13.07 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.42 $ 0.74 $ 0.62 $ 0.68 $ 0.71 $ 0.66 Net realized and unrealized gain (loss) on investments 0.96 4.16 (0.23) 0.40 2.67 (1.20) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 1.38 $ 4.90 $ 0.39 $ 1.08 $ 3.38 $ (0.54) Distributions to shareowners: Net investment income (0.40) (0.64) (0.69) (0.56) (0.59) (0.60) Net realized gain -- -- -- -- -- (0.12) Tax return of capital -- (0.16) -- (0.17) (0.10) (0.08) ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 0.98 $ 4.10 $ (0.30) $ 0.35 $ 2.69 $ (1.34) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 19.55 $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 ======= ======= ======= ======= ======= ======= Total return* 7.40% 34.75% (2.53)% 7.80% 29.51% (4.17)% Ratio of net expenses to average net assets+ 0.94%** 1.03% 1.07% 1.16% 1.10% 1.15% Ratio of net investment income (loss) to average net assets+ 4.22%** 4.49% 4.76% 4.71% 5.02% 5.07% Portfolio turnover rate 43%** 20% 29% 34% 31% 54% Net assets, end of period (in thousands) $30,297 $31,891 $29,873 $33,026 $32,982 $28,318 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.30% Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 4.92% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.14% Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 5.08%
(a) Amount rounds to less than one cent per share. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 5 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio ASSETS: Investment in securities, at value (Cost $55,838,852) $ 72,899,325 Cash 1,906,225 Foreign currencies, at value -- Receivables -- Investment securities sold 2,124,520 Fund shares sold 181,129 Dividends, interest and foreign taxes withheld 428,504 Other 354 ------------ Total assets $ 77,540,057 ------------ LIABILITIES: Payables -- Investment securities purchased $ 2,208,201 Fund shares repurchased 378,282 Dividends -- Upon return for securities loaned -- Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 66,321 Accrued expenses 19,954 Other -- ------------ Total liabilities $ 2,672,758 ------------ NET ASSETS: Paid-in capital $ 57,527,714 Accumulated net investment income (loss) 160,542 Accumulated undistributed net realized gain (loss) 118,570 Net unrealized gain (loss) on: Investments 17,060,473 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $ 74,867,299 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 30,296,916 Shares outstanding 1,549,560 ------------ Net asset value per share $ 19.55 Class II: No par value (unlimited number of shares authorized) Net assets $ 44,570,383 Shares outstanding 2,283,389 ------------ Net asset value per share $ 19.52
6 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $1,676) $1,885,996 Interest 18,128 Income on securities loaned, net 535 Other -- ---------- Total investment income $1,904,659 ---------- EXPENSES: Management fees $ 294,190 Transfer agent fees 1,494 Distribution fees (Class II) 53,188 Administrative fees 9,250 Custodian fees 13,052 Professional fees 19,250 Printing 8,855 Fees and expenses of nonaffiliated trustees -- Miscellaneous 899 ---------- Total expenses $ 400,178 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ---------- Net expenses $ 400,178 ---------- Net investment income (loss) $1,504,481 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $3,075,780 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $3,075,780 ---------- Change in net unrealized gain or loss from: Investments $ 359,869 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ 359,869 ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $3,435,649 ---------- Net increase (decrease) in net assets resulting from operations $4,940,130 ----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 1,504,481 $ 3,062,870 Net realized gain (loss) on investments 3,075,780 (474,302) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 359,869 15,553,008 ------------ ------------- Net increase (decrease) in net assets resulting from operations $ 4,940,130 $ 18,141,576 ------------ ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (637,400) $ (1,422,912) Class II (859,854) (1,519,594) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ------------ ------------- Total distributions to shareowners $ (1,497,254) $ (2,942,506) ------------ ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 7,974,724 $ 9,753,610 Reinvestment of distributions 1,497,254 2,942,506 Cost of shares repurchased (9,831,522) (17,969,003) ------------ ------------- Net increase (decrease) in net assets resulting from fund share transactions $ (359,544) $ (5,272,887) ------------ ------------- Net increase (decrease) in net assets $ 3,083,332 $ 9,926,183 ------------ ------------- NET ASSETS: Beginning of period $ 71,783,967 $ 61,857,784 ------------ ------------- End of period $ 78,867,299 $ 71,783,967 ============ ============= Accumulated/(distributions in excess of) net investment income (loss) $ 160,542 $ 153,315 ============ =============
8 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Real Estate Shares VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Real Estate Shares Portfolio pursues long-term capital growth, with current income as a secondary objective. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no fair valued securities. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Because Real Estate Shares Portfolio invests a substantial portion of its assets in real estate 9 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- investment trusts (REITs), the Portfolio may be subject to certain risks associated with direct investments in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital returns may be made at any time. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code or its failure to maintain exemption from registration under the Investment Company Act of 1940. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Real Estate Shares had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. A portion of the dividend income recorded by Real Estate Shares Portfolio is from distributions by publicly traded REITs, and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Trust as a reduction of the cost basis of the securities held. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, 10 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Real Estate Shares VCT Portfolio had a capital loss carryforward of $3,310,843, of which the following amounts will expire between 2007 and 2011 if not utilized: $2,238,450 in 2007, $619,294 in 2008 and $453,069 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio 2003 - --------------------------------------------------------- Distributions paid from: Ordinary Income* $ 2,171,485 Long-Term capital gain -- ----------- 2,171,485 Return of Capital -- ----------- Total distributions $ 2,171,485 ----------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/ (Capital loss carryforward) (2,665,210) Unrealized appreciation (depreciation) 16,408,604 ----------- Total $13,743,394 -----------
- -------------------------------------------------------------------------------- * Included in the Portfolio's distributions from 2003 ordinary income is $192,564 in excess of investment company taxable income, which, in accordance with U.S. tax law, is taxable to shareowners as ordinary income distributions. The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. Prior to June 30, 2004, the Portfolio has reclassified $21,639 to decrease net unrealized gain on investments, $6,268 to decrease accumulated undistributed net realized gain on investments and $27,907 to increase paid-in capital. The reclassification has no impact on the net assets of the Portfolio and presents the Portfolio's capital accounts on a tax basis. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities 11 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.80% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $55,958 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $10,106 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows: - --------------------------------------------------------------------------------
Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------------------- Real Estate Shares Portfolio $56,411,455 $16,815,051 $ (327,181) $16,487,870 ----------- ----------- ---------- -----------
- -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $17,444,652 and $15,240,948, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: - --------------------------------------------------------------------------------
Real Estate Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ----------------------------------------------------------------------------------------- CLASS II: Shares sold 46,990 $ 914,044 153,884 $ 2,545,266 Reinvestment of distributions 31,935 637,400 87,137 1,422,912 Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017) -------- ------------ -------- ------------ Net increase (167,581) $ (3,090,354) (347,178) $ (5,232,839) ======== ============ ======== ============ CLASS II: Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344 Reinvestment of distributions 43,174 859,854 92,474 1,519,594 Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986) -------- ------------ -------- ------------ Net increase 132,798 $ 2,730,810 (62,278) $ (40,048) -------- ------------ -------- ------------
- -------------------------------------------------------------------------------- 12 - -------------------------------------------------------------------------------- This page for your notes. 13 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16066-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Mid Cap Value VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Mid Cap Value VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 7 Notes to Financial Statements 11
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 93.0% Temporary Cash Investment 6.0% Depositary Receipts for International Stocks 1.0%
Sector Distribution (As a percentage of equity holdings) [DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Financials 21.7% Consumer Discretionary 15.6% Industrials 12.6% Information Technology 12.6% Health Care 9.6% Materials 8.5% Energy 6.6% Utilities 6.5% Consumer Staples 6.3%
Five Largest Holdings (As a percentage of equity holdings)
- ----------------------------------- 1. Foot Locker, Inc. 2.58% - ----------------------------------- 2. Mattel, Inc. 2.29 - ----------------------------------- 3. W.W. Grainger, Inc. 2.26 - ----------------------------------- 4. Safeway, Inc. 2.14 - ----------------------------------- 5. CIGNA Corp. 2.13 - -----------------------------------
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 21.99 $ 20.47 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.080 $ - $ 0.2095
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Mid Cap Value VCT Portfolio at net asset value, compared to that of the Russell Midcap Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [DATA BELOW IS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Russell Mid Cap Mid-Cap Value VCT Value Index Portfolio 3/95 10,000 10,000 12,263 11,819 12/96 14,748 13,596 19,812 16,952 12/98 20,820 16,271 20,799 18,407 12/00 24,789 21,721 25,369 23,130 12/02 22,920 20,537 31,643 28,234 6/04 33,910 30,733
Index comparison begins 2/28/95. The Russell Midcap Value Index measures the performance of the value-oriented stocks in the Russell Midcap Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in any Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 12.66% (3/1/95) 5 Years 10.11% 1 Year 32.23%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- Despite interim volatility, stocks tended to gain over the first six months of 2004, riding on the tide of a strengthening economy and generally rising corporate profitability. In the following interview, Rod Wright discusses the market environment and portfolio strategies during the six months ended June 30, 2004. Mr. Wright is responsible for day-to-day portfolio supervision of Pioneer Mid Cap Value VCT Portfolio. Q: How did the Portfolio perform? A: The Portfolio performed well. For six months ended June 30, 2004, the Portfolio had a total return of 8.85% at net asset value, while the Russell Midcap Value Index returned 7.17%. Q: What were the principal factors that affected performance? A: Despite a succession of fears that caused short-term market reversals, stocks generally rose during the six months as evidence accumulated that the economy was strengthening and that corporate earnings were increasing. The rally that had driven the market for most of 2003 continued in early 2004 until March, when market interest rates spiked up on fears about the effects of rising oil prices, the possibility of increasing inflationary pressure and the likelihood that the Federal Reserve would tighten monetary policy. Adding to the uncertainty was the anxiety over the continuing violence in Iraq. In the final weeks of the period, however, the market rebounded again in anticipation of good news about corporate earnings and the widening expectation that the Federal Reserve would act gradually in raising short-term rates, helping to sustain the economic recovery. Q: What types of investments helped Portfolio performance? A: Security selection was the primary factor, as stocks across the industry spectrum contributed to performance. Stocks in the health care, financial services, telecommunications and industrial sectors did well, while stocks in basic materials, consumer staples and consumer discretionary sectors did less well. The top individual contributor was Charter One Financial, which was taken over by Royal Bank of Scotland, at a substantial premium to its valuation. Several other performance leaders were formerly out-of-favor companies whose stock prices began appreciating as their earnings and business prospects began to improve. They included: NCR, the technology conglomerate that began turning around its business in time to benefit from an increase in corporate capital spending; and Reliant Energy, an independent power producer and energy merchant whose stock gained as a result of a corporate restructuring and the sale of undervalued assets. The Portfolio also had success with stocks such as Becton Dickinson, the medical supplies company, which benefited from rising earnings and the introduction of new products, and Providian, a credit-card issuer whose prospects began to improve under a restructuring plan implemented by new management. Q: Were there any disappointments? A: We had a few. Investment Technology Group, a company specializing in electronic trading operations, declined as it faced increased competition in the financial markets. However, we continued to hold the stock because of the value of its assets. We have sold our stake in another disappointment, Seagate Technology, a manufacturer of disc drives, which became the victim of industry overcapacity. Similarly, we also eliminated positions in two disappointing mining stocks, Freeport-McMoRan and Newmont Mining, both of which declined as the price of gold weakened. Q: What is your investment outlook? A: We think that the market trends will continue to be choppy, as a variety of factors will weigh on investors' minds. However, the outlook for corporate earnings is generally positive and companies are generating a great deal of free cash flow. We intend to remain focused on our core discipline, concentrating on investments in quality companies with reasonable stock valuations. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. - -------------------------------------------------------------------------------- Mid-capitalization stocks may be subject to greater short-term price fluctuations than securities of larger companies. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 97.9% Energy - 6.4% Integrated Oil & Gas - 0.9% 115,840 Occidental Petroleum Corp. $ 5,607,814 ------------ Oil & Gas Drilling - 2.9% 138,315 ENSCO International, Inc. $ 4,024,967 98,730 Nabors Industries, Inc.* 4,464,571 155,930 Transocean Offshore, Inc.* 4,512,612 98,235 Weatherford International, Inc.* 4,418,610 ------------ $ 17,420,760 ------------ Oil & Gas Exploration & Production - 2.0% 82,861 Devon Energy Corp. $ 5,468,826 180,485 Pioneer Natural Resources Co. 6,331,414 ------------ $ 11,800,240 ------------ Oil & Gas Refining Marketing & Transportation - 0.6% 57,785 Sun Company, Inc. $ 3,676,282 ------------ Total Energy $ 38,505,096 ------------ Materials - 8.3% Commodity Chemicals - 1.0% 115,445 Air Products & Chemicals, Inc. $ 6,055,090 ------------ Diversified Chemical - 1.6% 155,120 PPG Industries, Inc. $ 9,693,449 ------------ Diversified Metals & Mining - 2.0% 155,285 Phelps Dodge Corp.* $ 12,036,140 ------------ Metal & Glass Containers - 1.6% 130,210 Ball Corp. $ 9,381,631 ------------ Paper Products - 2.1% 311,267 Flowserve Corp.* $ 7,762,999 164,600 Meadwestvaco Corp. 4,837,594 ------------ $ 12,600,593 ------------ Total Materials $ 49,766,903 ------------ Capital Goods - 6.0% Aerospace & Defense - 0.9% 148,300 United Defense Industries, Inc.* $ 5,190,500 ------------ Electrical Components & Equipment - 1.8% 178,465 American Power Conversion Corp. $ 3,506,837 486,390 Symbol Technologies, Inc. 7,169,389 ------------ $ 10,676,226 ------------ Industrial Conglomerates - 3.3% 222,080 American Standard Companies, Inc.* $ 8,952,045 131,520 ITT Industries, Inc. 10,916,160 ------------ $ 19,868,205 ------------ Total Capital Goods $ 35,734,931 ------------ Shares Value Commercial Services & Supplies - 4.6% Commercial Printing - 2.0% 90,200 John H. Harland Co. $ 2,647,370 294,540 R.R. Donnelly & Sons Co. (a) 9,725,711 ------------ $ 12,373,081 ------------ Diversified Commercial Services - 1.0% 131,010 H & R Block, Inc. $ 6,246,557 ------------ Environmental Services - 1.6% 319,335 Republic Services, Inc. $ 9,241,555 ------------ Total Commercial Services & Supplies $ 27,861,193 ------------ Transportation - 1.7% Airlines - 0.6% 228,310 Southwest Airlines Co. $ 3,828,759 ------------ Railroads - 1.1% 149,120 Canadian National Railway Co. $ 6,500,141 ------------ Total Transportation $ 10,328,900 ------------ Consumer Durables & Apparel - 4.2% Apparel, Accessories & Luxury Goods - 0.9% 297,010 The Limited Brands, Inc. $ 5,554,087 ------------ Housewares & Specialties - 0.5% 105,600 Yankee Candle Co.* $ 3,088,800 ------------ Leisure Products - 2.3% 736,530 Mattel, Inc. $ 13,441,673 ------------ Photographic Products - 0.5% 115,500 Eastman Kodak Co. $ 3,116,190 ------------ Total Consumer Durables & Apparel $ 25,200,750 ------------ Hotels, Restaurants & Leisure - 2.3% Restaurants - 2.3% 148,700 Brinker International, Inc.* $ 5,073,644 230,605 Tricon Global Restaurants, Inc.* 8,583,116 ------------ $ 13,656,760 ------------ Total Hotels, Restaurants & Leisure $ 13,656,760 ------------ Media - 0.8% Movies & Entertainment - 0.8% 271,660 Regal Entertainment Group (a) $ 4,917,046 ------------ Total Media $ 4,917,046 ------------ Retailing - 7.9% Apparel Retail - 2.1% 132,230 Jones Apparel Group, Inc. $ 5,220,440 196,400 Liz Claiborne, Inc. 7,066,472 ------------ $ 12,286,912 ------------ Department Stores - 0.8% 130,200 J.C. Penney Co., Inc. $ 4,916,352 ------------
4 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value General Merchandise Stores - 2.0% 238,200 American Greetings Corp.* $ 5,521,476 172,680 Sears, Roebuck and Co. 6,520,397 ------------ $ 12,041,873 ------------ Specialty Stores - 3.0% 620,430 Foot Locker, Inc. $ 15,101,266 195,300 Toys "R" Us, Inc.* 3,111,129 ------------ $ 18,212,395 ------------ Total Retailing $ 47,457,532 ------------ Food & Drug Retailing - 6.2% Drug Retail - 1.5% 211,270 CVS Corp. $ 8,877,565 ------------ Food Retail - 3.4% 280,590 ConAgra, Inc. $ 7,598,377 494,200 Safeway, Inc.* 12,523,028 ------------ $ 20,121,405 ------------ Hypermarkets & Supercenters - 1.3% 313,670 BJ'S Wholesale Club, Inc.* $ 7,841,750 ------------ Total Food & Drug Retailing $ 36,840,720 ------------ Health Care Equipment & Services - 9.4% Health Care Distributors - 0.5% 82,400 Par Pharmaceutical Co., Inc.* $ 2,901,304 ------------ Health Care Equipment - 2.4% 239,400 Apogent Technologies, Inc.* $ 7,660,800 132,205 Becton, Dickinson & Co. 6,848,219 ------------ $ 14,509,019 ------------ Health Care Facilities - 3.3% 557,200 Tenet Healthcare Corp.* $ 7,472,052 330,060 Triad Hospitals, Inc.* 12,288,134 ------------ $ 19,760,186 ------------ Health Care Services - 1.1% 164,630 Laboratory Corp. of America Holdings* $ 6,535,811 ------------ Managed Health Care - 2.1% 181,500 CIGNA Corp. $ 12,489,015 ------------ Total Health Care Equipment & Services $ 56,195,335 ------------ Banks - 9.1% Regional Banks - 5.4% 99,000 City National Corp. $ 6,504,300 140,330 KeyCorp 4,194,464 116,165 Marshall & Ilsley Corp. 4,540,890 99,005 North Fork Bancorporation, Inc. 3,767,140 66,240 SouthTrust Corp. 2,570,774 90,775 TCF Financial Corp. 5,269,489 89,400 Zions Bancorporation 5,493,630 ------------ $ 32,340,687 ------------ Shares Value Thrifts & Mortgage Finance - 3.7% 115,699 Countrywide Financial Corp. $ 8,127,855 115,375 GreenPoint Financial Corp. 4,580,388 222,760 The PMI Group, Inc. 9,694,515 ------------ $ 22,402,758 ------------ Total Banks $ 54,743,445 ------------ Diversified Financials - 6.0% Consumer Finance - 3.1% 671,200 Providian Financial Corp.* $ 9,846,504 16,514 White Mountains Insurance Group, Ltd. 8,422,140 ------------ $ 18,268,644 ------------ Asset Management & Custody Banks - 1.1% 214,590 Federated Investors, Inc. $ 6,510,661 ------------ Investment Banking & Brokerage - 1.8% 190,500 A.G. Edwards, Inc. $ 6,482,715 341,950 Investment Technology Group, Inc.* 4,373,541 ------------ $ 10,856,256 ------------ Total Diversified Financials $ 35,635,561 ------------ Insurance - 6.3% Insurance Brokers - 2.1% 180,710 Platinum Underwriter Holdings, Ltd. (a) $ 5,499,005 187,840 Willis Group Holdings, Ltd. 7,034,608 ------------ $ 12,533,613 ------------ Life & Health Insurance - 0.9% 99,130 Jefferson - Pilot Corp. $ 5,035,804 ------------ Property & Casualty Insurance - 3.3% 104,105 Ambac Financial Group, Inc. $ 7,645,471 278,500 Safeco Corp. 12,254,000 ------------ $ 19,899,471 ------------ Total Insurance $ 37,468,888 ------------ Software & Services - 2.3% Data Processing & Outsourced Services - 2.3% 555,530 The BISYS Group, Inc.* $ 7,810,752 239,929 SunGard Data Systems, Inc.* 6,238,154 ------------ $ 14,048,906 ------------ Total Software & Services $ 14,048,906 ------------ Technology Hardware & Equipment - 9.4% Communications Equipment - 3.2% 296,600 Century Telephone Enterprises, Inc. $ 8,909,864 356,121 Tellabs, Inc.* 3,112,498 230,200 Utstarcom, Inc (a)* 6,963,550 ------------ $ 18,985,912 ------------ Computer Hardware - 1.9% 231,360 NCR Corp.* $ 11,473,142 ------------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Computer Storage & Peripherals - 2.1% 284,600 SanDisk Corp. (a)* $ 6,172,974 214,600 Storage Technology Corp.* 6,223,400 ------------ $ 12,396,374 ------------ Electronic Equipment & Instruments - 2.2% 230,080 W.W. Grainger, Inc. $ 13,229,600 ------------ Total Technology Hardware & Equipment $ 56,085,028 ------------ Semiconductors - 0.6% 260,900 Cypress Semiconductor Corp. (a)* $ 3,702,171 ------------ Total Semiconductors $ 3,702,171 ------------ Utilities - 6.4% Electric Utilities - 4.6% 148,675 Constellation Energy Group $ 5,634,783 140,350 DTE Energy Co. 5,689,789 115,315 Entergy Corp. 6,458,793 347,300 PG&E Corp.* 9,703,562 ------------ $ 27,486,927 ------------ Gas Utilities - 0.1% 16,315 KeySpan Energy Corp. $ 598,761 ------------ Multi-Utilities & Unregulated Power - 1.7% 920,000 Reliant Energy* $ 9,963,600 ------------ Total Utilities $ 38,049,288 ------------ TOTAL COMMON STOCKS (Cost $509,973,009) $586,198,453 ------------ Principal Amount Value TEMPORARY CASH INVESTMENTS - 6.2% Repurchase Agreement - 2.0% $12,100,000 UBS Warburg, Inc. 1.25%, dated 6/30/04, repurchase price of $12,100,000 plus accrued interest on 7/1/04 collateralized by $11,094,000 U.S. Treasury Bill, 7.0%, 7/15/06 $ 12,100,000 ------------ Shares Security Lending Collateral - 4.2% 25,038,825 Securities Lending Investment Fund, 1.29% $ 25,038,825 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $37,138,825) $ 37,138,825 ------------ TOTAL INVESTMENT IN SECURITIES - 104.1% (Cost $547,111,834) (a) $623,337,278 ------------ OTHER ASSETS AND LIABILITIES - (4.1)% $(24,737,403) ------------ TOTAL NET ASSETS - 100.0% $598,599,875 ============
* Non-income producing security. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 105,980 Cypress Semiconductor Corp.* $ 1,462,524 14,695 Platinum Underwriter Holdings Ltd. 445,552 249,900 Regal Entertainment Group 4,510,695 155,000 R.R. Donnelly & Sons Co. 5,128,950 263,720 SanDisk Corp.* 5,909,965 275,023 Utstarcom, Inc* 8,363,449 ----------- Total $25,821,135 ===========
6 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 20.47 $ 14.94 $ 17.35 $ 17.79 $ 16.26 $ 14.49 -------- -------- -------- -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.05 $ 0.14 $ 0.07 $ 0.07 $ 0.13 $ 0.13 Net realized and unrealized gain (loss) on investments 1.76 5.45 (1.97) 1.06 2.62 1.77 -------- -------- -------- -------- -------- -------- Net increase (decrease) from investment operations $ 1.81 $ 5.59 $ (1.90) $ 1.13 $ 2.75 $ 1.90 Distributions to shareowners: Net investment income (0.08) (0.06) (0.05) (0.10) (0.13) (0.13) Net realized gain (0.21) -- (0.46) (1.47) (1.09) -- -------- -------- -------- -------- -------- -------- Net increase (decrease) in net asset value $ 1.52 $ 5.53 $ (2.41) $ (0.44) $ 1.53 $ 1.77 -------- -------- -------- -------- -------- -------- Net asset value, end of period $ 21.99 $ 20.47 $ 14.94 $ 17.35 $ 17.79 $ 16.26 ======== ======== ======== ======== ======== ======== Total return* 8.85% 37.48% (11.21)% 6.49% 18.00% 13.13% Ratio of net expenses to average net assets+ 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76% Ratio of net investment income (loss) to average net assets+ 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77% Portfolio turnover rate 71%** 52% 68% 95% 85% 91% Net assets, end of period (in thousands) $198,767 $170,237 $120,687 $128,340 $111,466 $120,526 Ratio with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76% Net investment income (loss) 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77% Ratio with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.71%** 0.76% 0.80% 0.79% 0.77% 0.76% Net investment income (loss) 0.62%** 0.86% 0.46% 0.45% 0.63% 0.77%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $25,821,135) (Cost $547,111,834) $ 623,337,278 Cash 232,088 Foreign currencies, at value -- Receivables -- Investment securities sold 9,079,092 Fund shares sold 824,503 Variation margin -- Dividends, interest and foreign taxes withheld 422,351 Forward foreign currency settlement contracts, net -- Due from Pioneer Investment Management, Inc. -- Other -- ------------- Total assets $ 633,895,312 ------------- LIABILITIES: Payables -- Investment securities purchased $ 9,767,200 Fund shares repurchased 17,620 Dividends -- Upon return of securities loaned 25,038,825 Forward foreign currency settlement contracts, net -- Reserve for repatriation taxes -- Due to bank -- Due to affiliates 439,928 Accrued expenses 31,864 ------------- Total liabilities $ 35,295,437 ------------- NET ASSETS: Paid-in capital $ 491,654,895 Accumulated net investment income (loss) 1,141,650 Accumulated undistributed net realized gain (loss) 29,577,886 Net unrealized gain (loss) on: Investments 76,225,444 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------- Total net assets $ 598,599,875 ------------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 198,767,124 Shares outstanding 9,037,285 ------------- Net asset value per share $ 21.99 Class II: No par value (unlimited number of shares authorized) Net assets $ 399,832,751 Shares outstanding 18,321,840 ------------- Net asset value per share $ 21.82
8 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $5,324) $ 3,149,536 Interest 61,832 Income on securities loaned, net 6,732 Other -- ----------- Total investment income $ 3,218,100 ----------- EXPENSES: Management fees $ 1,558,884 Transfer agent fees 1,432 Distribution fees (Class II) 369,014 Administrative fees 41,873 Custodian fees 39,878 Professional fees 37,060 Printing 23,211 Fees and expenses of nonaffiliated trustees -- Miscellaneous 5,011 ----------- Total expenses $ 2,076,363 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ----------- Net expenses $ 2,076,363 ----------- Net investment income (loss) $ 1,141,737 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $31,570,054 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $31,570,054 ----------- Change in net unrealized gain or loss from: Investments $ 7,930,499 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $ 7,930,499 ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $39,500,553 =========== Net increase (decrease) in net assets resulting from operations $40,642,290 ===========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 1,141,737 $ 1,803,484 Net realized gain (loss) on investments 31,570,054 6,004,760 Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 7,930,499 75,230,670 ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 40,642,290 $ 83,038,914 ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (711,725) $ (438,494) Class II (1,067,643) (236,135) Net realized gain Class I (1,863,831) -- Class II (3,740,321) -- Tax return of capital Class I -- -- Class II -- -- ------------- ------------- Total distributions to shareowners $ (7,383,520) $ (674,629) ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 196,943,386 $ 161,143,658 Reinvestment of distributions 7,383,520 674,611 Cost of shares repurchased (20,342,972) (44,550,616) ------------- ------------- Net increase (decrease) in net assets resulting from fund share transactions $ 183,983,934 $ 117,267,653 ------------- ------------- Net increase (decrease) in net assets $ 217,242,704 $ 199,631,938 ------------- ------------- NET ASSETS: Beginning of period $ 381,357,171 $ 181,725,233 ------------- ------------- End of period $ 598,599,875 $ 381,357,171 ============= ============= Accumulated/(distributions in excess of) net investment income (loss) $ 1,141,650 $ 1,779,281 ============= =============
10 The accompanying notes are an integral part of these financial statements. Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Mid Cap Value VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Mid Cap Value Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no fair valued securities. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total 11 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Mid Cap Value Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. - --------------------------------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio 2003 - ---------------------------------------------------------- Distributions paid from: Ordinary Income $ 674,629 Long-Term capital gain -- ----------- $ 674,629 Return of Capital -- ----------- Total distributions $ 674,629 =========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 3,095,345 Undistributed long-term gain/ (Capital loss carryforward) 4,286,038 Unrealized appreciation (depreciation) 66,304,827 ----------- Total $73,686,210 ===========
- -------------------------------------------------------------------------------- The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. 12 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $352,423 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $87,247 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows: 13 Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) --------------- -------------- ----------------- --------------- Mid Cap Value Portfolio $549,097,482 $120,657,540 $ (46,417,744) $74,239,796 ============ ============ ============= ===========
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $343,646,689 and $167,846,365, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: - --------------------------------------------------------------------------------
Mid Cap Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ----------------------------------------------------------------------------------------------- CLASS I: Shares sold 1,350,399 $ 28,801,387 2,677,744 $ 46,157,551 Reinvestment of distributions 117,892 2,575,556 26,084 438,476 Shares repurchased (746,981) (15,842,125) (2,465,836) (40,592,863) --------- ------------- ---------- ------------- Net increase 721,400 $ 15,534,818 237,992 $ 6,003,164 --------- ------------- ---------- ------------- CLASS II: Shares sold 7,925,107 $ 168,141,999 6,515,291 $ 114,986,107 Reinvestment of distributions 221,974 4,807,964 93,450 236,135 Shares repurchased (214,474) (4,500,847) (1,080,224) (3,957,753) ========= ============= ========== ============= Net increase 7,932,607 $ 168,449,116 6,280,420 $ 111,264,489 ========= ============= ========== =============
14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16064-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Real Estate Shares VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 5 Notes to Financial Statements 9 Trustees, Officers and Service Providers 14
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stock 100.0%
Sector Distribution (As a percentage of equity holdings) [DATA BELOW IS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Office 17.4% Apartment 16.8% Regional Mail 15.0% Industrial 12.7% Shopping Center 10.4% Hotel 8.7% Diversified 8.5% Self Storage 4.1% Cash 3.0% Factory Outlet 2.1% Manufactured Homes 1.0% Health Care 0.3%
Five Largest Holdings (As a percentage of equity holdings) - ----------------------------------------------- 1. Simon DeBartolo Group, Inc. 6.00% - ----------------------------------------------- 2. Boston Properties, Inc. 5.02 - ----------------------------------------------- 3. Equity Residential Property Trust 4.36 - ----------------------------------------------- 4. ProLogis Trust 3.97 - ----------------------------------------------- 5. Catellus Development Corp. 3.91 - -----------------------------------------------
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 19.55 $ 18.57 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.400 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Real Estate Shares VCT Portfolio at net asset value, compared to that of the Wilshire Real Estate Securities Index. Portfolio returns are based on net asset value and do not reflect applicable insurance fees and surrender charges. [DATA BELOW IS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Wilshire Pioneer Real Estate Real Estate Securities Index+ Shares VCT Portfolio 3/95 10,000 10,000 11,322 11,696 6/96 15,497 15,875 18,565 19,235 6/98 15,330 15,629 14,841 14,977 6/00 19,403 19,397 21,431 20,911 6/02 21,983 21,440 30,133 28,890 6/04 32,226 31,028
+ Index comparison begins on 2/28/95. The Wilshire Real Estate Securities Index is a market-capitalization weighted measure of the performance of real estate investment trusts (equity and hybrid) and real estate operating companies. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 12.89% (3/1/95) 5 Years 13.58% 1 Year 28.90%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- Fear of higher interest rates, rising oil prices and the ongoing turmoil in Iraq contributed to volatile markets for the six months ended June 30, which made up the first half or your Portfolio's fiscal year. In this report, Mathew Troxell, a member of the Portfolio's investment management team, discusses the sector's positive returns amidst the shifting economic landscape and his expectations for 2004. Q: Was the market and economic environment favorable for the Portfolio's investment strategy? A: Real estate stocks, like most asset classes, experienced great volatility during the reporting period. With evidence suggesting that the U.S. economy was on its way to recovery, the real estate market rose strongly during the first quarter of 2004. However, in early April, the jobs report for March was surprisingly strong and sparked a sell-off in the bond market. Bond investors feared that the economy might be growing too fast and would ignite inflation. Interest rates began to rise, pushing bond prices down. Prices of real estate stocks also fell sharply even though historically they have exhibited a low correlation to bond prices. Rising oil prices and political uncertainty in Iraq further heightened investor concerns. During May and June, real estate investment trusts began to recover and picked up enough positive momentum to regain much of the ground lost in April -- ending the six months with relatively strong performance gains. For the six months ended June 30, 2004, the Portfolio's Class I shares rose 7.4% at net asset value. In comparison, the Wilshire Real Estate Securities Index increased 6.96% for the same period. Q: What investments helped performance during the six months? A: Several holdings contributed positively to the Portfolio's returns. AvalonBay Communities, one of the Portfolio's largest holdings, is an apartment/multi-family real estate investment trust (REIT) that has benefited from the expectation of improving fundamentals for apartments. Job growth has been very positive for household formations, especially for young adults who are leaving home for the first time. This demographic group has the highest propensity to rent rather than buy. This stronger renter demand is giving apartment REIT managers, such as AvalonBay, greater pricing flexibility. In addition, rising interest rates should contribute to higher renter demand, because buying a home becomes a more expensive option. In the lodging sector, Starwood Hotels and Resorts performed well, particularly in the final two months of the reporting period. Starwood, as well as the sector in general, are benefiting from a recovery in lodging demand, which is directly correlated to the improving economy. Catellus Development, a real estate management and development company, holds a portfolio of high-quality predominately industrial properties generating strong cash flow. This REIT's positive performance was driven, in part, by management's decision to convert to REIT status early in 2004. The heightened investor interest helped it to outperform the benchmark during the six months. Q: What investments hurt performance during the six months? A: We believe that Simon Property Group is a solid company, but after consistently outperforming the real estate market during the multi-year rally through the first quarter of 2004, it, along with other retail names, lagged in the final months of the reporting period. Following the market correction this spring, it began to recover. However, when management announced in late June that it was acquiring Chelsea Property Group (also held by the Portfolio), investors reacted negatively. We view the proposed merger very positively, because we think Chelsea Property Group, which owns factory outlet shopping centers in Japan as well as in the United States, would add international diversity and a new retail focus to Simon's current portfolio. Following disappointing performance last year, Apartment Investment and Management continued to lag the benchmark. This REIT, which owns a diverse portfolio of multi-family apartment complexes, suffered more than its peers as apartment fundamentals proved challenging last year and experienced lower-than-expected fee income and higher-than-expected apartment-turnover-related expenses last year -- resulting in a reduced dividend. Even with the greater promise for improving fundamentals, we reduced the position this spring, because we tempered our view of its total return potential. Q: What is your outlook for the balance of 2004? A: We think that the various property types making up the real estate market are generally experiencing improving fundamentals. While real estate earnings typically lag an improvement in fundamentals, hotel and apartment landlords can respond fairly quickly. Should economic growth continue, however, we believe retail landlords will begin to lose the relative advantage they have previously enjoyed. We believe that it will fall to astute stock selection to separate the wheat from the chafe. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. - -------------------------------------------------------------------------------- Real estate investments may be subject to special risks, including risks related to general and local economic conditions and risks related to an individual property. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 97.4% Hotels, Restaurants & Leisure - 5.3% Hotels, Resorts & Cruise Lines - 5.3% 75,000 Hilton Hotels Corp.* $ 1,399,500 58,000 Starwood Hotels & Resorts 2,601,300 ----------- $ 4,000,800 ----------- Total Hotels, Restaurants & Leisure $ 4,000,800 ----------- Diversified Financials - 3.0% Diversified Financial Services - 3.0% 77,000 Brookfield Properties Corp. $ 2,213,750 ----------- Total Diversified Financials $ 2,213,750 ----------- Real Estate - 89.1% Real Estate Management & Development - 4.0% 115,500 Catellus Development Corp. $ 2,847,075 8,200 Inland Real Estate Corp.* 106,682 ----------- $ 2,953,757 ----------- Real Estate Investment Trusts - 85.1% 38,500 Apartment Investment & Management Co. $ 1,198,505 46,200 AMB Property Corp. 1,599,906 22,400 Affordable Residential Communities* 371,840 16,500 Alexandria Real Estate Equities, Inc. 936,870 44,000 Arden Realty Group, Inc. 1,294,040 92,500 Archstone Communities Trust 2,713,025 50,000 AvalonBay Communities, Inc.* 2,826,000 73,100 Boston Properties, Inc. 3,660,848 17,500 Chelsea Property Group, Inc. 1,141,350 30,000 Camden Property Trust 1,374,000 10,000 Carramerica Realty Corp. 302,300 61,000 Developers Diversifies Realty Corp. 2,157,570 57,000 Duke Realty Investments, Inc. 1,813,170 79,000 Equity Office Properties Trust 2,148,800 107,000 Equity Residential Property Trust 3,181,110 5,800 First Potomac Realty Trust* 111,186 36,000 Federal Realty Investment Trust 1,497,240 79,500 General Growth Properties, Inc. 2,350,815 25,500 Highwoods Properties, Inc.* 599,250 Shares Value 189,000 Host Marriott Corp.* $ 2,336,040 6,000 Healthcare Realty Trust, Inc. 224,880 2,500 Kilroy Realty Corp. 85,250 53,000 Liberty Property Trust 2,131,130 35,500 The Macerich Co. 1,699,385 11,300 Manufactured Home Communities, Inc. 375,047 9,100 Mills Corp. 424,970 10,500 Corporate Office Properties 260,925 88,000 ProLogis Trust 2,896,960 29,300 Pan Pacific Retail Properties, Inc. 1,480,236 55,000 Prentiss Properties Trust 1,843,600 45,206 Public Storage, Inc. 2,079,928 25,500 PS Business Parks Inc* 1,026,120 48,000 Regency Centers Corp. 2,059,200 35,000 The Rouse Co.* 1,662,500 9,500 iStar Financial, Inc.* 380,000 27,500 Shurgard Storage Centers, Inc. 1,028,500 15,800 Strategic Hotel Capital, Inc.* 232,260 85,000 Simon DeBartolo Group, Inc. 4,370,700 51,000 Taubman Centers, Inc. 1,167,390 37,600 Trizec Properties Inc. 611,376 47,200 United Dominion Realty Trust 933,616 46,000 Vornado Realty Trust 2,627,060 16,500 Western Resources, Inc. 516,120 ----------- $63,731,018 ----------- Total Real Estate $66,684,775 ----------- TOTAL COMMON STOCKS (Cost $55,838,852) $72,899,325 ----------- TOTAL INVESTMENT IN SECURITIES - 97.4% (Cost $55,838,852) $72,899,325 ----------- OTHER ASSETS AND LIABILITIES - 2.6% $ 1,967,974 ----------- TOTAL NET ASSETS - 100.0% $74,867,299 ===========
* Non-income producing security. 4 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year Year Year 6/30/04 Ended Ended Ended Ended Ended Class I (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 $ 13.07 ------- ------- ------- ------- ------- ------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.42 $ 0.74 $ 0.62 $ 0.68 $ 0.71 $ 0.66 Net realized and unrealized gain (loss) on investments 0.96 4.16 (0.23) 0.40 2.67 (1.20) ------- ------- ------- ------- ------- ------- Net increase (decrease) from investment operations $ 1.38 $ 4.90 $ 0.39 $ 1.08 $ 3.38 $ (0.54) Distributions to shareowners: Net investment income (0.40) (0.64) (0.69) (0.56) (0.59) (0.60) Net realized gain -- -- -- -- -- (0.12) Tax return of capital -- (0.16) -- (0.17) (0.10) (0.08) ------- ------- ------- ------- ------- ------- Net increase (decrease) in net asset value $ 0.98 $ 4.10 $ (0.30) $ 0.35 $ 2.69 $ (1.34) ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 19.55 $ 18.57 $ 14.47 $ 14.77 $ 14.42 $ 11.73 ======= ======= ======= ======= ======= ======= Total return* 7.40% 34.75% (2.53)% 7.80% 29.51% (4.17)% Ratio of net expenses to average net assets+ 0.94%** 1.03% 1.07% 1.16% 1.10% 1.15% Ratio of net investment income (loss) to average net assets+ 4.22%** 4.49% 4.76% 4.71% 5.02% 5.07% Portfolio turnover rate 43%** 20% 29% 34% 31% 54% Net assets, end of period (in thousands) $30,297 $31,891 $29,873 $33,026 $32,982 $28,318 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.30% Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 4.92% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.94%** 1.03% 1.07% 1.16% 1.10% 1.14% Net investment income (loss) 4.22%** 4.49% 4.76% 4.71% 5.02% 5.08%
(a) Amount rounds to less than one cent per share. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 5 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio ASSETS: Investment in securities, at value (Cost $55,838,852) $ 72,899,325 Cash 1,906,225 Foreign currencies, at value -- Receivables -- Investment securities sold 2,124,520 Fund shares sold 181,129 Dividends, interest and foreign taxes withheld 428,504 Other 354 ------------ Total assets $ 77,540,057 ------------ LIABILITIES: Payables -- Investment securities purchased $ 2,208,201 Fund shares repurchased 378,282 Dividends -- Upon return for securities loaned -- Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 66,321 Accrued expenses 19,954 Other -- ------------ Total liabilities $ 2,672,758 ------------ NET ASSETS: Paid-in capital $ 57,527,714 Accumulated net investment income (loss) 160,542 Accumulated undistributed net realized gain (loss) 118,570 Net unrealized gain (loss) on: Investments 17,060,473 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $ 74,867,299 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 30,296,916 Shares outstanding 1,549,560 ------------ Net asset value per share $ 19.55 Class II: No par value (unlimited number of shares authorized) Net assets $ 44,570,383 Shares outstanding 2,283,389 ------------ Net asset value per share $ 19.52
6 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $1,676) $1,885,996 Interest 18,128 Income on securities loaned, net 535 Other -- ---------- Total investment income $1,904,659 ---------- EXPENSES: Management fees $ 294,190 Transfer agent fees 1,494 Distribution fees (Class II) 53,188 Administrative fees 9,250 Custodian fees 13,052 Professional fees 19,250 Printing 8,855 Fees and expenses of nonaffiliated trustees -- Miscellaneous 899 ---------- Total expenses $ 400,178 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ---------- Net expenses $ 400,178 ---------- Net investment income (loss) $1,504,481 ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $3,075,780 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $3,075,780 ---------- Change in net unrealized gain or loss from: Investments $ 359,869 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ 359,869 ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $3,435,649 ---------- Net increase (decrease) in net assets resulting from operations $4,940,130 ----------
The accompanying notes are an integral part of these financial statements. 7 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 1,504,481 $ 3,062,870 Net realized gain (loss) on investments 3,075,780 (474,302) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 359,869 15,553,008 ------------ ------------- Net increase (decrease) in net assets resulting from operations $ 4,940,130 $ 18,141,576 ------------ ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (637,400) $ (1,422,912) Class II (859,854) (1,519,594) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ------------ ------------- Total distributions to shareowners $ (1,497,254) $ (2,942,506) ------------ ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 7,974,724 $ 9,753,610 Reinvestment of distributions 1,497,254 2,942,506 Cost of shares repurchased (9,831,522) (17,969,003) ------------ ------------- Net increase (decrease) in net assets resulting from fund share transactions $ (359,544) $ (5,272,887) ------------ ------------- Net increase (decrease) in net assets $ 3,083,332 $ 9,926,183 ------------ ------------- NET ASSETS: Beginning of period $ 71,783,967 $ 61,857,784 ------------ ------------- End of period $ 78,867,299 $ 71,783,967 ============ ============= Accumulated/(distributions in excess of) net investment income (loss) $ 160,542 $ 153,315 ============ =============
8 The accompanying notes are an integral part of these financial statements. Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Real Estate Shares VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Real Estate Shares Portfolio pursues long-term capital growth, with current income as a secondary objective. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no fair valued securities. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. Because Real Estate Shares Portfolio invests a substantial portion of its assets in real estate 9 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- investment trusts (REITs), the Portfolio may be subject to certain risks associated with direct investments in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital returns may be made at any time. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code or its failure to maintain exemption from registration under the Investment Company Act of 1940. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Real Estate Shares had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. A portion of the dividend income recorded by Real Estate Shares Portfolio is from distributions by publicly traded REITs, and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Trust as a reduction of the cost basis of the securities held. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, 10 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Real Estate Shares VCT Portfolio had a capital loss carryforward of $3,310,843, of which the following amounts will expire between 2007 and 2011 if not utilized: $2,238,450 in 2007, $619,294 in 2008 and $453,069 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. - --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio 2003 - --------------------------------------------------------- Distributions paid from: Ordinary Income* $ 2,171,485 Long-Term capital gain -- ----------- 2,171,485 Return of Capital -- ----------- Total distributions $ 2,171,485 ----------- Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/ (Capital loss carryforward) (2,665,210) Unrealized appreciation (depreciation) 16,408,604 ----------- Total $13,743,394 -----------
- -------------------------------------------------------------------------------- * Included in the Portfolio's distributions from 2003 ordinary income is $192,564 in excess of investment company taxable income, which, in accordance with U.S. tax law, is taxable to shareowners as ordinary income distributions. The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. Prior to June 30, 2004, the Portfolio has reclassified $21,639 to decrease net unrealized gain on investments, $6,268 to decrease accumulated undistributed net realized gain on investments and $27,907 to increase paid-in capital. The reclassification has no impact on the net assets of the Portfolio and presents the Portfolio's capital accounts on a tax basis. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities 11 Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.80% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $55,958 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $10,106 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows: - --------------------------------------------------------------------------------
Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ---------------------------------------------------------------------------------------------------- Real Estate Shares Portfolio $56,411,455 $16,815,051 $ (327,181) $16,487,870 ----------- ----------- ---------- -----------
- -------------------------------------------------------------------------------- 6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $17,444,652 and $15,240,948, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: - --------------------------------------------------------------------------------
Real Estate Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ----------------------------------------------------------------------------------------- CLASS II: Shares sold 46,990 $ 914,044 153,884 $ 2,545,266 Reinvestment of distributions 31,935 637,400 87,137 1,422,912 Shares repurchased (246,506) (4,641,798) (588,199) (9,201,017) -------- ------------ -------- ------------ Net increase (167,581) $ (3,090,354) (347,178) $ (5,232,839) ======== ============ ======== ============ CLASS II: Shares sold 367,646 $ 7,060,680 424,038 $ 7,208,344 Reinvestment of distributions 43,174 859,854 92,474 1,519,594 Shares repurchased (278,022) (5,189,724) (578,790) (8,767,986) -------- ------------ -------- ------------ Net increase 132,798 $ 2,730,810 (62,278) $ (40,048) -------- ------------ -------- ------------
- -------------------------------------------------------------------------------- 12 - -------------------------------------------------------------------------------- This page for your notes. 13 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16066-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT Portfolio -- Class I Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Fund VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 8 Notes to Financial Statements 12
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [The following table was depicted as a pie chart in the printed material.] U.S. Common Stocks 94.7% Depositary Receipts for International Stocks 3.5% International Common Stocks 1.8%
Sector Distribution (As a percentage of equity holdings) [The following table was depicted as a pie chart in the printed material.] Financials 17.1% Information Technology 13.9% Consumer Discretionary 13.0% Health Care 12.5% Industrials 12.3% Consumer Staples 11.9% Energy 8.2% Materials 5.7% Telecommunication Services 3.3% Utilities 2.1%
Five Largest Holdings (As a percentage of equity holdings) 1. ChevronTexaco Corp. 2.17% 2. Exxon Mobil Corp. 2.11 3. McGraw-Hill Co., Inc. 1.93 4. Target Corp. 1.85 5. SBC Communications, Inc. 1.71
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $ 18.98 $ 18.70
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ 0.100 $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Fund VCT Portfolio at net asset value, compared to that of the Standard & Poor's (S&P) 500 Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
S&P 500 Pioneer Fund VCT Portfolio ------- -------------------------- 10/97 10000 10000 10643 10543 12/98 13686 13296 16565 15411 12/00 15060 15600 13275 13908 12/02 10342 11261 13306 13936 6/04 13764 14220
The S&P 500 Index is an unmanaged measure of 500 widely held common stocks listed on the New York Stock Exchange, American Stock Exchange and the over-the-counter market. Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. Portfolio returns are based on net asset value and do not reflect any annuity-related costs. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class 5.42% (10/31/97) 5 Years -0.70% 1 Year 17.84%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In the following discussion, portfolio manager John Carey, reviews the investment environment and the performance of Pioneer Fund VCT Portfolio over the six months ended June 30, 2004. Q: How did the Portfolio perform over the first six months of 2004? A: Pioneer Fund VCT Portfolio recorded a positive total return of 2.04% at net asset value in the six months ended June 30, 2004. The Standard & Poor's 500 Index showed a total return of 3.44% over the same period. Investors appeared to be "rotating" out of more highly priced stocks and into shares more moderately priced, with dividends and steadier earnings outlooks. Q: Please discuss the Portfolio's performance versus the S&P 500 Index. A: Our underperformance versus the S&P was attributable mainly to our stock holdings in four sectors: information technology, materials, industrials and telecommunications services. Our strongest positive contributors were our investments in consumer discretionary, consumer staples and health care. Taking first the negative contributors, our technology holdings showed an overall decline of 1.59% versus the S&P sector gain of 0.44%. The main culprits were our positions in Texas Instruments, Novellus Systems, Synopsys and Nokia. After analyzing the different situations, we retained shares in Texas Instruments and Nokia, but liquidated our positions in Novellus and Synopsys. With regard to materials, where again we showed a negative return (3.80%) versus a slight positive return (0.71%) for the S&P sector, the largest factor was our position in Rio Tinto. In the case of the materials, we believe that the fundamentals are strong for the group looking out at least over the next couple of years and that it was mainly "profit taking" behind the weak share prices. Perhaps, too, there was some concern about a potential slow-down in the Chinese economy, which has been a prime user of many raw materials as that country rapidly industrializes. Following our evaluation of the "pros and cons," we retained Rio Tinto, a prominent worldwide mining company, as well as our shares of other companies in the sector. Industrials presented a mixed picture, with our investments rising 5.13% versus an increase for the sector of 7.42%. We had very good performance from our railroad holding Norfolk Southern, but our capital-goods stocks were more sluggish. Finally, in telecomm services, we did not own AT&T Wireless, which received a premium take-over bid, but instead owned BellSouth and SBC Communications, the companies in the joint venture, Cingular, that made the bid. BellSouth and SBC both declined as investors worried that they "overpaid." On the bright side, we had some nice gains from stocks in consumer discretionary, consumer staples and health care. They were, respectively, John Wiley & Sons, publisher of scientific and technical books and journals and also owner of the "For Dummies" imprint; Colgate-Palmolive, major brand in toothpaste; and Becton Dickinson, provider of medical supplies including disposable syringes. Q: What changes have you have made to the Portfolio so far this year? A: We were fairly active during the six months, adding 18 positions and eliminating 18. The combined effect of securities transactions and market fluctuations produced overall increases for our weightings in the energy, consumer discretionary, consumer staples, health care and financials sectors; overall decreases for our weightings in industrials and information technology; and no meaningful change for our weightings in materials, telecommunications services and utilities. In energy, we initiated positions in Apache, British Petroleum, Pioneer Natural Resources and Occidental Petroleum and sold positions in Transocean, Royal Dutch Petroleum, and Shell Transport & Trading. We believed that Transocean was fairly valued, and in the cases of Royal Dutch and the allied Shell Transport we had developed reservations about management in the wake of significant downward revisions in oil and gas reserves estimates. On the other hand, we thought that prospects were positive for the companies we added and that the larger number of holdings would provide the portfolio with more diversification. In consumer discretionary we invested in three companies we thought were poised to do better with the stronger economy, Ford Motor, Liz Claiborne, and Walt Disney, and sold two stocks that had been longer-term disappointments, Dow Jones and Eastman Kodak. We also added Clorox, formulator of bleaches and other household cleansers, and Estee Lauder, cosmetics manufacturer, in consumer staples. Our health care additions were among our most significant and included equipment makers Guidant and St. Jude Medical, distributor Cardinal Health, and generic-drug companies Barr Pharmaceuticals and Mylan Laboratories. One of our purchases in financials proved to be particularly well timed, as SouthTrust, a regional bank headquartered in Birmingham, Alabama, received a generous acquisition offer from another bank, Wachovia, not long after we had bought it. Another entry we made to the portfolio was U.S. Bancorp, based in Minneapolis, Minnesota. In other sectors, we bought, in materials, Ecolab, supplier of industrial and institutional cleaning chemicals, and, in information technology, Apple Computer, survivor, against all odds, in the personal-computer business as well as innovative producer of the very hot iPod digital-music player. Along with the seven names already mentioned in energy and consumer discretionary and (above) in information technology, we deleted the following: Boeing, Lockheed Martin, Robert Half, Union Pacific, Medco Health Solutions, Bank of America, Electronics Data Systems, BMC Software, Cisco Systems, QUALCOMM and Altera. Q: What is your outlook on the stock market and economy for the remainder of 2004? A: At the midpoint of 2004, the market appears in disarray. Truth be told, interest rates have not really moved very much at all, but there appears great anxiety about greater moves to come. Inflation is not a current problem, yet the high oil and raw-materials prices, as well as the prospect of rising wages with growth in employment, provide the worriers a reason to focus on the risk of inflation. Corporate earnings are generally very strong and also strongly up from last year, but the expressed concern is with respect to slowing of the impressive comparisons. The market to us remains attractive, even if more moderately attractive than it was in early 2003 when prices were much lower and the economy was still just poised for its rebound rather than underway with the rebound as it is currently. We see especially good values, however, among the good companies with good long-term records in which we like to invest on your behalf and which were relatively neglected by investors up until recently. Betting which way the market might go on a short-term basis has never seemed to us like a particularly fruitful endeavor. So our intention is, as always, to stay invested over the coming months, and years, and to stay invested in the solid kinds of companies we always aim to own in your Portfolio. Thank you for your support. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 96.5% Energy - 7.9% Integrated Oil & Gas - 5.9% 16,643 BP Amoco Plc (A.D.R.) $ 891,566 57,921 ChevronTexaco Corp. 5,450,945 24,727 ConocoPhillips 1,886,423 119,280 Exxon Mobil Corp. 5,297,224 36,993 Occidental Petroleum Corp. 1,790,831 ------------ $ 15,316,989 ------------ Oil & Gas Drilling - 0.9% 42,044 Smith International, Inc.* $ 2,344,373 ------------ Oil & Gas Exploration & Production - 1.1% 18,971 Apache Corp. $ 826,187 57,988 Pioneer Natural Resources Co. 2,034,219 ------------ $ 2,860,406 ------------ Total Energy $ 20,521,768 ------------ Materials - 5.5% Aluminum - 0.6% 46,252 Alcoa, Inc. $ 1,527,704 ------------ Commodity Chemicals - 1.1% 23,113 Air Products & Chemicals, Inc. $ 1,212,277 38,676 E.I. du Pont de Nemours and Co. 1,717,988 ------------ $ 2,930,265 ------------ Diversified Chemical - 0.4% 18,467 PPG Industries, Inc. $ 1,154,003 ------------ Diversified Metals & Mining - 2.5% 32,924 Phelps Dodge Corp.* $ 2,551,939 164,111 Rio Tinto Plc 3,949,666 ------------ $ 6,501,605 ------------ Paper Products - 0.5% 43,199 Meadwestvaco Corp. $ 1,269,619 ------------ Specialty Chemicals - 0.4% 32,149 Ecolab, Inc. $ 1,019,123 ------------ Total Materials $ 14,402,319 ------------ Capital Goods - 7.4% Aerospace & Defense - 1.5% 38,908 General Dynamics Corp. $ 3,863,564 ------------ Electrical Components & Equipment - 0.7% 18,467 Emerson Electric Co. $ 1,173,578 26,633 General Electric Co. 862,909 ------------ $ 2,036,487 ------------ Shares Value Industrial Conglomerates - 2.8% 20,674 Illinois Tool Works, Inc. $ 1,982,430 45,528 Johnson Controls, Inc. 2,430,285 31,359 United Technologies Corp. 2,868,721 ------------ $ 7,281,436 ------------ Industrial Machinery - 2.4% 33,682 Caterpillar, Inc. $ 2,675,698 50,290 Deere & Co. 3,527,341 ------------ $ 6,203,039 ------------ Total Capital Goods $ 19,384,526 ------------ Commercial Services & Supplies - 1.0% Office Services & Supplies - 1.0% 47,154 Canon, Inc. (A.D.R.) $ 2,518,023 ------------ Total Commercial Services & Supplies $ 2,518,024 ------------ Transportation - 3.4% Airlines - 0.9% 137,864 Southwest Airlines Co. $ 2,311,979 ------------ Railroads - 2.0% 40,302 Burlington Northern, Inc. $ 1,413,391 146,340 Norfolk Southern Corp. 3,880,937 ------------ $ 5,294,328 ------------ Trucking - 0.5% 16,958 United Parcel Service $ 1,274,733 ------------ Total Transportation $ 8,881,040 ------------ Automobiles & Components - 2.3% Automobile Manufacturers - 2.3% 208,966 Ford Motor Corp. $ 3,270,318 46,602 PACCAR, Inc. 2,702,450 ------------ $ 5,972,768 ------------ Total Automobiles & Components $ 5,972,768 ------------ Media - 6.2% Advertising - 1.0% 35,541 Omnicom Group $ 2,697,206 ------------ Movies & Entertainment - 0.4% 34,933 The Walt Disney Co. $ 890,442 ------------ Publishing - 4.8% 46,390 Elsevier NV $ 652,795 40,418 Gannett Co. 3,429,467 113,495 John Wiley & Sons, Inc. 3,631,840 63,415 McGraw-Hill Co., Inc. 4,855,687 ------------ $ 12,569,789 ------------ Total Media $ 16,157,437 ------------
4 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Retailing - 4.1% Apparel Retail - 0.3% 19,973 Liz Claiborne, Inc. $ 718,629 ------------ Department Stores - 0.6% 53,341 May Department Stores Co. $ 1,466,344 ------------ General Merchandise Stores - 2.1% 29,152 Family Dollar Stores, Inc. $ 886,804 109,408 Target Corp. 4,646,558 ------------ $ 5,533,362 ------------ Home Improvement Retail - 0.8% 39,604 Lowe's Companies, Inc. $ 2,081,190 ------------ Specialty Stores - 0.3% 25,229 Barnes & Noble, Inc.* $ 857,281 ------------ Total Retailing $ 10,656,806 ------------ Food & Drug Retailing - 3.5% Drug Retail - 1.6% 112,775 Walgreen Co. $ 4,083,583 ------------ Food Distributors - 1.3% 12,492 Cardinal Health, Inc. $ 875,065 68,293 Sysco Corp. 2,449,670 ------------ $ 3,324,735 ------------ Hypermarkets & Supercenters - 0.6% 30,854 Wal-Mart Stores, Inc. $ 1,627,857 ------------ Total Food & Drug Retailing $ 9,036,175 ------------ Food, Beverage & Tobacco - 4.7% Packaged Foods & Meats - 3.6% 70,267 Campbell Soup Co. $ 1,888,777 36,702 General Mills, Inc. 1,744,446 45,065 Hershey Foods Corp. 2,085,158 59,465 H.J. Heinz Co., Inc. 2,331,028 61,629 Sara Lee Corp. 1,416,851 ------------ $ 9,466,260 ------------ Soft Drinks - 1.1% 53,078 PepsiCo, Inc. $ 2,859,843 ------------ Total Food, Beverage & Tobacco $ 12,326,103 ------------ Household & Personal Products - 3.3% Household Products - 3.3% 12,405 Clorox Co. $ 667,141 53,543 Colgate-Palmolive Co. 3,129,588 19,005 Estee Lauder Co. 927,064 70,848 Procter & Gamble Co. 3,856,965 ------------ $ 8,580,758 ------------ Total Household & Personal Products $ 8,580,758 ------------ Shares Value Health Care Equipment & Services - 5.9% Health Care Distributors - 2.4% 47,967 Abbott Laboratories $ 1,955,135 75,610 Johnson & Johnson 4,211,477 ------------ $ 6,166,612 ------------ Health Care Equipment - 2.7% 58,653 Becton, Dickinson & Co. $ 3,038,225 35,076 Biomet, Inc. 1,558,777 26,639 Guidant Corp. 1,488,587 13,291 St. Jude Medical, Inc.* 1,005,464 ------------ $ 7,091,053 ------------ Managed Health Care - 0.8% 20,042 United Healthcare Group, Inc. $ 1,247,615 7,549 Wellpoint Health Networks, Inc.* 845,563 ------------ $ 2,093,178 ------------ Total Health Care Equipment & Services $ 15,350,843 ------------ Pharmaceuticals & Biotechnology - 6.1% Pharmaceuticals - 6.1% 33,785 Barr Laboratorie, Inc.* $ 1,138,555 35,772 Eli Lilly & Co. 2,500,821 55,400 Merck & Co., Inc. 2,631,500 67,544 Mylan Laboratories, Inc. 1,367,766 45,761 Novartis AG (A.D.R.) 2,036,364 62,253 Pfizer, Inc. 2,134,033 15,214 Roche Holdings AG (A.D.R.)* 1,508,088 145,764 Schering-Plough Corp. 2,693,719 ------------ $ 16,010,846 ------------ Total Pharmaceuticals & Biotechnology $ 16,010,846 ------------ Banks - 7.4% Diversified Banks - 2.2% 32,784 Charter One Financial, Inc. $ 1,448,725 85,656 U.S. Bancorp 2,360,679 35,519 Wells Fargo & Co. 2,032,752 ------------ $ 5,842,156 ------------ Regional Banks - 4.2% 28,340 First Horizon National Corp. $ 1,288,620 114,053 National City Corp. 3,992,996 38,351 SouthTrust Corp. 1,488,402 47,329 SunTrust Banks, Inc. 3,075,912 19,396 Zions Bancorporation 1,191,884 ------------ $ 11,037,814 ------------ Thrifts & Mortgage Finance - 1.0% 64,028 Washington Mutual, Inc. $ 2,474,042 ------------ Total Banks $ 19,354,012 ------------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Diversified Financials - 5.6% Asset Management & Custody Banks - 3.8% 52,067 The Bank of New York Co., Inc. $ 1,534,935 37,051 Federated Investors Inc. 1,124,127 62,368 State Street Corp. 3,058,527 81,766 T. Rowe Price Associates, Inc. 4,121,006 ------------ $ 9,838,595 ------------ Consumer Finance - 0.8% 38,211 American Express Co. $ 1,963,281 ------------ Investment Banking & Brokerage - 1.0% 49,593 Merrill Lynch & Co., Inc. $ 2,677,030 ------------ Total Diversified Financials $ 14,478,906 ------------ Insurance - 3.5% Multi - Line Insurance - 1.0% 37,283 American International Group, Inc. $ 2,657,532 ------------ Property & Casualty Insurance - 2.5% 46,109 Chubb Corp. $ 3,143,712 26,583 Safeco Corp. 1,169,652 52,652 St. Paul Travelers Companies, Inc. 2,134,512 ------------ $ 6,447,876 ------------ Total Insurance $ 9,105,408 ------------ Software & Services - 4.7% Application Software - 2.4% 35,888 Adobe Systems, Inc. $ 1,668,792 119,628 Microsoft Corp. 3,416,576 26,017 Symantec Corp.* 1,139,024 ------------ $ 6,224,392 ------------ Data Processing & Outsourced Services - 2.3% 39,373 Automatic Data Processing, Inc. $ 1,648,941 32,311 Computer Sciences Corp.* 1,500,200 21,836 DST Systems, Inc.* 1,050,093 25,494 Fiserv, Inc.* 991,462 32,184 SunGard Data Systems, Inc.* 836,784 ------------ $ 6,027,480 ------------ Total Software & Services $ 12,251,872 ------------ Technology Hardware & Equipment - 5.4% Communications Equipment - 2.0% 182,952 Motorola, Inc. $ 3,338,874 128,455 Nokia Corp (A.D.R.) 1,867,736 ------------ $ 5,206,610 ------------ Shares Value Computer Hardware - 3.4% 17,403 Apple Computer, Inc.* $ 566,294 60,976 Dell, Inc.* 2,184,160 22,881 Diebold, Inc. 1,209,718 72,740 Hewlett-Packard Co. 1,534,814 24,634 IBM Corp.* 2,171,487 252,670 Sun Microsystems, Inc.* 1,096,588 ------------ $ 8,763,061 ------------ Total Technology Hardware & Equipment $ 13,969,671 ------------ Semiconductors - 3.4% Semiconductor Equipment - 0.9% 120,790 Applied Materials, Inc.* $ 2,369,900 ------------ Semiconductors - 2.5% 126,597 Intel Corp. $ 3,494,077 118,406 Texas Instruments, Inc. 2,863,057 ------------ $ 6,357,134 ------------ Total Semiconductors $ 8,727,034 ------------ Telecommunication Services - 3.2% Integrated Telecommunication Services - 3.2% 18,815 Alltel Corp. $ 952,415 116,841 BellSouth Corp. 3,063,571 176,887 SBC Communications, Inc. 4,289,510 ------------ $ 8,305,496 ------------ Total Telecommunication Services $ 8,305,496 ------------ Utilities - 2.0% Electric Utilities - 1.3% 26,945 American Electric Power Co., Inc. $ 862,240 29,268 Consolidated Edison, Inc. 1,163,696 46,790 Southern Co. 1,363,929 ------------ $ 3,389,865 ------------ Gas Utilities - 0.6% 22,532 KeySpan Energy Corp. (a) $ 826,924 31,011 Vectren Corp. 778,065 ------------ $ 1,604,989 ------------ Water Utilities - 0.1% 14,953 Aqua America, Inc. $ 299,808 ------------ Total Utilities $ 5,294,662 ------------ TOTAL COMMON STOCKS (Cost $224,336,202) $251,286,474 ------------
6 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Principal Amount Value TEMPORARY CASH INVESTMENTS - 3.7% Repurchase Agreement - 3.4% $ 8,800,000 UBS Warburg, Inc., 1.25%, dated 6/30/04, repurchase price of $8,800,000 plus accrued interest on 7/1/04 collateralized by $8,068,000 U.S. Treasury Bill, 7.0%, 7/15/06 $ 8,800,000 ------------ Shares Security Lending Collateral - 0.3% 766,159 Securities Lending Investment Fund, 1.29% $ 766,159 ------------ TOTAL TEMPORARY CASH INVESTMENTS (Cost $9,566,159) $ 9,566,159 ------------ TOTAL INVESTMENT IN SECURITIES - 100.2% (Cost $233,902,361) (a) $260,852,633 ------------ OTHER ASSETS AND LIABILITIES - (0.2)% $ (506,268) ------------ TOTAL NET ASSETS - 100.0% $260,346,365 ============
* Non-income producing security. (A.D.R.) American Depositary Receipt (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 20,707 KeySpan Energy Corp. $751,043
The accompanying notes are an integral part of these financial statements. 7 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year 6/30/04 Ended Ended Class I (unaudited) 12/31/03 12/31/02 Net asset value, beginning of period $ 18.09 $ 15.11 $ 18.40 -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.22 $ 0.41 $ 0.42 Net realized and unrealized gain (loss) on investments 0.49 2.96 (3.30) -------- -------- -------- Net increase (decrease) from investment operations $ 0.71 $ 3.37 $ (2.88) Distributions to shareowners: Net investment income (0.18) (0.39) (0.41) Net realized gain -- -- -- -------- -------- -------- Net increase (decrease) in net asset value $ 0.53 $ 2.98 $ (3.29) -------- -------- -------- Net asset value, end of period $ 18.62 $ 18.09 $ 15.11 ======== ======== ======== Total return* 3.94% 22.61% (15.82)% Ratio of net expenses to average net assets+ 0.72%** 0.78% 0.80% Ratio of net investment income (loss) to average net assets+ 2.34%** 2.55% 2.48% Portfolio turnover rate 18%** 12% 12% Net assets, end of period (in thousands) $158,805 $155,634 $133,258 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.72%** 0.78% 0.80% Net investment income (loss) 2.34%** 2.55% 2.48% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.72%** 0.78% 0.80% Net investment income (loss) 2.34%** 2.55% 2.48% Year Year Year Ended Ended Ended Class I 12/31/01 12/31/00 12/31/99 Net asset value, beginning of period $ 21.28 $ 20.72 $ 21.44 -------- -------- -------- Increase (decrease) from investment operations: Net investment income (loss) $ 0.40 $ 0.51 $ 0.42 Net realized and unrealized gain (loss) on investments (1.86) 2.28 (0.15) -------- -------- -------- Net increase (decrease) from investment operations $ (1.46) $ 2.79 $ 0.27 Distributions to shareowners: Net investment income (0.36) (0.49) (0.41) Net realized gain (1.06) (1.74) (0.58) -------- -------- -------- Net increase (decrease) in net asset value $ (2.88) $ 0.56 $ (0.72) -------- -------- -------- Net asset value, end of period $ 18.40 $ 21.28 $ 20.72 ======== ======== ======== Total return* (6.97)% 14.85% 1.21% Ratio of net expenses to average net assets+ 0.75% 0.71% 0.70% Ratio of net investment income (loss) to average net assets+ 2.07% 2.40% 1.97% Portfolio turnover rate 13% 13% 23% Net assets, end of period (in thousands) $164,019 $181,920 $226,379 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 0.75% 0.71% 0.70% Net investment income (loss) 2.07% 2.40% 1.97% Ratios with waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 0.75% 0.71% 0.70% Net investment income (loss) 2.07% 2.40% 1.97%
* Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. 8 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $751,043) (Cost $233,902,361) $ 260,852,633 Cash 63,820 Foreign currencies, at value -- Receivables -- Investment securities sold -- Fund shares sold 150,340 Dividends, interest and foreign taxes withheld 264,315 Other 622 ------------- Total assets $ 261,331,730 ------------- LIABILITIES: Payables -- Investment securities purchased $ -- Fund shares repurchased 14,838 Dividends -- Upon return for securities loaned 766,159 Forward foreign currency portfolio hedge contracts, open -- net -- Due to bank -- Due to affiliates 184,570 Accrued expenses 19,798 Other -- ------------- Total liabilities $ 985,365 ------------- NET ASSETS: Paid-in capital $ 268,906,525 Accumulated net investment income (loss) (75,908) Accumulated undistributed net realized gain (loss) (35,434,524) Net unrealized gain (loss) on: Investments 26,950,272 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------- Total net assets $ 260,346,365 ------------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 149,564,869 Shares outstanding 7,879,911 ------------- Net asset value per share $ 18.98 Class II: No par value (unlimited number of shares authorized) Net assets $ 110,781,496 Shares outstanding 5,850,266 ------------- Net asset value per share $ 18.94
The accompanying notes are an integral part of these financial statements. 9 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $19,683) $ 2,102,920 Interest 57,470 Income on securities loaned, net 7,876 Other -- ----------- Total investment income $ 2,168,266 EXPENSES: Management fees $ 811,005 Transfer agent fees 1,223 Distribution fees (Class II) 123,119 Administrative fees 15,324 Custodian fees 20,922 Professional fees 26,346 Printing 3,962 Fees and expenses of nonaffiliated trustees -- Miscellaneous 3,740 ----------- Total expenses $ 1,005,641 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ----------- Net expenses $ 1,005,641 ----------- Net investment income (loss) $ 1,162,625 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $(1,304,040) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (3,646) ----------- $(1,307,686) ----------- Change in net unrealized gain or loss from: Investments $ 5,111,020 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $ 5,111,020 ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ 3,803,334 ----------- Net increase (decrease) in net assets resulting from operations $ 4,965,959 ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 1,162,625 $ 2,086,873 Net realized gain (loss) on investments (1,307,686) (8,525,302) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 5,111,020 49,662,141 ------------- ------------- Net increase (decrease) in net assets resulting from operations $ 4,965,959 $ 43,223,712 ------------- ------------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ (793,149) $ (1,580,150) Class II (445,384) (520,900) Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ------------- ------------- Total distributions to shareowners $ (1,238,533) $ (2,101,050) ------------- ------------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 33,243,901 $ 58,651,489 Reinvestment of distributions 1,238,553 2,101,050 Cost of shares repurchased (20,190,548) (37,658,369) ------------- ------------- Net increase (decrease) in net assets resulting from fund share transactions $ 14,291,886 $ 23,940,170 ------------- ------------- Net increase (decrease) in net assets $ 18,019,312 $ 64,216,832 ------------- ------------- NET ASSETS: Beginning of period $ 242,327,053 $ 178,110,221 ------------- ------------- End of period $ 260,346,365 $ 242,327,053 ============= ============= Accumulated/(distributions in excess of) net investment income (loss) $ (75,908) $ -- ============= =============
The accompanying notes are an integral part of these financial statements. 11 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Fund VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen seperarate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Fund Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004, there were no fair valued securities. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total 12 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Fund Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Fund VCT Portfolio had a capital loss carryforward of $33,944,745, of which the following amounts will expire between 2009 and 2011 if not utilized: $6,699,261 in 2009, $14,227,957 in 2010 and $13,017,527 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 13 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
- ------------------------------------------------- Pioneer Fund VCT Portfolio 2003 - ------------------------------------------------- Distributions paid from: Ordinary Income $ 2,101,050 Long- Term capital gain -- ------------ $ 2,101,050 Return of Capital -- ------------ Total distributions $ 2,101,050 ------------ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/ (Capital loss carryforward) (33,944,745) Unrealized appreciation (depreciation) 21,657,159 ------------ Total $(12,287,586) ============ - -------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.65% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $159,258 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito 14 Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $257 in transfer agent fees payable to PIMSS at June 30, 2004. 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $25,055 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------ Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------ Fund Portfolio $234,084,454 $39,850,461 $ (13,082,282) $26,768,179 ------------ ----------- ------------- ----------- - ------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $50,667,140 and $30,168,567, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ----------------------------------------------------------------------------------------------- Fund Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ----------------------------------------------------------------------------------------------- CLASS II: Shares sold 184,697 $ 3,484,043 519,126 $ 8,479,870 Reinvestment of distributions 42,211 793,149 94,945 1,580,150 Shares repurchased (628,636) (11,825,399) (1,616,113) (25,664,887) -------------------------------------------------------------- Net increase (401,728) $(7,548,207) (1,156,042) $(15,504,867) ============================================================== CLASS II: Shares sold 1,580,694 $29,759,858 3,031,681 $ 50,171,619 Reinvestment of distributions 23,726 445,384 30,685 520,900 Shares repurchased (443,565) (8,365,149) (747,392) (12,093,482) -------------------------------------------------------------- Net increase 1,160,855 $21,840,093 2,314,974 $ 38,599,037 ============================================================== - -----------------------------------------------------------------------------------------------
15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16061-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Small Cap Value VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Small Cap Value VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 8 Notes to Financial Statements 12 Trustees, Officers and Service Providers 18
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 - -------------------------------------------------------------------------------- Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.] U.S. Common Stocks 87.0% Temporary Cash Investment 6.3% Depositary Receipts for International Stocks 4.0% Closed End Mutual Funds 1.3% Exchange Traded Fund 0.8% International Common Stocks 0.6%
Sector Distribution (As a percentage of equity holdings) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.] Financials 23.7% Industrials 21.3% Consumer Discretionary 13.1% Materials 8.8% Information Technology 8.5% Health Care 7.9% Energy 7.0% Utilities 5.2% Consumer Staples 3.4% Telecommunication Services 1.1%
Five Largest Holdings (As a percentage of equity holdings) 1. Nu Skin Enterprises, Inc. 2.17% 2. Massey Energy Co. 1.79 3. Pediatrix Medical Group, Inc. 1.74 4. Insight Enterprises, Inc. 1.70 5. Wabtec Corp. 1.63
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $13.45 $12.47
Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Small Cap Value VCT Portfolio at net asset value, compared to that of the Russell 2000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL.] Pioneer Small Cap Value VCT Portfolio Russell 2000 Value Index ------------------------------------- ------------------------ 11/01 $10,000 $10,000 6/01 $10,572 $10,612 6/02 $ 8,980 $ 9,400 6/03 $12,132 $13,727 6/04 $13,086 $14,802 Index comparison begins 11/30/01. The Russell 2000 Value Index is a measure of the performance of the value-oriented stocks in the Russell 2000 Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
Net Asset Value Life-of-Class 11.88% (11/9/01) 1 Year 29.95%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. 2 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- In the following discussion, portfolio manager David Adams and assistant portfolio manager Jack McPherson review their investment strategies and the performance of Pioneer Small Cap Value VCT Portfolio. Q: How did the Portfolio perform over this period? A. For the six months ended June 30, 2004, Class II shares of Pioneer Small Cap Value VCT Portfolio returned 7.86% at net asset value. These results were in line with the 7.83% return on the Russell 2000 Value Index, the Portfolio's benchmark, for the same period. Q: What were conditions like over the first half of the year, and how did you respond? A. The U.S. economic recovery continued to take hold over the early months of the year. But as global demand drove up prices for key commodities, inflationary pressures led the Federal Reserve Board to raise short-term interest rates at its June meeting. Anticipation of higher rates had been a damper on the markets for several weeks prior to the Fed's move. The Portfolio's positive results over the period reflected our commitment to our established discipline. In contrast to last year when speculative issues were market leaders, the kind of companies we invest in - better-quality issues with strong financial characteristics and good earnings prospects - have been in favor for much of 2004. Q: Which sectors or stocks helped performance the most? A. Our overweight position in energy-related companies compared to our benchmark was the biggest positive over this period. Massey Energy benefited as global demand pushed up the price of Appalachian coal. The weak U.S. dollar also made domestic coal more competitive in foreign markets. In energy services, Maverick Tube saw orders for its oil well casings increase as drilling activity grew in response to higher energy prices. Unit Corporation benefited from higher prices at its own wells, as well as from increased activity in its equipment leasing business. Stelmar Shipping is experiencing firm pricing for its fleet of double-hulled tankers as existing tanker capacity is unable to meet the demands of an expanding world economy. Q: Which of your other decisions had a positive impact? A. In the financial sector, we found good value among commercial banks whose business customers tend to increase borrowings as business conditions improve. Shares of Texas Capital Bancshares and Cardinal Financial both rose; those regional banks are well positioned to capture market share if customers seek local alternatives in the wake of the J.P. Morgan-BankOne merger. Advanta, which supplies credit cards for small businesses, was a strong contributor, and Selective Insurance gained, thanks to favorable claims experience and higher premiums. Among industrial firms, we bought Wabtac, a maker of parts for rail cars, at a low point in its business cycle. Shares have moved higher as the expanding economy absorbs excess freight capacity and new cars are being built. In health care, Pediatrix Medical Group saw continued good results from its hospital-based neonatology services. Shares of Cross Country Healthcare gained as investors anticipated renewed demand for temporary nursing staff at hospitals seeking to fill vacancies following a period of cutbacks. Software makers Borland and SPSS were sluggish performers. Investors also grew cautious toward Rewards Network as it worked to implement a new business plan. Lower gold prices hurt results at Iamgold, which is also attempting to acquire another firm while being targeted as a merger partner. Q: What is your outlook for the upcoming months? A. Most businesses sectors are doing well in the economic recovery, but an apparent slowdown in job creation and a wave of cautious earnings forecasts may hint at a slower pace of expansion. Inflation, higher interest rates and world tensions may also give investors reasons to defer commitments, at least until the presidential election is decided. Against that background, good, attractively valued companies continue to emerge, creating opportunities for our value-oriented investment style. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. Small-capitalization stocks, while offering the potential for higher returns, may be subject to greater short-term price fluctuations than securities of larger companies. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 86.1% Energy - 6.1% Oil & Gas Drilling - 1.6% 1,100 Atwood Oceanics, Inc.* $ 45,925 19,511 Key Energy Services, Inc.* 184,184 6,550 Todco* 101,329 ----------- $ 331,438 ----------- Oil & Gas Equipment & Services - 1.8% 10,125 Gulfmark Offshore, Inc.* $ 159,770 7,890 Maverick Tube Corp.* 207,191 ----------- $ 366,961 ----------- Oil & Gas Exploration & Production - 2.7% 4,550 Penn Virginia Corp. $ 164,301 9,370 Swift Energy Co.* 206,702 5,994 Unit Corp.* 188,511 ----------- $ 559,514 ----------- Total Energy $ 1,257,913 ----------- Materials - 7.6% Diversified Metals & Mining - 1.6% 11,314 Massey Energy Co. $ 319,168 ----------- Gold - 1.5% 9,150 Glamis Gold, Ltd.* $ 160,400 27,875 IAMGOLD Corp. (a) 155,543 ----------- $ 315,943 ----------- Metal & Glass Containers - 0.7% 3,962 Jarden Corp.* $ 142,592 ----------- Paper Products - 1.9% 12,093 Domtar, Inc. (a) $ 156,483 7,550 Flowserve Corp.* 188,297 3,425 Longview Fibre Co. 50,450 ----------- $ 395,230 ----------- Specialty Chemicals - 0.4% 2,900 Great Lakes Chemical Corp. $ 78,474 ----------- Steel - 1.5% 2,675 Carpenter Technology $ 91,084 21,693 Graftech International, Ltd.* 226,909 ----------- $ 317,993 ----------- Total Materials $ 1,569,400 ----------- Capital Goods - 7.7% Aerospace & Defense - 0.3% 3,450 Intrado, Inc.* $ 55,511 ----------- Construction, Farm Machinery & Heavy Trucks - 1.4% 16,150 Wabtec Corp. $ 291,346 ----------- Shares Value Construction & Engineering - 0.8% 3,795 Granite Construction, Inc. $ 69,183 5,800 Insituform Technologies, Inc.* 94,366 ----------- $ 163,549 ----------- Electrical Components & Equipment - 0.9% 16,004 Power-One, Inc.* $ 175,724 ----------- Industrial Conglomerates - 1.3% 14,760 Cornell Companies, Inc.* $ 200,736 6,021 NN, Inc. 76,527 ----------- $ 277,263 ----------- Industrial Machinery - 2.2% 8,062 Joy Global, Inc. $ 241,376 2,350 Kaydon Corp. 72,686 1,469 Nacco Industries, Inc. 139,555 ----------- $ 453,617 ----------- Trading Companies & Distributors - 0.8% 5,803 Applied Industrial Technologies, Inc. $ 174,786 ----------- Total Capital Goods $ 1,591,796 ----------- Commercial Services & Supplies - 7.1% Data Processing Services - 0.5% 7,725 Gartner Group, Inc.* $ 102,125 ----------- Commercial Printing - 0.8% 3,793 John H. Harland Co. $ 111,325 1,600 Valassis Communications, Inc.* 48,752 ----------- $ 160,077 ----------- Diversified Commercial Services - 4.9% 2,600 Arbitron, Inc.* $ 94,952 13,700 Central Parking Corp. 256,053 4,378 Chemed Corp. 212,333 2,570 FTI Consulting, Inc.* 42,405 10,685 Profit Recovery Group International* 58,447 20,105 Rent-Way, Inc.* 180,945 6,025 Watson Wyatt & Co. Holdings 160,566 ----------- $ 1,005,701 ----------- Employment Services - 0.9% 6,095 Korn/Ferry International* $ 118,060 11,575 On Assignment, Inc.* 68,293 ----------- $ 186,353 ----------- Total Commercial Services & Supplies $ 1,454,256 ----------- Transportation - 3.7% Marine - 0.8% 5,277 Stelmar Shipping Ltd. $ 174,933 ----------- Railroads - 1.2% 9,543 Genesee & Wyoming, Inc.* $ 226,169 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Trucking - 1.7% 12,950 Central Freight Lines, Inc.* $ 103,600 2,968 Dollar Thrifty Automotive Group* 81,442 4,375 Forward Air Corp.* 163,620 ----------- $ 348,662 ----------- Total Transportation $ 749,764 ----------- Automobiles & Components - 0.7% Auto Parts & Equipment - 0.7% 7,995 Federal Signal Corp. $ 148,787 ----------- Total Automobiles & Components $ 148,787 ----------- Consumer Durables & Apparel - 2.0% Apparel, Accessories & Luxury Goods - 1.3% 14,593 Charming Shoppes, Inc.* $ 130,315 2,950 Kellwood Co. 128,473 ----------- $ 258,788 ----------- Footwear - 0.7% 6,641 Maxwell Shoe Co., Inc.* $ 154,337 ----------- Total Consumer Durables & Apparel $ 413,125 ----------- Hotels, Restaurants & Leisure - 0.6% Restaurants - 0.6% 7,169 O'Charley's, Inc.* $ 123,235 ----------- Total Hotels, Restaurants & Leisure $ 123,235 ----------- Media - 2.0% Advertising - 1.6% 4,841 EMAK Worldwide, Inc.* $ 60,270 6,344 R.H. Donnelley Corp.+* 277,487 ----------- $ 337,757 ----------- Publishing - 0.4% 5,465 Advanced Marketing Services, Inc. $ 70,553 ----------- Total Media $ 408,310 ----------- Retailing - 6.1% Apparel Retail - 0.7% 3,695 Stage Stores, Inc.* $ 139,154 ----------- Catalog Retail - 1.5% 17,075 Insight Enterprises, Inc.* $ 303,252 ----------- General Merchandise Stores - 0.3% 1,615 Blyth Industries, Inc. $ 55,701 ----------- Specialty Stores - 3.6% 5,275 Claire's Stores, Inc. $ 114,468 5,502 Guitar Center, Inc.* 244,674 16,057 Hancock Fabrics, Inc. 204,727 4,923 School Specialty, Inc.* 178,754 ----------- $ 742,623 ----------- Total Retailing $ 1,240,730 ----------- Shares Value Food & Drug Retailing - 1.1% Food Retail - 1.1% 6,183 Fresh Del Monte Produce, Inc. (a) $ 156,244 4,875 Wild Oats Markets, Inc.* 68,591 ----------- $ 224,835 ----------- Total Food & Drug Retailing $ 224,835 ----------- Household & Personal Products - 1.9% Household Products - 1.9% 15,304 Nu Skin Enterprises, Inc. $ 387,497 ----------- Total Household & Personal Products $ 387,497 ----------- Health Care Equipment & Services - 6.3% Health Care Distributors - 2.3% 3,235 Amerigroup Corp.* $ 159,162 5,525 Chattem, Inc.* 159,507 8,375 Cross Country Healthcares, Inc.* (a) 152,003 ----------- $ 470,672 ----------- Health Care Equipment - 0.1% 600 Analogic Corp. $ 25,458 ----------- Health Care Facilities - 0.7% 1,675 Sunrise Senior Living, Inc. (a)* $ 65,560 2,133 Triad Hospitals, Inc.* 79,412 ----------- $ 144,972 ----------- Health Care Services - 1.9% 4,452 Pediatrix Medical Group, Inc.+* $ 310,972 4,550 Providence Service Corp.* 85,495 ----------- $ 396,467 ----------- Managed Health Care - 1.3% 6,830 PacifiCare Health Systems* $ 264,048 ----------- Total Health Care Equipment & Services $ 1,301,617 ----------- Pharmaceuticals & Biotechnology - 0.5% Biotechnology - 0.5% 14,105 Kendle International, Inc.* $ 109,314 ----------- Total Pharmaceuticals & Biotechnology $ 109,314 ----------- Banks - 6.6% Diversified Banks - 3.0% 9,655 BankAtlantic Bancorp, Inc. $ 178,135 3,231 Banner Corp. 93,893 55 International Bancshares Corp.* 2,230 6,600 Provident Financial Services, Inc. 115,830 13,875 Texas Capital Bancshares, Inc.* 230,325 ----------- $ 620,413 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Regional Banks - 3.2% 5,000 Alliance Bankshares Corp.* $ 75,250 19,325 Cardinal Financial Corp.* 174,891 2,400 City National Corp. 157,680 930 Irwin Financial Corp. 24,552 11,275 Sterling Bancshares, Inc. 159,992 1,280 Whitney Holding Corp. 57,178 ----------- $ 649,543 ----------- Thrifts & Mortgage Finance - 0.4% 7,075 First Niagara Financial Group, Inc. $ 84,900 ----------- Total Banks $ 1,354,856 ----------- Diversified Financials - 5.9% Consumer Finance - 2.8% 6,025 Advanta Corp. $ 132,128 5,778 Advanta Corp. (Class B) 132,432 20,406 Medallion Financial Corp. 162,228 15,100 Rewards Network, Inc. (a)* 135,900 ----------- $ 562,688 ----------- Investment Banking & Brokerage - 2.4% 4,150 A.G. Edwards, Inc. $ 141,225 17,975 Apollo Investment Corp.* 247,516 2,300 Piper Jaffray Co.* 104,029 ----------- $ 492,770 ----------- Specialized Finance - 0.7% 4,068 Financial Federal Corp. (a)* $ 143,438 ----------- Total Diversified Financials $ 1,198,896 ----------- Insurance - 3.5% Life & Health Insurance - 0.4% 3,231 FBL Financial Group, Inc. $ 91,308 ----------- Property & Casualty Insurance - 2.5% 3,175 American Safety Insurance Group, Ltd.* $ 47,657 5,251 IPC Holdings, Ltd. 193,919 11,400 Quanta Capital Holdings (144A)* 122,436 2,375 RLI Corp. 86,688 1,525 Selective Insurance Group, Inc. (a) 60,817 ----------- $ 511,517 ----------- Reinsurance - 0.6% 4,775 Odyssey Re Holdings Corp. (a) $ 114,600 ----------- Total Insurance $ 717,425 ----------- Real Estate - 3.9% Real Estate Management & Development - 0.8% 2,875 Corrections Corp. of America* $ 113,534 1,951 Levitt Corp.* 50,258 ----------- $ 163,792 ----------- Shares Value Real Estate Investment Trusts - 3.1% 3,610 Bedford Property Investors, Inc. $ 105,556 1,528 Entertainment Properties Trust 54,611 3,850 Reckson Associates Realty Corp. 105,721 8,215 Trizec Properties, Inc. 133,576 3,396 Universal Health Realty, Inc. 97,465 6,237 Ventas, Inc. 145,634 ----------- $ 642,563 ----------- Total Real Estate $ 806,355 ----------- Software & Services - 3.6% Application Software - 0.8% 8,779 SPSS, Inc.* $ 157,759 ----------- Data Processing & Outsourced Services - 0.9% 5,078 Lightbridge, Inc.* $ 28,437 11,967 Pegusus Systems, Inc.* 157,127 ----------- $ 185,564 ----------- Internet Software & Services - 0.8% 5,875 Internet Security Systems, Inc.* $ 90,123 6,800 PEC Solutions, Inc.* 81,124 ----------- $ 171,247 ----------- Systems Software - 1.1% 18,375 Borland Software Corp.* $ 156,004 5,275 Netiq Corp.* 69,630 ----------- $ 225,634 ----------- Total Software & Services $ 740,204 ----------- Technology Hardware & Equipment - 2.8% Communications Equipment - 1.0% 31,500 Remec, Inc.* $ 199,080 ----------- Computer Storage & Peripherals - 0.8% 2,575 Applied Films Corp.* $ 74,727 3,400 Electronics For Imaging, Inc.* 96,084 ----------- $ 170,811 ----------- Electronic Equipment & Instruments - 0.6% 8,800 Planar Systems, Inc.* $ 117,832 ----------- Technology Distributors - 0.4% 2,300 Tech Data Corp.* $ 89,999 ----------- Total Technology Hardware & Equipment $ 577,722 ----------- Semiconductors - 1.0% Semiconductor Equipment - 0.7% 2,768 Advanced Energy Industries, Inc.* $ 43,513 2,187 Brooks Automation, Inc.* 44,068 2,745 Photronics, Inc.* 51,990 ----------- $ 139,571 -----------
6 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Semiconductors - 0.3% 5,670 HI/FN, Inc. (a)* $ 67,757 ----------- Total Semiconductors $ 207,328 ----------- Telecommunication Services - 0.9% Wireless Telecommunication Services - 0.9% 18,803 Boston Communications Group, Inc.* $ 192,731 ----------- Total Telecommunication Services $ 192,731 ----------- Utilities - 4.5% Gas Utilities - 3.7% 4,175 AGL Resources, Inc. $ 121,284 11,800 NUI Corp. (a) 172,280 4,680 People's Energy Corp. 197,262 9,549 Southwestern Energy Co.* 273,770 ----------- $ 764,596 ----------- Multi-Utilities & Unregulated Power - 0.4% 1,750 Energen Corp. $ 83,983 ----------- Utilities - 0.4% 2,325 UGI Corp. $ 74,633 ----------- Total Utilities $ 923,212 ----------- TOTAL COMMON STOCKS (Cost $14,675,424) $17,699,308 ----------- EXCHANGE TRADED FUND - 0.7% 875 Russell 2000 Exchange Traded Fund $ 150,763 ----------- TOTAL EXCHANGE TRADED FUND (Cost $113,541) $ 150,763 ----------- Shares Value TEMPORARY CASH INVESTMENT - 5.9% Security Lending Collateral - 5.9% 1,202,726 Securities Lending Investment Fund, 1.29% $ 1,202,726 ----------- TOTAL TEMPORARY CASH INVESTMENT (Cost $1,202,726) $ 1,202,726 ----------- TOTAL INVESTMENT IN SECURITIES - 92.7% (Cost $15,991,691) (a) $19,052,797 ----------- OTHER ASSETS AND LIABILITIES - 7.3% $ 1,504,180 ----------- TOTAL NET ASSETS - 100.0% $20,556,977 ===========
* Non-income producing security. + At May 31, 2004, the following securities have pledged to cover margin requirements for open futures contracts:
Shares Description Market Value 2,385 Pediatrix Medical Group, Inc.* $166,592 400 R.H. Donnelley Corp.* 17,496
144A Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2004, the value of these securities amounted to $122,436 or 0.6% of net assets. (a) At June 30, 2004, the following securities were out on loan:
Shares Description Market Value 3,735 Cross Country Healthcares, Inc.* $ 68,238 10,960 Domtar, Inc. 141,713 2,915 Financial Federal Corp.* 102,258 5,565 Fresh Del Monte Produce, Inc. 139,292 4,720 HI/FN, Inc.* 56,262 26,481 IAMGOLD Corp. 141,938 11,540 NUI Corp. 163,176 3,860 Odyssey Re Holdings Corp. 92,640 12,635 Rewards Network, Inc.* 116,874 1,425 Selective Insurance Group, Inc. 55,889 1,496 Sunrise Senior Living, Inc.* 58,254 ---------- Total $1,136,534 ==========
The accompanying notes are an integral part of these financial statements. 7 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended 5/1/03 6/30/04 to Class II (a) (unaudited) 12/31/03 Net asset value, beginning of period $12.47 $ 9.11 ------ ------ Increase (decrease) from investment operations: Net investment income (loss) $(0.03) $(0.00) Net realized and unrealized gain on investments and foreign currency transactions 1.01 3.37 ------ ------ Net increase from investment operations $ 0.98 $ 3.36 Distributions to shareowners: Net investment income -- -- Net realized gain -- -- ------ ------ Net increase in net asset value $ 0.98 $ 3.36 ------ ------ Net asset value, end of period $13.45 $12.47 ====== ====== Total return* 7.86% 36.88% Ratio of net expenses to average net assets+ 1.58%** 1.58%** Ratio of net investment income to average net assets+ (0.62)%** (0.15)%** Portfolio turnover rate 43%** 74% Net assets, end of period (in thousands) $6,014 $2,760 Ratios with no waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.64%** 2.65%** Net investment income (loss) (0.68)%** (1.22)%** Ratios with waiver of management fees and assumption of expenses by PIM and no reduction for fees paid indirectly: Net expenses 1.58%** 1.58%** Net investment income (loss) (0.62)%** (0.15)%**
(a) Class II shares were first publicly offered May 1, 2003. * Assumes initial investment at net asset value at the beginning of each period,reinvestment of all distriibutions and the complete redemption of the investment at the net asset value at the end of each period. ** Annualized + Ratios with no reduction for fees paid indirectly 8 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Small Cap Value VCT Portfolio ASSETS: Investment in securities, at value (including securities loaned of $1,136,534) (Cost $15,991,691) $19,052,797 Cash 2,718,102 Foreign currencies, at value -- Receivables -- Investment securities sold 23,852 Fund shares sold 21,160 Variation margin 7,700 Dividends, interest and foreign taxes withheld 15,498 Forward foreign currency settlement contracts, net -- Due from Pioneer Investment Management, Inc. -- Other 584 ----------- Total assets $21,839,693 ----------- LIABILITIES: Payables -- Investment securities purchased $ 10,897 Fund shares repurchased 20,907 Dividends -- Upon return of securities loaned 1,202,726 Forward foreign currency settlement contracts, net -- Reserve for repatriation taxes -- Due to bank -- Due to affiliates 6,556 Accrued expenses 41,630 ----------- Total liabilities $ 1,282,716 ----------- NET ASSETS: Paid-in capital $17,643,559 Accumulated net investment income (loss) (32,380) Accumulated undistributed net realized gain (loss) (170,680) Net unrealized gain (loss) on: Investments 3,061,106 Futures contracts 55,372 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- Total net assets $20,556,977 ----------- NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $14,543,028 Shares outstanding 1,077,380 ----------- Net asset value per share $ 13.50 Class II: No par value (unlimited number of shares authorized) Net assets $ 6,013,949 Shares outstanding 447,131 ----------- Net asset value per share $ 13.45
The accompanying notes are an integral part of these financial statements. 9 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Small Cap Value VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $61) $ 74,837 Interest 4,917 Income on securities loaned, net 1,081 Other -- ---------- Total investment income $ 80,835 ---------- EXPENSES: Management fees $ 65,883 Transfer agent fees (1,877) Distribution fees (Class II) 5,351 Administrative fees 9,250 Custodian fees 18,376 Professional fees 22,386 Printing 2,274 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,004 ---------- Total expenses $ 122,647 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (5,786) ---------- Net expenses $ 116,879 ---------- Net investment income (loss) $ (36,044) ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 839,832 Futures contracts 26,278 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ 866,110 ---------- Change in net unrealized gain or loss from: Investments $ 481,469 Futures contracts 32,938 Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ---------- $ 514,407 ---------- Net gain (loss) on investments, futures contracts and foreign currency transactions $1,380,517 ========== Net increase (decrease) in net assets resulting from operations $1,344,473 ==========
10 The accompanying notes are an integral part of these financial statements. Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Small Cap Value VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ (36,044) $ 2,125 Net realized gain (loss) on investments 866,110 (334,168) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions 514,407 3,353,942 ----------- ------------ Net increase (decrease) in net assets resulting from operations $ 1,344,473 $ 3,021,899 ----------- ------------ DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ -- $ -- Class II -- -- Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ----------- ------------ Total distributions to shareowners $ -- $ -- ----------- ------------ FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 6,450,844 $ 15,752,093 Reinvestment of distributions -- -- Cost of shares repurchased (2,046,639) (10,568,904) ----------- ------------ Net increase (decrease) in net assets resulting from fund share transactions $ 4,404,205 $ 5,183,189 ----------- ------------ Net increase (decrease) in net assets $ 5,748,678 $ 8,205,088 ----------- ------------ NET ASSETS: Beginning of period $14,808,299 $ 6,603,211 ----------- ------------ End of period $20,556,977 $ 14,808,299 =========== ============ Accumulated/(distributions in excess of) net investment income (loss) $ (32,380) $ 3,664 =========== ============
The accompanying notes are an integral part of these financial statements. 11 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Small Cap Value VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) The Portfolio commenced operations on May 1, 2003. Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Small Cap Value Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004 there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total 12 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Small Company Portfolio had the following open contracts:
- ---------------------------------------------------------------------------------------------------------------- Number of Contracts Settlement Market Unrealized Type Long/(Short) Month Value Gain/(Loss) - ---------------------------------------------------------------------------------------------------------------- Small Cap Value Portfolio Russell 2000 4 September 2004 $1,184,700 $55,372 - ----------------------------------------------------------------------------------------------------------------
C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Small Cap Value VCT Portfolio had a capital loss carryforward of $513,628, of which the following amounts will expire between 2010 and 2011 if not utilized: $508,141 in 2010 and $5,487 in 2011. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 13 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Pioneer Small Cap Value VCT Portfolio 2003 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ -- Long-Term capital gain -- ---------- -- Return of Capital -- ---------- Total distributions $ -- ========== Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ 3,397 Undistributed long-term gain/ (Capital loss carryforward) (513,628) Unrealized appreciation (depreciation) 2,079,176 ---------- Total $1,568,945 ========== - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.75% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $5,022 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito 14 Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $255 in transfer agent fees payable to PIMSS at June 30, 2004 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $1,279 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - ------------------------------------------------------------------------------------------------- Small Cap Value Portfolio $16,492,152 $2,915,941 $(355,296) $2,560,645 ----------- ---------- --------- ---------- - -------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $7,241,266 and $3,313,196, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- ----------------------------------------------------------------------------------------------------- Small Cap Value Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - ----------------------------------------------------------------------------------------------------- CLASS II: Shares sold 239,892 $ 3,132,677 1,276,588 $ 13,058,675 Reinvestment of distributions -- -- -- -- Shares repurchased (126,447) (1,650,422) (1,028,432) (10,409,382) ----------------------------------------------------------------------- Net increase 113,445 $ 1,482,255 248,156 $ 2,649,293 ======================================================================= CLASS II: Shares sold 255,800 $ 3,318,167 235,328 $ 2,693,418 Reinvestment of distributions -- -- -- -- Shares repurchased (29,908) (396,217) (14,089) (159,522) ----------------------------------------------------------------------- Net increase 255,892 $ 2,921,950 221,239 $ 2,533,896 ======================================================================= - ------------------------------------------------------------------------------------------------------
15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16067-00-0804 [LOGO] PIONEER Investments(R) PIONEER VARIABLE CONTRACTS TRUST Pioneer Growth Shares VCT Portfolio -- Class II Shares SEMIANNUAL REPORT June 30, 2004 PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Table of Contents - -------------------------------------------------------------------------------- Pioneer Growth Shares VCT Portfolio Portfolio and Performance Update 2 Portfolio Management Discussion 3 Schedule of Investments 4 Financial Statements 7 Notes to Financial Statements 11
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO UPDATE 6/30/04 Portfolio Diversification (As a percentage of total investment portfolio) [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] U.S. Common Stocks 91.8% Depositary Receipts for International Stocks 8.2% [THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.] Sector Distribution (As a percentage of equity holdings) Information Technology 30.2% Health Care 22.9% Consumer Discretionary 14.5% Industrials 10.1% Financials 8.6% Consumer Staples 7.6% Materials 3.5% Telecommunication Services 1.6% Energy 1.0% Five Largest Holdings (As a percentage of equity holdings) 1. Microsoft Corp. 5.50% 2. Intel Corp. 4.41 3. Sandisk Corp. 3.05 4. Bristol-Myers Squibb Co. 3.02 5. Samsung Electronics Co., Ltd. 2.84
Holdings will vary for other periods. This list excludes temporary cash and derivative investments. - -------------------------------------------------------------------------------- PERFORMANCE UPDATE 6/30/04 - -------------------------------------------------------------------------------- Prices and Distributions
6/30/04 12/31/03 Net Asset Value per Share $11.96 $12.10 Distributions per Share Short-Term Long-Term (1/1/04 - 6/30/04) Dividends Capital Gains Capital Gains $ - $ - $ -
- -------------------------------------------------------------------------------- Performance of a $10,000 Investment The following chart shows the change in value of an investment made in Pioneer Growth Shares VCT Portfolio at net asset value, compared to that of the Russell 1000 Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges. [THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.] Date Pioneer Growth Shares Russell 1000 VCT Portfolio* Index 10/31/1997 $10,000 $10,000 $10,222 $10,646 12/31/1998 $13,521 $13,522 $14,539 $16,351 12/31/2000 $13,539 $15,079 $10,934 $13,202 12/31/2002 $7,099 $10,343 $8,855 $13,436 6/30/2004 $8,753 $13,883 The Russell 1000 Growth Index contains those Russell 1000 securities with greater-than-average growth orientation. Companies in this index tend to exhibit higher price-to-book and price-to-earnings ratios, lower dividend yields and higher forecasted growth values than the Value universe. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. You cannot invest directly in the Index. - -------------------------------------------------------------------------------- Average Annual Total Returns (As of June 30, 2004)
- -------------------------------------------------------------------------------- Net Asset Value - -------------------------------------------------------------------------------- Life-of-Class -1.98% (10/31/97) 5 Years -10.08% 1 Year 9.42%
All total returns shown assume reinvestment of distributions at net asset value. Performance data shown represents past performance. Past performance does not guarantee future results. Assumes reinvestment of all distributions at net asset value. Investment return and principal value fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance shown. For performance data that is current to the most recent month-end, please call 1-800-225-6292 or visit our web site at www.pioneerfunds.com. Portfolio performance does not reflect any variable contract fees, expenses or sales charges. If they had been included, performance would have been lower. See the pages that comprise the inside cover of this report for performance net of any contract fees, expenses or sales charges. 2 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT DISCUSSION 6/30/04 - -------------------------------------------------------------------------------- The U.S. economy continued to grow during the first half of 2004, but the general investment environment for equities began turning slightly negative as rising corporate profit trends began to weaken, consumer spending was not as strong as expected, and markets began anticipating a tighter monetary policy from the Federal Reserve. In the following interview, Christopher Galizio discusses the factors that affected the performance of Pioneer Growth Shares VCT Portfolio during the six-month period ended June 30, 2004. Mr. Galizio is a member of the Portfolio's management team. Q: How did the Portfolio perform during the first half of 2004? A: For the six-month period ended June 30, 2004, the Growth Shares Portfolio Class II had a total return of -1.16% at net asset value. For the same period, the Russell 1000 Growth Index returned 2.74%. We believe the Portfolio's underperformance was due to the overweight position in technology, particularly semi-conductor companies, early in the period. Q: What was the general investment environment like during the period? A: The overall market sentiment appeared to be turning negative late in the six-month period. The stock market surge that that had begun in March 2003 appeared to lose some energy. Several major corporations, including the retail and semi-conductor industries, began to report earnings disappointments, and we saw some weakening in profit trends, notably in the consumer and technology sectors. Consumer spending trends, in particular, appeared weak as over-extended consumers finally began to retrench from their high-spending patterns. As stock market investors anticipated the June 30 announcement by the Federal Reserve Board that it would begin to tighten monetary policy by raising short-term interest rates, the share prices of some consumer-oriented financial institutions began to fade. Industrial stocks, however, tended to outperform the overall market. Q: What were your principal strategies during the period? A: We restructured the Portfolio during the period, focusing on large-cap companies that we believed offered long-term value, above-average revenue growth, strong returns on capital and reasonable valuations in relation to their earnings potential. This strategy led to a reduced emphasis on the semi-conductor industry and increased weightings in the software, consumer discretionary and financial services areas. We reduced our semi-conductor holdings, eliminating positions in Applied Materials, Cypress Semiconductor, Texas Instruments and Maxim Technology. We did add Taiwan Semiconductor, a major manufacturer with an attractive stock valuation. Overall, however, semiconductor stocks went from an overweight to an underweight position relative to the benchmark S&P 500. The reduced weightings in technology tended to support performance. Conversely, we increased the Portfolio's emphasis on software companies, adding companies such as Macrovision, which has developed a technology to protect DVDs, CDs and other disc-based products from piracy, as well as Take-Two Interactive, the developer of video games, including Grand Theft Auto - the most successful game in history, with a new version soon to be introduced. We also added Fair Isaac, which has developed software to help credit card companies analyze the credit-worthiness of applicants. Fair Isaac tended to detract from performance late in the six-month period as it reported disappointing earnings, but we continued to hold it because of its attractive valuation. We moved from an underweight to an overweight in the consumer discretionary sector, taking advantage of attractive valuations of Disney, whose media and theme park properties have improved earnings outlooks, and Viacom, the owner of the CBS and MTV television networks among other properties. Among retailers, we sold our Wal-Mart position before the stock fell hard, investing in Target, Kohl's and Ross Stores. In addition, we increased the emphasis on financial services stocks, focusing on insurance companies with excellent valuations that were not as vulnerable to interest-rate increases as banks and other lenders. We continued to de-emphasize consumer staples, although we added Altria (the former Philip Morris), which offered a high dividend yield and an attractive stock price that we believed was the result of overly pessimistic market evaluations of the company's tobacco liability. In addition, we invested in First Data, the leader in processing of credit card transactions and owner of the Western Union system, and Accenture, an information technology services consulting firm. Q: What were some of the investments that influenced performance? A: Among newer holdings, Macrovision rose significantly during the period as its revenue grew faster than had been expected. Sepracor, a pharmaceutical company and a new holding, also advanced on positive news of a drug under development. Zimmer Holdings, a world leader in orthopedic products, including hip and knee replacements, was another health care position that did very well. The timely sale of Wal-Mart also supported performance. The overweight position in the semiconductor industry early during the six-month period held back performance, as valuations in that group fell hard. Corinthian Colleges, operator of adult vocational educational colleges and programs, was another detractor, as the SEC began an investigation of its financial records. However, we took advantage of the price decline to add to the position in Corinthian because of its goods long-term fundamentals. Lexar and Sandisk, two manufacturers of flash memories for cameras and cell phones, also fell on disappointing sales. Freeport-McMoRan, a leader in the copper mining industry and a strong support for performance in 2003, also declined both because of problems at one of its mines and because of fears of an economic slowdown in China, an important importer of copper. We increased our investment in the company because of its attractive price. We also believed it experienced some short-term production problems that would be resolved. Q: What is your investment outlook? A: We are cautions about the near-term opportunities in the domestic stock market, as stock valuations appear relatively expensive and the Federal Reserve Board has moved to a less accommodating monetary policy. The home refinancing boom of the past two years may hurt the future earnings of banks, while the technology industry faces a number of challenges, from pricing pressure on its products to calls to change the way many companies have treated stock options in their accounting. Health care stocks, however, appear to be more reasonably valued. Given this outlook, we are paying very strict attention to our analysis and selection of individual companies. We also have somewhat reduced our exposure to the domestic stock market with investments in Europe and the emerging markets. We have, for example, increased our position in Vodafone, the world's largest wireless communications service company, and we have added small holdings from Korea, Taiwan and Israel. Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio's historical or future performance are statements of the opinion of Portfolio management as of the date of this report. These statements should not be relied upon for any other purposes. Past performance is no guarantee of future results, and there is no guarantee that market forecasts discussed will be realized. The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced its management fee and certain other expenses; otherwise, returns would have been lower. 3 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Shares Value COMMON STOCKS - 99.6% Energy - 1.0% Integrated Oil & Gas - 1.0% 2,500 ConocoPhillips $ 190,725 4,200 Occidental Petroleum Corp. 203,322 ----------- $ 394,047 ----------- Total Energy $ 394,047 ----------- Materials - 3.5% Diversified Metals & Mining - 3.5% 19,700 Freeport-McMoRan Copper & Gold, Inc. (Class B) $ 653,055 8,900 Phelps Dodge Corp.* 689,839 ----------- $ 1,342,894 ----------- Total Materials $ 1,342,894 ----------- Capital Goods - 6.9% Aerospace & Defense - 1.1% 6,200 L-3 Communications Holdings, Inc. $ 414,160 ----------- Electrical Component & Equipment - 1.3% 15,200 General Electric Co. $ 492,480 ----------- Industrial Conglom - 4.5% 16,900 American Standard Companies, Inc.* $ 681,239 21,400 Tyco International Ltd. 709,196 4,000 United Technologies Corp. 365,920 ----------- $ 1,756,355 ----------- Total Capital Goods $ 2,662,995 ----------- Commercial Services & Supplies - 2.0% Employment Services - 2.0% 31,300 Corinthian Colleges, Inc.* $ 774,362 ----------- Total Commercial Services & Supplies $ 774,362 ----------- Transportation - 1.2% Trucking - 1.2% 5,900 United Parcel Service $ 443,503 ----------- Total Transportation $ 443,503 ----------- Hotels, Restaurants & Leisure - 3.0% Casinos & Gaming - 1.3% 13,400 International Game Technology $ 517,240 ----------- Hotels, Resorts & Cruise Lines - 0.8% 6,400 Carnival Corp. $ 300,800 ----------- Restaurants - 0.9% 9,100 Tricon Global Restaurants, Inc.* $ 338,702 ----------- Total Hotels, Restaurants & Leisure $ 1,156,742 ----------- Shares Value Media - 3.3% Broadcasting & Cable TV - 0.9% 9,300 Clear Channel Communications, Inc. $ 343,635 ----------- Movies & Entertainment - 2.4% 21,300 The Walt Disney Co. $ 542,937 10,400 Viacom, Inc. (Class B) 371,488 ----------- $ 914,425 ----------- Total Media $ 1,258,060 ----------- Retailing - 8.2% Apparel Retail - 2.3% 5,400 Liz Claiborne, Inc. $ 194,292 3,900 Nike, Inc. 295,425 15,200 Ross Stores, Inc. 406,752 ----------- $ 896,469 ----------- Department Stores - 2.1% 7,500 J.C. Penney Co., Inc. $ 283,200 12,300 Kohl's Corp.* 520,044 ----------- $ 803,244 ----------- General Merchandise Stores - 2.4% 9,900 Family Dollar Stores, Inc. $ 301,158 14,700 Target Corp. 624,309 ----------- $ 925,467 ----------- Home Improvement Retail - 1.4% 10,000 Lowe's Companies, Inc. $ 525,500 ----------- Total Retailing $ 3,150,680 ----------- Food & Drug Retailing - 2.1% Drug Retail - 0.6% 5,900 Walgreen Co. $ 213,639 ----------- Food Distributors - 1.5% 8,500 Cardinal Health, Inc. $ 595,425 ----------- Total Food & Drug Retailing $ 809,064 ----------- Food, Beverage & Tobacco - 5.5% Soft Drinks - 3.6% 17,000 The Coca-Cola Co. $ 858,160 9,800 PepsiCo, Inc. 528,024 ----------- $ 1,386,184 ----------- Tobacco - 1.9% 14,500 Altria Group, Inc. $ 725,725 ----------- Total Food, Beverage & Tobacco $ 2,111,909 -----------
4 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Shares Value Health Care Equipment & Services - 10.8% Health Care Distributors - 5.7% 47,400 Bristol-Myers Squibb Co. $ 1,161,300 6,203 Teva Pharmaceutical Industries, Ltd. 417,400 17,100 Wyeth 618,336 ----------- $ 2,197,036 ----------- Health Care Equipment - 4.3% 16,700 Guidant Corp. $ 933,196 5,400 St. Jude Medical, Inc.* 408,510 3,500 Zimmer Holdings, Inc.* 308,700 ----------- $ 1,650,406 ----------- Managed Health Care - 0.8% 2,800 Wellpoint Health Networks, Inc.* $ 313,628 ----------- Total Health Care Equipment & Services $ 4,161,070 ----------- Pharmaceuticals & Biotechnology - 11.9% Biotechnology - 2.8% 12,758 Amgen, Inc.* $ 696,204 35,400 Cubist Pharmaceuticals, Inc.* 392,940 ----------- $ 1,089,144 ----------- Pharmaceuticals - 9.1% 16,000 Merck & Co., Inc. $ 760,000 27,851 Pfizer, Inc. 954,732 17,200 Sepracor, Inc.* 909,880 23,400 Schering-Plough Corp. 432,432 14,400 Sanofi-Synthelabo SA (A.D.R.)* 460,656 ----------- $ 3,517,700 ----------- Total Pharmaceuticals & Biotechnology $ 4,606,844 ----------- Banks - 2.3% Diversified Banks - 1.1% 4,900 Bank of America Corp. $ 414,638 ----------- Thrifts & Mortgage Finance - 1.2% 7,400 Freddie Mac $ 468,420 ----------- Total Banks $ 883,058 ----------- Diversified Financials - 1.3% Consumer Finance - 0.6% 15,900 Providian Financial Corp.* $ 233,253 ----------- Investment Banking & Brokerage - 0.7% 2,800 Goldman Sachs Group, Inc. $ 263,648 ----------- Total Diversified Financials $ 496,901 ----------- Shares Value Insurance - 5.0% Insurance Brokers - 0.8% 8,200 Willis Group Holdings, Ltd. $ 307,090 ----------- Multi-Line Insurance - 2.4% 13,000 American International Group, Inc. $ 926,640 ----------- Property & Casualty Insurance - 1.8% 9,000 ACE, Ltd. $ 380,520 7,400 Safeco Corp. 325,600 ----------- $ 706,120 ----------- Total Insurance $ 1,939,850 ----------- Software & Services - 11.6% Application Software - 8.4% 9,200 Fair Isaac & Co., Inc. $ 307,096 74,000 Microsoft Corp. 2,113,440 21,500 Macrovision Corp.* 538,145 9,500 Veritas Software Corp.* 263,150 ----------- $ 3,221,831 ----------- Data Processing & Outsourced Services - 1.5% 12,600 First Data Corp. $ 560,952 ----------- Home Entertainment Software - 0.7% 9,300 Take-Two Interactive Software, Inc.* $ 284,952 ----------- IT Consulting & Other Services - 1.0% 14,100 Accenture, Ltd.* $ 387,468 ----------- Total Software & Services $ 4,455,203 ----------- Technology Hardware & Equipment - 13.0% Communications Equipment - 1.8% 16,600 Nokia Corp. (A.D.R.) $ 241,364 15,100 Utstarcom, Inc.* 456,775 ----------- $ 698,139 ----------- Computer Hardware - 4.3% 21,800 Dell, Inc.* $ 780,876 41,600 Hewlett-Packard Co. 877,760 ----------- $ 1,658,636 ----------- Computer Storage & Peripherals - 4.1% 61,800 Lexar Media, Inc.* $ 412,824 53,900 Sandisk Corp.* 1,169,091 ----------- $ 1,581,915 ----------- Electronic Equipment & Instruments - 2.8% 5,300 Samsung Electronics Co., Ltd.* $ 1,091,126 ----------- Total Technology Hardware & Equipment $ 5,029,816 -----------
The accompanying notes are an integral part of these financial statements. 5 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS 6/30/04 (UNAUDITED) (continued) - --------------------------------------------------------------------------------
Shares Value Semiconductors - 5.5% 61,300 Intel Corp. $ 1,691,880 51,100 Taiwan Semiconductor Manufacturing Co. (A.D.R.) 424,641 ----------- $ 2,116,521 ----------- Total Semiconductors $ 2,116,521 ----------- Telecommunication Services - 1.6% Wireless Telecommunication Services - 1.6% 27,100 Vodafone Group Plc (A.D.R.) $ 598,911 ----------- Total Telecommunication Services $ 598,911 ----------- TOTAL COMMON STOCKS (Cost $38,249,059) $38,392,430 ----------- TOTAL INVESTMENT IN SECURITIES - 99.6% (Cost $38,249,059) $38,392,430 ----------- OTHER ASSETS AND LIABILITIES - 0.4% $ 169,200 ----------- TOTAL NET ASSETS - 100.0% $38,561,630 ===========
* Non-income producing security. (A.D.R.) American Depository Receipt 6 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
Six Months Ended Year Year Year 5/1/00 6/30/04 Ended Ended Ended to Class II (a) (unaudited) 12/31/03 12/31/02 12/31/01 12/31/00 Net asset value, beginning of period $12.10 $ 9.70 $ 14.94 $18.50 $21.68 ------ ------ ------- ------ ------ Increase (decrease) from investment operations: Net investment income (loss) $(0.01) $(0.02) $ (0.13) $(0.05) $(0.03) Net realized and unrealized gain (loss) on investments (0.13) 2.42 (5.11) (3.51) (1.23) ------ ------ ------- ------ ------ Net increase (decrease) from investment operations $(0.14) $ 2.40 $ (5.24) $(3.56) $(1.26) Distributions to shareowners: Net investment income -- -- -- -- -- Net realized gain -- -- -- -- (1.92) ------ ------ ------- ------ ------ Net increase (decrease) in net asset value $(0.14) $ 2.40 $ (5.24) $(3.56) $(3.18) ------ ------ ------- ------ ------ Net asset value, end of period $11.96 $12.10 $ 9.70 $14.94 $18.50 ====== ====== ======= ====== ====== Total return* (1.16)% 24.74% (35.07)% 19.24% (6.36)% Ratio of net expenses to average net assets+ 1.16%** 1.44% 1.63% 1.58% 1.03%** Ratio of net investment income (loss) to average net assets+ (0.17)%** (0.40)% (0.64)% (0.61)% (0.33)%** Portfolio turnover rate 208%** 58% 86% 111% 95%** Net assets, end of period (in thousands) $5,592 $3,049 $ 263 $ 658 $ 203 Ratios with no waiver of management fees and assumption of expenses by PIM and reduction for fees paid indirectly: Net expenses 1.16%* * 1.44% 1.63% 1.58% 0.73%** Net investment income (loss) (0.17)%** (0.40)% (0.64)% (0.61)% (0.11)%**
(a) Class 2 shares were first publicly offered on May 1, 2000. * Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. ** Annualized. + Ratios with no reduction for fees paid indirectly. The accompanying notes are an integral part of these financial statements. 7 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio ASSETS: Investment in securities, at value (Cost $38,249,059) $ 38,392,430 Cash 166,266 Foreign currencies, at value -- Receivables -- Investment securities sold 350,395 Fund shares sold -- Variation margin -- Dividends, interest and foreign taxes withheld 44,334 Forward foreign currency settlement contracts, net -- Due from Pioneer Investment Management, Inc. -- Other 470 ------------ Total assets $ 38,953,895 ------------ LIABILITIES: Payables -- Investment securities purchased $ 328,381 Fund shares repurchased 8,488 Dividends -- Upon return of securities loaned -- Forward foreign currency settlement contracts, net -- Reserve for repatriation taxes -- Due to bank -- Due to affiliates 27,887 Accrued expenses 27,509 ------------ Total liabilities $ 392,265 ------------ NET ASSETS: Paid-in capital $ 78,004,905 Accumulated net investment income (loss) 2,672 Accumulated undistributed net realized gain (loss) (39,589,318) Net unrealized gain (loss) on: Investments 143,371 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ------------ Total net assets $ 38,561,630 ------------ NET ASSET VALUE PER SHARE: Class I: No par value (unlimited number of shares authorized) Net assets $ 32,969,391 Shares outstanding 2,724,557 ------------ Net asset value per share $ 12.10 Class II: No par value (unlimited number of shares authorized) Net assets $ 5,592,239 Shares outstanding 467,443 ------------ Net asset value per share $ 11.96
8 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio Six Months Ended 6/30/04 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $1,046) $ 179,113 Interest 2,776 Income on securities loaned, net -- Other -- ----------- Total investment income $ 181,889 ----------- EXPENSES: Management fees $ 135,655 Transfer agent fees 1,508 Distribution fees (Class II) 5,230 Administrative fees 9,250 Custodian fees 11,802 Professional fees 14,662 Printing 30 Fees and expenses of nonaffiliated trustees -- Miscellaneous 1,080 ----------- Total expenses $ 179,217 Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. -- ----------- Net expenses $ 179,217 ----------- Net investment income (loss) $ 2,672 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain (loss) from: Investments $ 1,809,705 Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $ 1,809,705 ----------- Change in net unrealized gain or loss from: Investments $(2,214,548) Futures contracts -- Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies -- ----------- $(2,214,548) ----------- Net gain (loss) on investments, futures contracts and foreign currency transactions $ (404,843) =========== Net increase (decrease) in net assets resulting from operations $ (402,171) ===========
The accompanying notes are an integral part of these financial statements. 9 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS 6/30/04 (UNAUDITED) - --------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio Six Months Ended Year 6/30/04 Ended (unaudited) 12/31/03 FROM OPERATIONS: Net investment income (loss) $ 2,672 $ (20,270) Net realized gain (loss) on investments 1,809,705 (3,697,565) Change in net unrealized gain or loss on investments, futures contracts and foreign currency transactions (2,214,548) 11,680,101 ----------- ----------- Net increase (decrease) in net assets resulting from operations $ (402,171) $ 7,962,266 ----------- ----------- DISTRIBUTIONS TO SHAREOWNERS: Net investment income Class I $ -- $ (4,477) Class II -- -- Net realized gain Class I -- -- Class II -- -- Tax return of capital Class I -- -- Class II -- -- ----------- ----------- Total distributions to shareowners $ -- $ (4,477) ----------- ----------- FROM FUND SHARE TRANSACTIONS: Net proceeds from sale of shares $ 3,453,095 $ 4,104,812 Reinvestment of distributions -- 4,477 Cost of shares repurchased (3,287,636) (8,277,302) ----------- ----------- Net increase (decrease) in net assets resulting from fund share transactions $ 165,459 $(4,168,013) ----------- ----------- Net increase (decrease) in net assets $ (236,712) $ 3,789,776 ----------- ----------- NET ASSETS: Beginning of period $38,798,342 $35,008,566 ----------- ----------- End of period $38,561,630 $38,798,342 =========== =========== Accumulated/(distributions in excess of) net investment income (loss) $ 2,672 $ -- =========== ===========
10 The accompanying notes are an integral part of these financial statements. Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies The Pioneer Growth Shares VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust registered under the Investment Company Act of 1940 as an open-end management investment company. The Trust consists of nineteen separate portfolios, fourteen of which issue both Class I and Class II shares (collectively, the Portfolios, individually the Portfolio) as follows: Portfolios: Pioneer Emerging Markets VCT Portfolio (Emerging Markets Portfolio) Pioneer Europe VCT Portfolio (Europe Portfolio) Pioneer International Value VCT Portfolio (International Value Portfolio) Pioneer Small Cap Value VCT Portfolio (Small Cap Value Portfolio) Pioneer Small Company VCT Portfolio (Small Company Portfolio) Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio) Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio) Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio) Pioneer Fund VCT Portfolio (Fund Portfolio) Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio) Pioneer Balanced VCT Portfolio (Balanced Portfolio) Pioneer High Yield VCT Portfolio (High Yield Portfolio) Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio) Pioneer America Income VCT Portfolio (America Income Portfolio) Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares only) Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only) Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim Portfolio) (Class II shares only) Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp Small and Mid Cap Growth Portfolio) (Class II shares only) Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth Portfolio) (Class II shares only) Portfolio shares may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts, and may also be purchased by qualified pension and retirement plans. The investment objective of Growth Shares Portfolio is to seek capital appreciation. The financial highlights for the Portfolio's Class I shares are presented in a separate book. The Trust's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America that require the management of the Trust to, among other things, make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income, expenses, gains and losses during the reporting periods. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Trust, which are in conformity with those generally accepted in the investment company industry: A. Security Valuation Security transactions are recorded as of trade date. Net asset values for the portfolio are computed once daily, on each day the New York Stock Exchange is open, as of the close of regular trading on the Exchange. In computing the net asset values, securities are valued at the last sale price on the principal exchange where they are traded. Securities that have not traded on the date of valuation, or securities for which sale prices are not generally reported, are valued at the mean between the last bid and asked prices. Securities for which market quotations are not readily available are valued at their fair values as determined by, or under the direction of, the Board of Trustees. As of June 30, 2004 there were no securities fair valued. Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence. Interest income, including interest on income bearing cash accounts, is recorded on the accrual basis. Temporary cash investments are valued at amortized cost. Gains and losses from sales on investments are calculated on the identified cost method for both financial reporting and federal income tax purposes, and, if applicable, are reported net of foreign taxes on capital gains at the applicable country rates. B. Futures Contracts The Portfolio may enter into futures transactions to hedge against changes in interest rates, securities prices, and currency rates or to seek to increase total 11 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- return. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum "initial margin" requirements of the associated futures exchange. Subsequent payments for futures contracts ("variation margin") are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized gains or losses. When the contract is closed, the Portfolio realize a gain or loss equal to the difference between the opening and closing value of the contract. The use of futures contracts involves, to varying degrees, elements of market risk which may exceed the amounts recognized by the Portfolio. Changes in the value of the contracts may not directly correlate to the changes in the value of the underlying securities. These risks may decrease the effectiveness of the Portfolio's hedging and trading strategies and potentially result in a loss. As of June 30, 2004, Growth Shares Portfolio had no open contracts. C. Foreign Currency Translation The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates. Net realized gains and losses on foreign currency transactions represent, the net realized gains and losses on foreign currency contracts, disposition of foreign currencies, and the difference between the amount of income accrued and the U.S. dollar actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated in the statement of operations from the effects of changes in market price of those securities but are included with the net realized and unrealized gain or loss on investments. D. Forward Foreign Currency Contracts The Portfolio enters into forward foreign currency contracts (contracts) for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific investment transactions (settlement hedges) or portfolio positions (portfolio hedges). All contracts are marked to market daily at the applicable exchange rates, and any resulting unrealized gains or losses are recorded in the Portfolio's financial statements. The Portfolio records realized gains and losses at the time a portfolio hedge is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. E. Taxes It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income and net realized capital gains, if any, to its shareowners. Therefore, no federal income tax provision is required. The amount and characterization of distributions to shareowners for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of each Portfolio's distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. Capital loss carryforwards are available to offset future realized capital gains. At December 31, 2003, Growth Shares VCT Portfolio had a capital loss carryforward of $40,517,554, of which the following amounts will expire between 2008 and 2011 if not utilized: $4,132,928 in 2008, $9,820,202 in 2009, $19,245,183 in 2010 and $7,319,241 in 2011. The portfolio elected to defer $85,372 in capital losses recognized between November 1, 2003 and December 31, 2003 to its fiscal year ending December 31, 2004. The tax character of current year distributions paid will be determined at the end of the current fiscal year. The following chart shows the components of distributable earnings (accumulated losses) as of December 31, 2003 and the distributions paid during the year ended December 31, 2003 on a tax basis as of December 31, 2003. 12 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Pioneer Growth Shares VCT Portfolio 2003 - -------------------------------------------------------------------------------- Distributions paid from: Ordinary Income $ 4,477 Long-Term capital gain -- ------------ 4,477 Return of Capital -- ------------ Total distributions $ 4,477 ============ Distributable Earnings (Accumulated Losses): Undistributed ordinary income $ -- Undistributed long-term gain/ (Capital loss carryforward) (40,517,554) Unrealized appreciation (depreciation) 1,561,822 ------------ Total $(38,955,732) ============ - --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales, returns of capital on REITs, and the recognition of unrealized gains or losses on certain futures contracts. F. Portfolio Shares The Portfolio records sales and repurchases of its portfolio shares as of trade date. Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Trust and a wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (Unicredito Italiano), $612,526 in commissions on the sale of Trust shares for the six months ended June 30, 2004. Distribution fees are calculated based on the average daily net asset values attributable to Class I and Class II shares of the Portfolio, respectively. Shareowners of each class share all expenses and fees paid to the transfer agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS), for its services, which are allocated based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 3). Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on the respective percentage of adjusted net assets at the beginning of the day. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner, at the same time, and in the same amount, except that Class I and Class II shares can bear different transfer agent and distribution fees. Income, expenses (excluding 12b-1 fees) and gains and losses are calculated at the Portfolio level and are allocated daily based on the respective percentage of adjusted net assets at the beginning of the day. Dividends and distributions to shareowners are recorded on the ex-dividend date. G. Securities Lending The Portfolio lends securities in its portfolio to certain broker-dealers or other institutional investors, with the Portfolio's custodian acting as the lending agent. When entering into a loan, the Portfolio receives collateral which is maintained by the custodian and earns income in the form of negotiated lenders' fees. The Portfolio also continues to receive interest or dividends on the securities loaned, and gain or loss in the fair value of the securities loaned that may occur during the term of the loan, will be for account of the Trust. The loans are secured by collateral of at least 102%, at all times, of the fair value of the securities loaned. The fair value of the collateral will be adjusted daily to reflect any price fluctuation in the value of the loaned securities. The Trust has the right under the lending agreement to recover the securities on loan from the borrower on demand. The Trust invests cash collateral in the Securities Lending Investment Fund which is managed by Brown Brothers Harriman & Co., the Trust's custodian. H. Repurchase Agreements With respect to repurchase agreements entered into by the Portfolio, the value of the underlying securities (collateral), including accrued interest received from counterparties, is required to be at least equal to or in excess of the value of the repurchase agreement at the time of purchase. The collateral for all repurchase agreements is held in safekeeping in the customer-only account of the Portfolio's custodian, or subcustodian. The Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is responsible for determining that the value of the collateral remains at least equal to the repurchase price. 2. Management Agreement PIM manages the Portfolio, and is a wholly owned indirect subsidiary of UniCredito Italiano. Management fees are calculated daily at the following annual rate of 0.70% of the Portfolio's average daily net assets. In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio. At June 30, 2004, $26,397 was payable to PIM related to management fees, administrative fees and certain other services, and is included in due to affiliates. 13 Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 6/30/04 (UNAUDITED) (continued) - -------------------------------------------------------------------------------- 3. Transfer Agent Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned indirect subsidiary of UniCredito Italiano provides substantially all transfer agent and shareowner services to the Trust at negotiated rates. Included in due to affiliates is $258 in transfer agent fees payable to PIMSS at June 30, 2004 4. Distribution Plans The Portfolio has adopted a plan of distribution for Class II shares in accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily net assets attributable to Class II shares. Included in due to affiliates is $1,232 payable to PFD at June 30, 2004. 5. Aggregate Unrealized Appreciation and Depreciation At June 30, 2004, the Portfolios' aggregate unrealized appreciation and depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------- Net Gross Gross Appreciation/ Tax Cost Appreciation Depreciation (Depreciation) - --------------------------------------------------------------------------------------------------- Growth Shares Portfolio $39,045,156 $1,123,103 $(1,775,829) $(652,726) =========== ========== =========== ========= - ---------------------------------------------------------------------------------------------------
6. Portfolio Transactions The cost of purchases and the proceeds from sales of investments other than U.S. Government obligations and temporary cash investments for the six months ended June 30, 2004, were $39,697,597 and $38,914,354, respectively. 7. Capital Shares At June 30, 2004, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
- --------------------------------------------------------------------------------------------------- Growth Shares Portfolio '04 Shares '04 Amount '03 Shares '03 Amount - --------------------------------------------------------------------------------------------------- CLASS II: Shares sold 50,359 $ 618,962 91,892 $ 1,012,931 Reinvestment of distributions -- -- 403 4,477 Shares repurchased (251,629) (3,068,841) (731,375) (7,757,809) ---------------------------------------------------------------- Net increase (201,270) $(2,449,879) (639,080) $(6,740,401) ================================================================ CLASS II: Shares sold 233,502 $ 2,834,133 271,796 $ 3,091,881 Reinvestment of distributions -- -- -- -- Shares repurchased (18,080) (218,795) (46,885) (519,493) ---------------------------------------------------------------- Net increase 215,422 $ 2,615,338 224,911 $ 2,572,388 ================================================================ - ---------------------------------------------------------------------------------------------------
14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 16 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This page for your notes. 17 [LOGO] PIONEER Investments(R) Pioneer Variable Contracts Trust Officers John F. Cogan, Jr., President Osbert M. Hood, Executive Vice President Vincent Nave, Treasurer Dorothy E. Bourassa, Secretary Christopher J. Kelley, Assistant Secretary David C. Phelan, Assistant Secretary Luis I. Presutti, Assistant Treasurer Gary Sullivan, Assistant Treasurer Katherine Kim Sullivan, Assistant Treasurer Trustees John F. Cogan, Jr., Chairman Mary K. Bush Richard H. Egdahl, M.D. Margaret B.W. Graham Osbert M. Hood Marguerite A. Piret Stephen K. West John Winthrop Investment Adviser Pioneer Investment Management, Inc. Custodian Brown Brothers Harriman & Co. Principal Underwriter Pioneer Funds Distributor, Inc. Legal Counsel Wilmer Cutler Pickering Hale and Dorr LLP Shareowner Services and Transfer Agent Pioneer Investment Management Shareholder Services, Inc. Offering Legend Please consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the fund and should be read carefully before you invest or send money. To obtain a prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or visit our website www.pioneerfunds.com. 16076-00-0804 ITEM 2. CODE OF ETHICS. (a) Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so. The registrant has adopted, as of the end of the period covered by this report, a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer and controller. (b) For purposes of this Item, the term "code of ethics" means written standards that are reasonably designed to deter wrongdoing and to promote: (1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; (3) Compliance with applicable governmental laws, rules, and regulations; (4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (5) Accountability for adherence to the code. (c) The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item. The registrant has made no amendments to the code of ethics during the period covered by this report. (d) If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver. Not applicable. (e) If the registrant intends to satisfy the disclosure requirement under paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from, a provision of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item by posting such information on its Internet website, disclose the registrant's Internet address and such intention. Not applicable. (f) The registrant must: (1) File with the Commission, pursuant to Item 10(a), a copy of its code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as an exhibit to its annual report on this Form N-CSR; (2) Post the text of such code of ethics on its Internet website and disclose, in its most recent report on this Form N-CSR, its Internet address and the fact that it has posted such code of ethics on its Internet website; or (3) Undertake in its most recent report on this Form N-CSR to provide to any person without charge, upon request, a copy of such code of ethics and explain the manner in which such request may be made. See Item 10(2) ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a) (1) Disclose that the registrant's board of trustees has determined that the registrant either: (i) Has at least one audit committee financial expert serving on its audit committee; or (ii) Does not have an audit committee financial expert serving on its audit committee. The registrant's Board of Trustees has determined that the registrant has at least one audit committee financial expert. (2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is "independent." In order to be considered "independent" for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of trustees, or any other board committee: (i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or (ii) Be an "interested person" of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)). Ms. Marguerite A. Piret, an independent trustee, is such an audit committee financial expert. (3) If the registrant provides the disclosure required by paragraph (a)(1) (ii) of this Item, it must explain why it does not have an audit committee financial expert. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. N/A (b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A (c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A (d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A (e) (1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. PIONEER FUNDS APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES PROVIDED BY THE INDEPENDENT AUDITOR SECTION I - POLICY PURPOSE AND APPLICABILITY The Pioneer Funds recognizes the importance of maintaining the independence of their outside auditors. Maintaining independence is a shared responsibility involving Pioneer Investment Management, Inc ("PIM"), the audit committee and the independent auditors. The Funds recognizes that a Fund's independent auditors: 1) possess knowledge of the Funds, 2) are able to incorporate certain services into the scope of the audit, thereby avoiding redundant work, cost and disruption of Fund personnel and processes, and 3) have expertise that has value to the Funds. As a result, there are situations where it is desirable to use the Fund's independent auditors for services in addition to the annual audit and where the potential for conflicts of interests are minimal. Consequently, this policy, which is intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and procedures to be followed by the Funds when retaining the independent audit firm to perform audit, audit-related tax and other services under those circumstances, while also maintaining independence. Approval of a service in accordance with this policy for a Fund shall also constitute approval for any other Fund whose pre-approval is required pursuant to Rule 210.2-01(c)(7)(ii). In addition to the procedures set forth in this policy, any non-audit services that may be provided consistently with Rule 210.2-01 may be approved by the Audit Committee itself and any pre-approval that may be waived in accordance with Rule 210.2-01(c)(7)(i)(C) is hereby waived. Selection of a Fund's independent auditors and their compensation shall be determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY - ---------------- -------------------------------- ------------------------------------------------- SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES CATEGORY - ---------------- -------------------------------- ------------------------------------------------- I. AUDIT Services that are directly o Accounting research assistance SERVICES related to performing the o SEC consultation, registration independent audit of the Funds statements, and reporting o Tax accrual related matters o Implementation of new accounting standards o Compliance letters (e.g. rating agency letters) o Regulatory reviews and assistance regarding financial matters o Semi-annual reviews (if requested) o Comfort letters for closed end offerings - ---------------- -------------------------------- ------------------------------------------------- II. Services which are not o AICPA attest and agreed-upon procedures AUDIT-RELATED prohibited under Rule o Technology control assessments SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments and are related extensions of o Enterprise security architecture the audit services support the assessment audit, or use the knowledge/expertise gained from the audit procedures as a foundation to complete the project. In most cases, if the Audit-Related Services are not performed by the Audit firm, the scope of the Audit Services would likely increase. The Services are typically well-defined and governed by accounting professional standards (AICPA, SEC, etc.) - ---------------- -------------------------------- ------------------------------------------------- ------------------------------------- ------------------------------------ AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY ------------------------------------- ------------------------------------ o "One-time" pre-approval o A summary of all such for the audit period for all services and related fees pre-approved specific service reported at each regularly subcategories. Approval of the scheduled Audit Committee independent auditors as meeting. auditors for a Fund shall constitute pre approval for these services. ------------------------------------- ------------------------------------ o "One-time" pre-approval o A summary of all such for the fund fiscal year within services and related fees a specified dollar limit (including comparison to for all pre-approved specified dollar limits) specific service subcategories reported quarterly. o Specific approval is needed to exceed the pre-approved dollar limit for these services (see general Audit Committee approval policy below for details on obtaining specific approvals) o Specific approval is needed to use the Fund's auditors for Audit-Related Services not denoted as "pre-approved", or to add a specific service subcategory as "pre-approved" ------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED - ----------------------- --------------------------- ----------------------------------------------- SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES DESCRIPTION - ----------------------- --------------------------- ----------------------------------------------- III. TAX SERVICES Services which are not o Tax planning and support prohibited by the Rule, o Tax controversy assistance if an officer of the Fund o Tax compliance, tax returns, excise determines that using the tax returns and support Fund's auditor to provide o Tax opinions these services creates significant synergy in the form of efficiency, minimized disruption, or the ability to maintain a desired level of confidentiality. - ----------------------- --------------------------- ----------------------------------------------- - ------------------------------------- ------------------------- AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY - ------------------------------------- ------------------------- - ------------------------------------- ------------------------- o "One-time" pre-approval o A summary of for the fund fiscal year all such services and within a specified dollar limit related fees (including comparison to specified dollar limits) reported quarterly. o Specific approval is needed to exceed the pre-approved dollar limits for these services (see general Audit Committee approval policy below for details on obtaining specific approvals) o Specific approval is needed to use the Fund's auditors for tax services not denoted as pre-approved, or to add a specific service subcategory as "pre-approved" - ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED - ----------------------- --------------------------- ----------------------------------------------- SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES DESCRIPTION - ----------------------- --------------------------- ----------------------------------------------- IV. OTHER SERVICES Services which are not o Business Risk Management support prohibited by the Rule, o Other control and regulatory A. SYNERGISTIC, if an officer of the Fund compliance projects UNIQUE QUALIFICATIONS determines that using the Fund's auditor to provide these services creates significant synergy in the form of efficiency, minimized disruption, the ability to maintain a desired level of confidentiality, or where the Fund's auditors posses unique or superior qualifications to provide these services, resulting in superior value and results for the Fund. - ----------------------- --------------------------- ----------------------------------------------- - --------------------------------------- ------------------------ AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY - ------------------------------------- -------------------------- o "One-time" pre-approval o A summary of for the fund fiscal year within all such services and a specified dollar limit related fees (including comparison to specified dollar limits) reported quarterly. o Specific approval is needed to exceed the pre-approved dollar limits for these services (see general Audit Committee approval policy below for details on obtaining specific approvals) o Specific approval is needed to use the Fund's auditors for "Synergistic" or "Unique Qualifications" Other Services not denoted as pre-approved to the left, or to add a specific service subcategory as "pre-approved" - ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED - ----------------------- ------------------------- ----------------------------------------------- SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES DESCRIPTION - ----------------------- ------------------------- ----------------------------------------------- PROHIBITED SERVICES Services which result 1. Bookkeeping or other services in the auditors losing related to the accounting records or independence status financial statements of the audit under the Rule. client* 2. Financial information systems design and implementation* 3. Appraisal or valuation services, fairness* opinions, or contribution-in-kind reports 4. Actuarial services (i.e., setting actuarial reserves versus actuarial audit work)* 5. Internal audit outsourcing services* 6. Management functions or human resources 7. Broker or dealer, investment advisor, or investment banking services 8. Legal services and expert services unrelated to the audit 9. Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible - ----------------------- ------------------------- ----------------------------------------------- - ------------------------------------------- ------------------------------ AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE REPORTING POLICY - ------------------------------------------- ------------------------------ o These services are not to be o A summary of all performed with the exception of the(*) services and related services that may be permitted fees reported at each if they would not be subject to audit regularly scheduled procedures at the audit client (as Audit Committee meeting defined in rule 2-01(f)(4)) level will serve as continual the firm providing the service. confirmation that has not provided any restricted services. - ------------------------------------------- ------------------------------
- -------------------------------------------------------------------------------- GENERAL AUDIT COMMITTEE APPROVAL POLICY: o For all projects, the officers of the Funds and the Fund's auditors will each make an assessment to determine that any proposed projects will not impair independence. o Potential services will be classified into the four non-restricted service categories and the "Approval of Audit, Audit-Related, Tax and Other Services" Policy above will be applied. Any services outside the specific pre-approved service subcategories set forth above must be specifically approved by the Audit Committee. o At least quarterly, the Audit Committee shall review a report summarizing the services by service category, including fees, provided by the Audit firm as set forth in the above policy. - -------------------------------------------------------------------------------- (2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. N/A (f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. N/A (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. N/A (h) Disclose whether the registrant's audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. N/A ITEMS 5-6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company's investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company's investment adviser, or any other third party, that the company uses, or that are used on the company's behalf, to determine how to vote proxies relating to portfolio securities. Not applicable to open-end management investment companies. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) Disclose the conclusions of the registrant's principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, about the effectiveness of the registrant's disclosure controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR 270.30a-2(c))) based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph. The registrant's principal executive officer and principal financial officer have concluded, that the registrant's disclosure controls and procedures are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) Disclose whether or not there were significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. EXHIBITS. File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated. (a) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. (b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2). Filed herewith. SIGNATURES [See General Instruction F] Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Pioneer Variable Contracts Trust By (Signature and Title)* /s/ John F. Cogan, Jr. John F. Cogan, Jr, President Date August XX, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ John F. Cogan, Jr. John F. Cogan, Jr., President Date August XX, 2004 By (Signature and Title)* /s/ Vincent Nave Vincent Nave, Treasurer Date August XX, 2004 * Print the name and title of each signing officer under his or her signature. 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-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, 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 which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: August 25, 2004 /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-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, 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 which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: August 25, 2004 /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 "Fund"), hereby certifies, to the best of his knowledge, that the Fund's Report on Form N-CSR for the period ended June 30, 2004 (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 25, 2004 /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 "Fund"), hereby certifies, to the best of his knowledge, that the Fund's Report on Form N-CSR for the period ended June 30, 2004 (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 25, 2004 /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-----